The Indian Bounce Back   

Published on August 23, 2010 by TheNEWS   ·   1 Comment

The Vaswani brothers, owners of the Stallion Group in Nigeria, survive yet another attempt at shutting them out of Nigeria

The matter of the Vaswani brothers will make an interesting case study for students of leadership, political economy and policy studies at the National Institute of Policy and Strategic Studies (NIPPS) and, indeed, students of Public Administration in Nigeria generally. Students will have a hard job appropriately situating real reasons for the Nigerian government’s inconsistency on the Vaswanis saga.  Twice, in 2003 and 2009, the federal government dubbed the Vaswani brothers villains and threw them out of the country. And twice, the same federal government retracted the villainy tag and recalled them. So what are the brothers – Sunil,  Haresh and Maresh -  to the Nigerian economy? Villains or  heroes?

The latest official verdict favoured the Indians, owners of the Stallion Group. Three weeks ago, on 28 July, Dan Abutu, the Chief Judge of the Federal High Court sitting in Lagos, declared that the brothers had been unfairly treated by the Economic and Financial Crimes Commission, EFCC, in 2009. The judgment practically vacates government’s expulsion order issued on the Vaswanis last year. On 9 April 2009, the erstwhile Interior Minister, retired General Godwin Abbe, acting on the orders of Umaru Yar’Adua, the late president, declared the three brothers “prohibited immigrants” and issued an order for their deportation “by first available means.”

Nearly two weeks after the order, the Vaswani brothers were still discovered to be in Nigeria. On Saturday 18 April, security officials invaded the Stallion Group offices and arrested 21 of its top officials, comprising Indians, Koreans and Philipinos, who were later deported. As disclosed by Waziri, the deported officials would be banned from Nigeria for five years. On Monday 20 April,  Farida Waziri, the EFCC chairman and Chukwurah Udeh, Comptroller-General of the Nigeria Immigration Services, NIS, jointly addressed the press vowing the brothers would be fished out.

Their alleged offences: criminal conspiracy, tax evasion, economic sabotage and money laundering. Waziri said that between 7 May and 31 October 2008, the Stallion Group evaded duty payment to the tune of N2.5bn on rice import. The Group was accused of using nine vessels to import rice, which they sold without paying any import duty to the government. The vessels were MV Golden, MV Luckyfield, MV Goldmar, MV Tolmi, MV Glory Sanye, MV Thor Alliance, MV Almasi, MV Rama and MV Gora. The first three vessels allegedly evaded duty through manipulation of documents at the Port Harcourt wharf, in connivance with officers of the Nigerian Customs Service, NCS, while the vessels were still loading overseas. MV Golden was even still loading in Thailand as at 30 August 2008, was expected to depart there on 21 September 2009 and estimated to arrive in Lagos and Port Harcourt by 10 October and 30 October 2008. But, as the allegation went, although the vessel was yet to arrive, all the accompanying documents, including cargo manifest, ship’s inward report, cargo stowage plan, bill of laden, crew list, port of call list and summary of discrepancies had been stamped and signed by the officer-in-charge of the Report Seat of the NCS, Area 1, Port Harcourt on 26 September 2008.

MV Luckyfield was billed to depart Thailand on 20 September 2008 and expected to arrive in Lagos and Port Harcourt on 31 September 2008 and 25 October 2008. The accompanying documents were stamped and signed on 26 September 2008, six days after its expected time of departure from Thailand. By that time, the vessel would still be on the high seas and yet to arrive Nigerian territorial waters. The vessel arrived on 9 November 2008 after the expiration of the waiver period of 7 May to 31 October 2008.

MV Goldmar was still loading in Thailand on 30 July 2008 and was expected to arrive in Lagos and Port Harcourt on 29 September 2008 and 12 October 2008. The vessel arrived on 8 November 2008, after the expiration of the same waiver period. As in the other two cases, all the accompanying documents were stamped and signed on 26 September 2008 by the officer-in-charge of the Report Seat of Customs, Area 1, Port Harcourt two weeks before the estimated time of arrival of the vessel in Port Harcourt.

The apparent indication was that the papers for the three vessels were processed at the Port Harcourt wharf days before the estimated time of their departure from Thailand or arrival in Nigeria. Waziri deduced this “front-loading”, as she called it, was done to sell the dummy that the shipments arrived Nigeria within 7 May to 31 October 2008 when duty on rice was waived, in order to avoid duty payment. And the allegation was that, indeed, the Stallion Group did not pay any duty.

