The Vaswani Brothers Dubious businesses in Nigeria


NIGERIA might not agree with India on certain isms in religion, marriage, or politics.  There is, however, a language they both speak and understand in business and politics. That is bakshish – the Indian word for bribery. And the Vaswani brothers, the Indian owners of the Stallion Group for the past three decades, have used it so effectively that they are now one force to reckon with among the Asian imperialists said to be controlling about 30 percent of Nigeria’s economy – thanks to globalization.

The Vaswani brothers now speak the said language as they face myriads of fresh investigations into their business activities by several institutions, including a National Assembly Committee, the Police, at the Special Fraud Unit, SFU, of the Force Criminal Investigation Department, FCID, States Security Services, SSS, and the Presidency.

These probes, like others, if sincerely and dutifully carried out, may have a devastating outcome, including, but not limited to, the likelihood of deportation of the Vaswani brothers, who have been twice lucky. In the event of this deportation, it will be the third time in eight years. The alleged crime has never changed; its dimension has only got wider.


Sabotaging Nigeria

New Delhi believes that its nationals, like the Vaswanis and other Indians in Nigeria, are actually strengthening the economic tie between the two former British colonies. Mahesh Sachdeva, the Indian High Commissioner to Nigeria, gleefully declared on May 1, 2012, that the bilateral business relationship between the two third-world nations has grown to $16.4billion. But the slew of sharp practices – which appear more like sabotage – trailing Sunil, Haresh, and Mahesh Vaswani, has made the partnership  a lopsided one. Nuhu Ribadu, former chairman of the once dreaded Economic and Financial Crimes Commission, EFCC, knows how tightly these brothers have gripped the veins of Nigeria’s economy. He first ran them out of the country in 2002, but they clawed their way back. ”It is very glaring the nation won’t enjoy much prosperity, especially in the domestic economy, as long as the Vaswanis remain in Nigeria,” the former anti-graft czar once reportedly lamented. Tongues in the presidency are wagging as feelers by way of petitions reaching it allege that between 2002 and 2010, Nigeria lost about N150.8 billion in over-invoicing, waivers abuse, and tax evasion to the group’s import business. But for some hunch, they would have strung Nigeria along again in a  N200 billion car importation waiver proposal and N150 billion in the Badeggi, another rice deal production nearly sealed by the Vaswanis and their Thailand collaborators.
Something else that effectively cripples Nigeria’s economy in the manner they conduct their business is capital flight, which results from repatriation of profits, in dollars, back to the United Kingdom, Dubai, India and other countries where they have businesses. A 2009 study of the Global Financial Integrity estimated that Africa lost $903 billion that year, and about $800 billion annually. Nigeria, according to the report, topped the losers’ list.

NASS Digs in

Maybe the deluge of petitions the seven-man Senate Committee on Privatisation received on the alleged economic crimes of these Indians will be heavy enough to confirm that the brothers hold Nigeria in the jugular. Economic analysts have always argued that it will take some doing for the country to really get industrialized with its current expansionist import policy.  The Stallion Group particularly appears more obsessed with dumping goods on the economy. With its 15 subsidiaries and a conglomerate of fronts in Nigeria, the group imports practically anything from rides to rice. That is one way of keeping Nigeria a perpetual consumerist nation, unlike India that is, to a large extent, known for its booming technology, health exports and manufacturing.

The Vaswani greed may have led to their latest scam in the acquisition of the Volkswagen Nigeria Limited, VON. The Senate is already convinced Nigeria has been short-changed in the sale of the company. Very revealing are the video clips of the Senate Committee’s fact-finding visit to the VON office in Apapa, Lagos, almost six years after sale.

The vast premises of the former German-Nigerian auto plant are now a bonded terminal, one of the three bonded terminals the group owns in Lagos. That conversion of a key driver of an economy into a storage facility is illegal, going by section 1 of the Memorandum of Association of the automobile company.

What further throws more light on the shady deal is the account of a 24-year old business romance gone frosty between Kashim Bukar Shettima, owner of the Barbedos Group. Shettima, in 2006, bought Nigeria’s 35 percent in Volkswagen for N612million, shortly after the brothers, who also bid, were deported. Although they were poles apart after then, the bond remained fairly strong between the Vaswanis and Shettima. “I made every effort to get their return,” he asserted. The brothers had won the bid for N400million in 2003, but a rice importation fraud pitted them against former President Olusegun Obasanjo who had to fling them out of the country. Yet Shettima ensured the Stallion Group was running on autopilot until 2007, when the late President Yar’ Adua, after a business luncheon, brokered by their Nigerian beneficiaries during his first visit to the United States, okayed their come-back.

