If corruption was an issue of the presence of individual ‘rotten apples’ in the state, it would suffice to arrest such
individuals to cleanse the system. That it is not so proves the story of the steel plant of Ajaokuta, Nigeria, where
corruption has been the system for decades.
Several government changes, commissions of enquiry, senate committees, even arrests, have not been able to stop the
bleeding of the tormented Ajaokuta steel manufacturing plant in Kogi State, Nigeria, the second largest in Africa and
twelfth largest in the world, for the past four decades.
A new change is on the books now, but will this time be different?
When abundant resources of steel were discovered in the region in the early eighties of the last century, the new steel
plant at Ajaokuta was seen as a promising project, meant to generate close to a million jobs and propel Nigeria finally
into industrialised manufacturing. But most of the ten thousand shiny new houses built for prospective mine workers and
their families at the time are now abandoned and overgrown with weeds, connected by ghost paths where armed robbers
hide. No less than four mining projects turned- plunder-exercises by old and new captors in the past thirty-six years
have enriched individual politicians, their bankers and other wealth managers, who managed to lay their claws on the
It delivered some steel once, during the first six months of its operations in 1983, and never since.
The revivals that weren’t
When asked when Ajaokuta would start to produce steel again, a present day government minister of transportation, Rotimi
Amaechi, responded sagely that the roads in the area should be done up first, because if not, how were you going to
transport it to customers? He was right: the roads in Ajaokuta, constructed in the 1980s, are now in a bad state. But
remarkably, it was the first time anybody ever asked this question. As if it had never really been a plan to get any
actual steel from the mine at the time of any of the other revivals.
Today, expired asphalt disintegrates from the base of the expressway to Ajaokuta, exposing the white sharp-edged stones
underneath. The houses around the mining compound have lost windows, doors and corrugated roofing sheets. Behind a large
faded gate one can still see the gigantic but now rusty machines, dilapidated factory buildings and abandoned tractors
meant for the ambitious steel complex that was meant to change the economic story of Nigeria no less than four times.
Wives and children of idling mine workers are hawking fried yam, plantain, corn, bean cakes and fast foods for passing
The Ajaokuta steel plant was first almost completed in 1983. Russian Tyazhpromexport (TPE) had delivered the machines
and heavy equipment; Germany’s Julius Berger had fixed the complex network of rail lines from the port to Ajaokuta,
while the French had carried out the civil work, including road construction, housing estates, and other foundations for
physical structures. The total investment according to a World Bank estimate was over US$ 7 billion.
But since all the contracts had included large slices for the ruling National Party of Nigeria (NPN), the money was
finished then. “Ajaokuta was a drainpipe for the NPN government. Through Ajaokuta, money was being funnelled from the
system into the party,” says Chief Paul Unongo (74), then Minister of Steel Development. “I was forty. I wanted the
project to work. We produced steel for six months. But I was made to resign (through political pressure, TA) because I
stood in the way of those who wanted to move money from Ajaokuta into the party.”
I was made to resign because I stood in the way
A later communication from the US Embassy on Ajaokuta’s history, captured by Wikileaks, confirms: “According to the GON
[Government of Nigeria] and Embassy contacts, since 1979 (the) Ajaokuta Steel Complex has been used as a mechanism to
grant contracts to contractors performing substandard work at overinflated prices while providing senior GON [Government
of Nigeria] officials with large kickbacks. The GON estimates it has spent at least US$ 5 billion on what was to be
Africa's largest steel production facility, while World Bank estimates put the cost at about US$ 7 billion (not adjusted
for inflation). That (…) administration may have thought the project feasible, (…) but within a few months senior GON
officials were already siphoning off millions in kickbacks from real and false contracts for the complex's
The corruption surrounding the Ajaokuta construction had been so blatant that it contributed to the collapse of Johnson
Mathey Bank of London in 1983. According to another Wikileaks cable, Johnson Mathey had acted as “a conduit to transfer
hard currency for some party members in Nigeria. A few leading officials and politicians had amassed large amounts of
money. They sought to transfer the money out of the country (…) by issuing import licenses (for fictitious items).” The
collapse of Johnson Mathey, which had conducted much unsavoury business with many unsavoury clients globally (1), would
inaugurate an era of stronger banking controls in the UK.