MV Tolmi and MV Sanye arrived Nigeria with imported rice for M/S Popular Foods Ltd, a subsidiary of the Stallion Group. NCS officials and the Vaswanis disagreed over price of rice in the international market, which the Customs used to calculate the import duty. While the Vaswanis claimed that the price of rice in the international market was $450 per ton of parboiled rice, the NCS insisted on $850. Customs would not allow the vessels to discharge in Apapa port until the Vaswanis issued a bank guarantee to cover the shortfall in the import duty. The EFCC said the federal government lost N2.5bn to the false entries made by the Stallion Group as regards their vessels already within Nigeria with a view to enjoying the concession granted by government on rice importation between 7 May and 31 October 2008. These acts, Waziri declared, “amount to criminal conspiracy and fraudulent evasion of duty, punishable under Section 164 (a) and (b) of Customs and Excise Management Act CAP C45 Laws of Federation of Nigeria 2004, as well as tax evasion and the consequent money laundering liability under the Money Laundering Prohibition Act 2004”.

Waziri said the Vaswani brothers could actually have milked the Nigerian government up to N4bn. As claimed by the EFCC last year, the brothers agreed to pay N2.5bn when they were confronted by NCS and Finance Ministry officials with facts on the matter. Although they allegedly agreed on Friday 10 April 2009 to pay, on Monday 13 April, they reneged on the agreement after a Lagos High Court granted some Stallion Group officials connected with the duty payment evasion bail. Rather, the Vaswani brothers  went to court, seeking an ex-parte order that would shield them from paying. Waziri expressed worries that the Vaswanis were always having their way with  ex-parte orders from the courts, as within only two months, they were able to secure 12 exparte orders from Lagos High Courts alone to evade payments. “They have corrupted a lot of institutions. How come they got 12 exparte motions in two months?” She queried. The EFCC boss then boasted she would ensure the Vaswani brothers pay the N2.5bn. To that effect, the EFCC placed a ‘No Debit Note’ on the accounts of the Stallion Group. In simple terms, it froze the Group’s accounts.

Abutu defroze them last month and further restrained the EFCC from seizing the Group’s assets. The Stallion Group, had, through Popular Foods Limited, filed a suit against the EFCC, with Attorney-General of the Federation as co-defendant, accusing it of infringing on its human rights. The plaintiffs include Tajudeen Olalere, Vinay Tuteja, Bhaskar Sinha, Pius Kizhakkudan, Chandrasekaran Ramamoorthy, Stallion Nigeria Limited, Premium Seafoods, Hyundai Motors Nigeria, Stallion Motors Limited, The Honda Place Limited, Stallion Plastic Industries Limited, Stallion Textile Industries, Sunil Vaswani, Haresh Vaswani and Mahesh Vaswani. The suit sought to annul EFCC’s seizure of Stallion Group’s property and challenge the arrest and detention of some its staff.

For now, the Vaswani brothers’ prayers in court have been answered and, once again, they are free to operate unhindered in Nigeria. But they may need to permanently be in court, or on their knees, praying against either business competitors or other Nigerians whose opinions are rabidly anti-Vaswani, influenced by developments since the Vaswani brothers were first booted out of Nigeria in 2003 for alleged similar economic crimes. The negative opinion-moulding has not been helped by Waziri’s virtual scathing castigation of the brothers, last year, as more of economic villains than heroes.

The Vaswani brothers, operating under the Stallion Group brand, have built up quite a conglomerate in Nigeria in over 30 years. They are big-time rice importers and are also into the importation of vehicles, particularly Honda products. In fact, they are the official sole marketers of Honda products in Nigeria, using their company, The Honda Place, which has sales outlets in Lagos, Kano and Abuja. They also import building materials and aside rice, other consumables. But the Vaswanis’ mode of operation has always been bedevilled by an image  problem. Their competitors say the Stallion Group engages in tax evasion, import duty shenanigans and money laundering so much so it can afford to cut prices and stay ahead of them. By 2003 when former president, Olusegun Obasanjo, acting on and convinced by a tome of petitions against the Vaswani brothers decided to deport them, they were alleged to have defrauded the country to the tune of up to N40bn in tax and duty evasion and money laundering. But nothing has been decisively proved against them.