Their Mafian Style

But the Indians came back with a vengeance. They had registered and incorporated a Barbedos Virgin Island (BVI) in the UK, in February, 2005, with which they later partnered with Shettima’s Barbedos, Nigeria Ltd, as Overseas Partner, to acquire the remaining 35 percent Federal Government stake in the company.

Petitioning the federal government and the National Assembly, Shettima said the Vaswanis cheated Nigeria by short-circuiting due process, under a company called Avolon, to acquire Germany’s 51 percent in Volkswagen. According to presidency sources, it was a breach of the pre-emptive rights of the federal government of Nigeria stated in section 151 of the Companies and Allied Matters Act 1990.

The BVI, however, had their reason. The National Council on Privatisation was aware of the under-hand deal. In a letter dated August 25, 2005, Atiku Abubakar, former vice president and chairman of the NCP, was informed by the Bureau of Public Enterprises, under Irene Chigbue, to waive Nigeria’s pre-emptive rights to acquire the 61 percent shares of the German partners.
While Abubakar knew then that the Vaswanis had been banished from the country, he blinked over the BPE request.

Again the debt of about DM 4 million that VON purportedly owed in Germany was another point in favour of the Vaswanis. They claimed to have settled up Germany, thereby making VON indebted to them. Shettima is, however, strongly of the opinion, in some of his representations to the presidency, that the credit arrangement was fraudulent because the auditing firm that investigated VON debt profile, Robert Ade-Odiachi & Co, said that the debt was non-transferable.

How they Bury Car Assembling Finally

Whichever way the sale eventually swung, the BVI outwitted the Federal Government, as always! And in that case, Barbedos Nigeria, to the Vaswanis Shettima has always known, will be no great shakes. The BVI worked it such that Shettima is now left clutching at 17 percent of the share, right in the glare of the BPE, Corporate Affairs Commission, and other regulators. While he is busy alleging sabotage and fraud, the Vaswanis have turned the VON into a bonded terminal. Nearly six years after, the plant still remains a shadow of itself. Some parts, covered in the Senate Committee video, are empty; other sections, 24 of them, warehouse vegetable oil, rice, fertilizers, and nine other products. There are also about 30,000 cars and hundreds of containers bearing imported goods on the premises. Given the necessary incentives, local entrepreneurs could have been producing these goods to further stimulate the economy. But the Stallion Group feels there is faster and bigger buck to make as an import monopoly,
using such facilities for hoarding imports, than just grinding out ‘beetles’ in Nigeria.
It wasn’t always like this in the Nigerian auto industry. There used to be three car assembling plants, and five heavy vehicle plants in the country. And Obasanjo’s idea of privatizing the VON, the only one surviving, in the 2000s was to revive the industry, and lower the prices. He made his concern known to the 40 industry stakeholders, led by Ade Ojo, chairman of Elizade Motors, who met in Aso Rock on February 1, 2000. The Honda Place, responsible for the automobile aspect of the Stallion Group, was not part of the meeting because of the Vaswani notoriety in the industry. But at least the President came away with some information: that the Vaswanis had been chiselling Nigeria through under-invoicing, underpayment of duties, VAT, surcharge, mischievous classification, and cargo diversion. Other malpractices of the brothers include use of containers to import vehicles, unspecified description of vehicles, and use of obscure ports. The Senate Committee on Industries that dug into the allegations later stated in a report dated February 16, 2001 that Nigeria lost N10 billion to the Vaswanis in the process. They merely got a slap on the wrist at the end of the probe.

Knowing What to Keep

What gives the Vaswanis this unfair advantage is their ability to arm-twist government for concession. They have been enjoying it over the years, especially during the military era. As tight-fingered as Obasanjo’s administration was, it took a lot of resistance for him not to swallow their bait on a rice production proposal. The list of concession the Stallion Group requested include tax holiday, free land, zero duty on agriculture equipment imported, and others. They, however, pushed things too far in 2002 when they colluded with Thailand exporters. In a report ENB/SEC Vol.1, 22 August, 2002, originating from the Nigerian embassy in Thailand, detailed how pre-shipment inspection was used by the Vaswanis to import 1.5 million metric tons of rice, the world highest then, at little return to Nigeria. Shipment, supposedly inspected from Thailand, would come in cleared. According to the Mohammed-Waziri-led probe panel, N800 million was lost to the Vaswani crookedness. They took off, like jack-rabbits, when Ribadu turned on the heat.