Sadly no such controls were established in Nigeria. Even though, in January 1984, the Nigerian military assumed power
amid promises to end corruption, then kept the Ajaokuta project at arm’s length for close to a decade, the looting
started again when General Sani Abacha came to power in 1993. Abacha’s plundered billions, kept in Swiss banks for
years, and estimated at US$ 22 billion in total, are legendary.
Less known is the fact that of this money, around US$ 2,5 billion came from Ajaokuta.
Abacha and his family -notably his son, Mohamed, about whom more later- saw the opportunity in 1995 when Russian TPE
came knocking for an outstanding payment for heavy machinery for Ajaokuta of US$ 2,5 billion. A family confidante and
banker by the name of Atiku Bagudu then hatched a plan to buy up that debt so that instead of owing the Russians, the
Nigerian state would now owe him -and the Abacha family.
Bagudu approached the Russians and told them that the Nigerian state was likely not going to be good on its money, but
that he, Bagudu, could repay them -at least partly, he added, because to repay the full amount would be impossible. It
worked: the Russians, already frustrated with the delay in payment, gave him a very good deal. The debt would be written
off if Bagudu could ensure payment of at least a fifth of its value: US$ 500 million. Using two off-shore companies,
Bagudu channelled the amount of US$ 500 million to TPE; then proceeded to recover the full US$ 2,5 billion from Nigeria
itself. This was the easiest part, since Abacha, for the state, then simply made the money available to the banker.
The full extent of Abacha’s plunder would come to light during an international investigation in 2000 led by the then
British Deputy High Commissioner to Nigeria, (who was involved since some of the looted money had been hidden by Bagudu
in the United Kingdom or British Virgin Isles.) When interrogated by lawyers for the British, General Abacha’s son
Mohammed Abacha admitted to the thefts and gave colourful descriptions of how the family and their banker looted the
Nigerian treasury and Central bank, taking money in “bags, cartons and trucks.” He also described how Bagudu helped to
lodge the moneys in offshore accounts.
Taking money in bags, cartons and trucks
Asked about Ajaokuta, Mohammed Abacha stated that the Nigerian government had requested him to return US $100 million of
the originally looted US$ 2,5 billion. He added that he “didn’t see any reason for that” but that he after he “was
threatened by the then (authorities)…. agreed with Mr Bagudu that, well, we should pay something (that 100 million) just
to get these people off our back.” Up to now, Mohammed and the rest of the Abacha family, instead of showing contrition,
appear annoyed by the zeal with which they have been “persecuted.” Their supporters point out that, while others who had
also taken state moneys were left unbothered, Mohammed Abacha was jailed for three years after the inquiry.
Over the last 20 years, ever since civilian rule returned to Nigeria in 1999, only US$ 3,3 billion out of the unknown
billions of dollars stashed away by the Abacha family has been recovered. None of it has been reinvested in the Ajaokuta
Relatives and friends
With a constant refrain of ‘government has no business in business,’ President Olusegun Obasanjo came to power as head
of a new civilian government in 1999 with a privatisation agenda that would once again drain lifeblood from Ajaokuta.
Soon after his ascendance to power, the new president started to appoint friends and relatives at the head of former
state enterprises in such a blatant way that, as Malam Nasir el-Rufai, a former Director-General of the Bureau of Public
Enterprises, would state in an interview with Sahara reporters in 2011, four years after Obasanjo had left the
presidency: “The president and I were always quarrelling over issues of privatisation. Each time I told him we have a
process ... that they should advise their friends to be the highest bidder.”