Two businessmen who will be interested in the Vaswanis’ return to Nigeria are William Anumudu of Globe Motors and Chief Ade Ojo of Elizade Motors. In the 1990s, Ojo got his fingers burnt doing business with the shrewd Indians. In 1999, he was compelled to rally a good number of auto dealers, including Toyota, Elizade, Briscoe, SCOA and Leventis Motors to jointly address the media in Lagos, “to bring the attention of the relevant authorities and the public at large, to the various activities and practices of unscrupulous characters in the automobile sector of the Nigerian economy”.

Anumudu is still nursing the thunderbolt of a grief he got in a deal with the Vaswani brothers. His Globe Motors had entered into a partnership deal with the Vaswanis’ The Honda Place, which authorised the former to sell 45 per cent of Honda cars under The Honda Place’s monopoly. Anumudu, in documents he released to the EFCC in 2007, claimed he was unaware that the documents the Vaswanis presented relating to the transaction were cooked. In the end, Anumudu lost  Globe Motors’ N40bn investment in the partnership. It was also alleged the Indians played a fast one on Anumudu by secretly terminating their sub-dealership contract with him after Globe Motors had vastly helped them dispose the huge quantum of Honda products, most of which had become out-modelled in The Honda Place showrooms in Lagos, Kano and Abuja. Globe Motors took the matter to court, stretching it up to the Supreme Court where it lost, on 15 July 2005, to the Indians on technical grounds. But Anumudu, who would not give up, tendered forensic evidence of forgery and alterations in the transaction papers to the EFCC. Waziri was said to have been horrified at what she saw and proceeded to commence another round of intense investigation. But that effort was aborted by Michael Aondoakaa, former Attorney-General of the Federation and Minister of Justice. In a memo to Waziri dated 31 December 2008, signed by Salihu Aliyu, Director of Public Prosecution in the Justice Ministry, Aondoakaa ordered the EFCC to discontinue investigation of the Globe Motors petition, pending when he (the Attorney-General) may feel otherwise. As Aliyu stated to Waziri, “the purpose of the letter is to draw your attention to the legal issue raised and to direct that you suspend further action on the treatment of the aforesaid petition by Globe Motors, pending my further consideration of the issues at stake and further communication with you on the matter”.

Anumudu was undaunted. In another petition dated 7 January 2009, he debunked certain claims The Honda Place presented which accorded it a clean bill of health before the authorities. Globe Motors stated that the three Vaswanis had approached Messrs Williams Anumudu and Globe Motors, seeking to appoint Globe Motors a sub-dealer for 45 per cent of Honda cars imported into Nigeria, since The Honda Place is a sole dealer in the country. “In the bid to convince the court to grant ex-parte injunction to them, The Honda Place altered the date on the agreement,” the fresh petition stated. It added that even investigation by the police revealed that the exclusive Dealership Agreement with The Honda Place, which had 1 April 1995 date on it was forged to deceive both the court and Globe Motors Limited which was supposed to earn a buying commission of Y34bn (Japanese Yen) accruable to its 45 per cent portion. According to Globe Motors, the fraud was never detected early, “and this fraud and forgery were never claimed, canvassed or raised in any of the courts leading to the Supreme Court judgment mentioned in the Attorney-General’s letter.” Anumudu appealed to Aondoakaa that the Vaswani brothers be made to face the full weight of the law for forgery.

In another reaction by Globe Motors, dated 10 January 2009, the automobile company argued that the civil case it filed against The Honda Place Limited was aimed at exposing the alleged N40bn fraud against it and to recover damages. “The issue of fraud was recently discovered and has not been determined by any judgment between the parties in relation to the subject matter,” the company stated.

Anumudu referred to a forensic examination carried out by one R. Onwuzuligbo, a police inspector attached to ‘D’ Department (Force CID), Ikoyi as well as that of E. Kolawole, a Deputy Superintendent of Police and forensic documents examiner, now deceased. In one of the said examination results dated 23 June 2008, Onwuzuligbo submitted, in part, that on “June 18, 2008, I was permitted to sight the original documents. When I carried out an examination of the tip paste portions on folio 32 and 33 of the case file (LD/1643/96), the said pages 32 and 33 are part of the documents headed: “Exclusive Dealership Agreement of Honda Automobiles. With the aid of a microscope, I found the word “April” to be the original word which was super-imposed with tip paste (tippex).”