One of the projects privatised by Obasanjo concerned Ajaokuta. In 2003, the steel mine was sold to Solgas Energy
Limited, a company incorporated on paper in the USA and introduced to Nigeria by Seun Oyefeso, an accountant friend of
Obasanjo’s son, Gbenga. Remarkably, at the beginning of the concession process, Solgas did not even bid for Ajaokuta,
but somehow the process involving five other bidders (Voest Alpine Industrial Services of Australia; Osaka Steels
Nigeria Ltd; Darueli Offline of Italy; Denus Nigeria Plc and Kobe Steel of Japan) was stopped. Instead, Solgas was
The concession of Ajaokuta to Solgas took place in spite of a critical report from the House of Representatives
committee that had discovered that Solgas did not have the technical and financial capacity to revive the project and
had advised against the concession. The report was ignored by the Obasanjo government. A United States Embassy memo on
Solgas, issued on 17 December 2003 and leaked by Wikileaks, commented that “SOLGAS, a small U.S. energy service
provider, has never managed or operated a steel factory. (..) In a private meeting (…) SOLGAS's Nigeria-based Vice
Chairman Oluwaseun "Seun" Oyefeso said the only reason SOLGAS was in Nigeria was to enter the electricity and gas
markets, and to make "money, money, money."
Money was, however, not forthcoming. Oyefeso was indeed unable to attract either local or international loans for the
Solgas Ajaokuta project and the agreement with Solgas was terminated by the Obasanjo government in 2004. However,
Obasanjo then immediately signed a new Ajaokuta agreement with the Nigerian branch of the Indian company Global
Infrastructure, Global Infrastructure (Nig) Ltd (GINL), which was promoted by the very same two men who had brought in
Solgas: presidential son Gbenga Obasanjo and his loyal sidekick Seun Oyefeso. Like Solgas, GINL was also registered
off shore on the Ilse of Man.
Large funds borrowed from Nigerian banks were not repaid
A presidential panel would, in 2007, scathingly compare the GINL deal to the Solgas deal, and state that there had been
no knowledge of the company “to warrant the qualification to rehabilitate complete, commission and operate Ajaokuta
Steel Project” in the first place. But, by then, President Obasanjo had already used his presidential fiat to oblige his
Minister of Steel to handover Ajaokuta to GINL in a new ten-year agreement.
Gbenga Obasanjo would still boast in a 2006 interview that he was “proud to associate with the success of the Ajaokuta
Steel Complex. (…)” and that “they have started making steel and prices of steel have come down in Nigeria....” But it
was not true. GINL was another disaster. According to the 2007 presidential panel company management “withheld any
foreign investment into the mine,” had “merely depended largely on funds borrowed from Nigerian banks, which were not
repaid” and could not even find where the money from the banks had gone: “the Panel is at a loss as to where this volume
of money has been invested,” it said, “as GINL has not been able to produce convincing records of injection of such
Cannibalising and vandalising
The panel further discovered that GINL could not even produce any bank reconciliation statement over the three years
since it took over Ajaokuta; that the mandatory payment of one percent of turnover as concession fee to the government
was never paid and that facilities at the company had been ‘cannibalised.” “GINL is constantly and systematically
cannibalising, vandalising and moving valuable equipment and Spare parts/Consumables out of (the Ajaokuta Steel
project),” it said, and also that “(…) GINL has not imported replacement parts in three years; it (is) using broken-down
equipment as spare parts shops – just to keep producing at the detriment of the entire system” while “security (…) has
completely broken down and from time to time thieves break in (…) and cart away valuable equipment,” with the Management
“not interested in prosecuting offenders.”
The panel also reported, even then, that buildings “such as the Metallurgical Training Centre” had already been
“overtaken by bushes exposing the buildings and equipment to bush fire.” It also reported that there had in fact been a
fire, in 2006, and that GINL management had pocketed the insurance pay out of close to US$ 1 million instead of passing
it to the government, which was funding the Ajaokuta structures and equipment. It came as no surprise that the panel at
the end of its report recommended that the concession agreement between GINL and Nigeria on Ajaokuta should be
terminated. The mine would again lay still in its broken state for another three years.