Kolawole’s earlier report bore a similar result. Part of the report said: “Examination of the document mentioned above carried out with the aid of Video Special Comparator (VSC) and other apparatus revealed evidence of alteration by means of correction fluid, but a look at the back of the concealed portion clearly revealed the word ‘April.’ It is my opinion, therefore, that what was originally in the questioned portion was 1st April, 1995”. Whereas the forensic examinations showed that the deal between Honda Motor Company of Japan and The Honda Place – its Nigerian distributor – was sealed on 25 April 1995, and counter-signed by Sunil, the eldest of the Vaswanis, The Honda Place’s date of incorporation in Nigeria was also curiously the same day – 25 April 1995. So could The Honda Place have entered the sole dealership agreement without being duly registered by the Corporate Affairs Commission?

If Anumudu, Ojo and their like are apprehensive of the Vaswanis’ return, there are others like Alhaji Tajudeen Olalere who are celebrating. Olalere, a director in the Stallion Group, had appealed, on behalf of some other colleagues, to Yar’Adua after Obasanjo exited office. On 12 December 2007, Yar’Adua through his then Chief of Staff, Major-General Abdullahi Mohammed (retd), revoked the deportation. Writing to the Vaswanis, Mohammed stated that “after a careful study of your case as presented and after appraisal and analysis of submissions by the various government agencies and in the spirit of justice, fairness and observance of the rule of law, Mr. President has approved the revocation of the deportation order that caused your deportation from Nigeria in May 2003. Consequently, you are as from now being given an unfettered right to return to Nigeria should you choose to do so, just as all relevant agencies concerned have been informed of this development”. Segun Adeniyi, Special Adviser to the President on Media and Communication disclosed that Yar’Adua sought the opinions of the relevant agencies of government who maintained there was no legal basis for the deportation. According to Adeniyi, “the Vaswanis were neither tried, nor convicted of any crime before they were deported.”

Sympathisers to the Vaswanis’ cause were, however, rattled again last year when Waziri began the EFCC onslaught against the Indians. Again, Olalere wrote to the president: “Our companies have done no wrong. The rice imports in dispute met all the requirements of the laws and Customs’ guidelines on importation and we are ready to prove that in court. Any thought of their deportation in the middle of judicial process will detract from the government’s impeccable due process credential. It will hurt the good prospects of foreign investments in the country and impact negatively on the 10,000 Nigerian families employed under our companies.”

The Stallion Group, established in 1969, operates about 30 companies in Nigeria. The group provides employment for about 10,000 people, directly and indirectly. It also does businesses in 17 other countries spread across the Middle East, South-East Asia and Africa. In the near future, the group hopes to expand its business frontiers to 30 other countries.

Stallion is the controlling entity of a number of leading businesses in trading, industrial, automotive and services sectors of the regional economy. In Nigeria and some other West African countries, the Group is the sole representative and distributor for many auto brands, including Skoda, Honda, Hyundai, Audi and Porsche. Besides sales and services, the group is currently exploring fresh and challenging areas like manufacturing of automobiles and fertilizer production.

Stallion also has its hands in sourcing, importation, warehousing and distribution of mass consumption products, trading in chemicals, rice, fertilizers, sugar, vehicles, building materials, accessories and food items.  It is also into manufacturing of textiles and plastics, and is involved in the assembly of motorbikes and in rice milling. The group is also involved in shipping, aircraft chartering and leasing, banking, insurance and others.

It might be news to some, but Stallion Group is actually involved in the insurance business, providing customers with a wide range of insurance services. The group has a shipping division, an international freight forwarder and customs broker that operates from Lagos in Nigeria as well as Accra in Ghana. The group’s Aircraft Chartering & Leasing provides aircraft chartering and leasing services.

In the area of banking, the old Reliance Bank was a child of the Vaswani Brothers. Following the Central Bank’s reforms in the banking industry which led to the merger of many banks, Reliance Bank teamed up with a few other like-minded banks to form the Skye Bank.

For its motorcycle business, Stallion collaborated with two world-renowned manufacturers of high quality two-wheelers – Suzuki of Japan and Qingqi of China – to supply the Nigerian market with affordable yet durable motorcycles.

—Tayo Odunlami

Tags:  Economic and Financial Crimes Commission, Haresh and Maresh, Stallion Group, Sunil, Vaswani brothers