None of the privatised steel mines had fared well
A senate committee investigating Obasanjo’s privatisation deals would find in 2011 that none of the steel mines
privatised by this president – besides Ajaokuta, also the Delta Steel Company, Oshogbo Steel Company Limited, Jos Steel
Rolling Mills and Katsina Steel Rolling Mills - had fared well. The committee reported a loss, for example, of over US$
100 million in the case of Delta Steel; said that Jos Steel had never engaged in any ‘meaningful commercial activities;’
and added that Oshogbo and Katsina, though not embroiled in controversies, had operated far below expectations.
The fourth wave
A new opportunity to feast on Ajaokuta arose when, after president Yar’Adua’s death in 2010, the new government under
President Goodluck Jonathan appointed Mohammed Adoke, one of the legal advisers to GINL, as the country’s
Attorney-General. Adoke, whose profile on Wikipedia proudly says he has handled a case “between Global Steel Holdings
(the parent company of GINL) and the Bureau of Public Enterprises Investment,” promptly proceeded to favour GINL in a
‘breach of contract’ case the company had filed against the Nigerian government. GINL now wanted US$ 525 million in
damages from the Nigerian state.
Instead of defending Nigeria’s interests, Adoke offered, on behalf of the state, an out-of-court settlement with his own
GINL clients whereby that company would obtain a new management contract as well as a reduced ‘damages’ payment of US$
250 million. Flabbergasted, stakeholders in the iron and steel industry in Nigeria opposed this move. The director of
Nigeria’s Bureau of Public Enterprises (BPE), Sanusi Mohammed, said that Adoke’s settlement with GINL was “null and
void” since the only agency in Nigeria entitled to conduct privatisation contracts was the BPE, and that the BPE had not
participated in the matter at all.
Sanusi Mohammed also reiterated the awful record of GINL, saying that it “ransacked and destroyed virtually every
facility they operated.” This included, besides the Ajaokuta Steel Company, also the National Iron Ore Company at Itakpe
and the railway track and locomotives running from Itakpe to Ajaokuta and Warri, Mohammed said.
Even some typos in the new agreement were identical
As a consequence of the outrage, then Minister of Steel Muhammed Sada rejected the Adoke settlement. The promised
‘compensation’ to GINL was not carried out and Sada’s ministry recommended that GINL’s arbitration case be pursued to a
Enter a new Minister of Solid Minerals in 2015: Dr Kayode Fayemi. For unknown reasons Fayemi turned out to be really
partial to the rejected Adoke settlement with GINL. He revived it by presenting a new settlement deal that, opponents
noted, was verbatim the same as the earlier deal made by erstwhile attorney general and GINL lawyer Bello Adoke. The
opponents pointed out that even some typos were identical: for example, in both, fine clay was written ae fire clay,
complete as compete, indicted as indicated and even as event.
Minister Fayemi defended himself by saying that he had negotiated a higher annual concession fee from three to four
percent of the turnover to be paid to the government by GINL. This was being economical with the truth, though, since
the 2013 draft agreement had already negotiated and obtained the four percent rate.
The minister said it would be handled differently this time
In his bid to continue with GINL in the management of Ajaokuta, Minister Fayemi said that the mine should be handled by
a private business and that no more money from the state should be poured into it. According to him, Nigeria had already
spent US$ 8 billion on it, which had been more than enough. He said privatisation would be handled differently this
time, assuring parliament that “we are not going to repeat the mistake of the Obasanjo administration.” He also promised
a “technical audit” and a thorough assessment of “as to who really has the technical capacity, the financial wherewithal
and the track record to really bring Ajaokuta back to life.”
However, Fayemi’s simultaneous insistence that management should once again be handed to GINL, the company that had
‘cannibalised’ Ajaokuta, caused many in Nigeria to doubt such promises. Stakeholders in the sector, including the
African Iron and Steel Association (AISA) and BPE’s Sanusi Mohamed, maintain that only proper governance by an
accountable government authority can avoid new drainage from the mine. They still support the view of the ad hoc senate
committee that had recommended in 2011 that both the Ajaokuta and Delta Steels privatisations should be undone.
A new voice
Fayemi is no longer a minister now, but the plan to once again privatise Ajaokuta through GINL still exist. An
increasingly strong protest against this, however, comes from a new voice on the block: former senate candidate and
barrister Natasha Akpoti, who leads the Ajaokuta/Itakpe Revival Movement in Kogi State. When Akpoti addressed a public
hearing in parliament last year, she pleaded strongly for the government to revive Ajaokuta and openly accused some of
those who have been pushing for a new privatisation deal with GINL of ‘covert interests’ in the company. She named the
Governor of Kogi state, Yahaya Bello, as being in ‘partnership’ with GINL and added that former steel minister Fayemi as
well as former Minister of Finance, Kemi Adeosun, also had personal interests in the new deal.
All individuals named by her denied such a connection and in turn accused her of working for a ‘competing Indian group’
interested in taking over the company. But she is not resting her case any time soon. “Ajaokuta means a lot to Nigeria’s
economic development,” she said in an interview. “The Federal Government should take over Ajaokuta and make it work.”
Her project is finding support from Chief Unongo, who still remains optimistic about the business prospects of the
company with its 24,000 hectares of land that dovetail into the bank of River Niger. After all, he says, the machinery
is still there, as well as two power plants and the internal standard gauge rail track of approximately 68 kilometres.
Also, out of the initially built 10 000 housing units, a third are still inhabited by workers who are ready to get going
again. “I wrote a 1,000-page handover note (at the time)” says Unongo. “We nearly completed Ajaokuta. It’s painful that
corruption has stalled it. But we can do it.”
One time Ajaokuta engineer Anthony Madagua still believes in Ajaokuta too: “If the US$ 2,5 billion stolen in the name of
Ajaokuta (by Abacha and Bagudu, ed.) was returned to the project, it would go a long way in reviving it. Even with
US$1,4 billion, which would produce 1,3 million tons of liquid steel per year, it should be on stream.”
Speaker of the House of Representatives, Yakubu Dogara, agreed during the public hearing where Natasha Akpoti spoke that
“Government does not need liquid cash to complete the plant and put it to work. All Government needs (to do this) is
So far, ever since the eighties, the Ajaokuta steel plant has still not produced any steel.
WHERE ARE THEY NOW?
Abacha’s banker Atiku Bagudu was first elected as a Senator of the Federal Republic of Nigeria in
2011, and later became
Governor of Kebbi State in 2015, a position to which he was re-elected in 2019.
Attorney General and lawyer Mohammed Bello Adoke left the country as soon as his party lost power
in 2015. Apart from
his controversial role in GINL, he is also linked to a number of other corruption scandals in Nigeria. Adoke has not
returned to Nigeria to tell his side of the story.
Mohammed Abacha is a wealthy businessman and politician.
Gbenga Obasanjo remains free in spite of an administrative panel finding him complicit in fraud to
the tune of N 24
billion (US$ 66,7 million) around Ajaokuta and Delta Steel in 2007. He has been away from the public glare since then.
Who got rich from Ajaokuta?
- The cost of the looting by the NPN government of the initial investment in the late seventies and early eighties has
never been estimated. If ‘commissions’ on the first contracts are calculated at a conservative ten percent, it would
have been at least US$ 700 million.
- The Abacha family got US$ 2 billion from Ajaokuta. This was supposed to have been paid out to the Russian machine
supplier TPE, so no direct theft from Ajaokuta itself. However, after the money not being paid to TPE it should have
been reinvested in Ajaokuta, which it wasn’t.
- It is again difficult to estimate what the cost of the ‘cannibalising’ of Ajaokuta by GINL has been. But if the
estimate of a local engineer that the present value of Ajaokuta machinery is US$ 5 billion, and former minister Fayemi
estimating that the government invested US$ 8 billion in it over the years, GINL can be said to have cost the steel
plant US$ 3 billion.
- If GINL is allocated a damages payment of US$ 250 million, this should be added to their bill.
- And then there are the workers, who have been idle, but whose salaries have been paid. The salaries were not high so
they never got rich, but the total wage bill is calculated to have cost Nigeria US$ 10,4 million per year since the
NOTE (1) see https://www.latimes.com/archives/la-xpm-1985-09-22-fi-18317-story.html.