When they were allowed back into the country in 2007, they brought along their Thai friends, and coaxed the late President Yar’ Adua into accepting a proposal on rice farming. Nigeria was to plonk down N150billion and give them land. They ran out of luck again when they made another criminal move – clearing a vessel that was yet to set sail from Thailand, a practice those who know them too well told this magazine, is their stock-in-trade. Like a cat with nine lives, they bounced back into the country. And they have been having a swell time in Jonathan’s administration since.

Waivers and tax exemption are lavish.

Between August and December 2010, Jonathan granted the group two waivers. In a letter referenced BO/B10260/TUB/LA/156, the finance minister, through the director of finance, Daniel Joel Tayelaiye, granted Energy Resources Management Ltd, one of their fronts, waivers of import duty, ETL, CISS, and other port charges’ on 250,000 metric tons of imported rice.

Similarly, ERM got a waiver for 250,000 metric tons of vegetable oil in December and another 250,000 of the same commodity by Connotation Concept Nigeria. As at February this year, the Vaswanis secured duty waiver for another 250,000 tons of vegetable oil, enjoying similar concession. To make a kill, ERM has continued to use the waivers all these years when each could only last a year. Investigation shows that they have used the 500,000mt duty waiver which is 20,000; 20 feet containers to import and clear double i.e 1,000,000mt or 40,000; 20 feet containers and most of the cargo and containers are still lying in their various yards in Lagos. Total duty waived was USD 220,500,000 (two hundred and twenty million, five hundred thousand dollars) for the 500,000mt that is N 35.280 billion.

The London Meeting

In their desperation to perpetuate themselves in the VON deal, the Vaswani brothers split themselves to not only monitor but to also trail the movements of some top government functionaries that are close to President Jonathan

They managed to trail two top Presidency insiders first to Geneva, Switzerland and then London. It was in London that they finally sealed the deal that robbed Shettima’s Barbedos Nigeria Ltd of his well deserved stake in VON.

With some other close aides of Mr. President in their pockets, the brothers moved in on full assault of Shettima’s business, sealing off his warehouse premises with containers in full glare of the public thus preventing him to take delivery of his goods while they kept their own warehouses busy; loading them with imported items such as rice, fish, iron rods and brand new cars to mention a few.

To seal the fate of Shettima and to prevent the expected backlash from the Senate committee on Privatisation, as regard the VON matter, the brothers with the help of the President’s close associates sought the services of a two time former Attorney General and minister of Justices. Kanu Agabi (SAN) to seek relief from a Federal High Court in Abuja. Part of the relief was to restrain the Senate Committee and the EFCC from hindering their illegal operations in the country and also to foil any attempt to rescind their ownership of VON in spite of their non-performance.

Hands in Gloves

These businessmen have all the liberties because when they speak bakshish, people listen.  It will surprise few Nigerians that the Vaswanis are being piggybacked into the country, after every deportation, by those that ought to keep an eye on them. There have been allegations that certain ministers, including a highly placed ex-NAFDAC official, are sympathetic to the family. And Mohammed Adoke, attorney-general of the federation, along with his predecessor, Michael Aondoakaa, isn’t exactly exonerated. The two kept the EFCC on a short leash anytime the commission is after the Vaswanis. Adoke, for instance, ensured that the EFCC looks to him for legal direction whenever taking a suspected economic criminal to court. For instance, a summary, with a reference number HAGF/SH/2010/Vol 1/32, was written to and received by the presidency on May 25, 2010. There the Attorney General of the Federation, AGF, recommended that the security agencies should respect court judgement granting the Vaswanis relief against being deported or arrested.

Adoke further counselled that the Federal Government should also honour part of the court judgement which awarded a compensation of N5billion to the Vaswanis. Adhering strictly to this legal advice, President Jonathan reportedly released the said sum which however found its way into the pockets of prominent Nigerians who are business allies of the Vaswanis. National Standard investigation revealed that between 75 and 80 percent of the hefty compensation was shared among these highly respected Nigerians.

Also zealous about shielding the Stallion Group and its owners are certain sources, mostly chiefs of staff, within the presidency. Major General (rtd) A. Mohammed, former chief of staff to Yar’ Adua, used to play the mother-hen whenever the EFCC hawk swooped on the Vaswanis. He nearly pleaded for them in his letter entitled Re: Revocation of Deportation Order to the EFCC, requesting the commission to review “these facts (earlier listed) with a view to attaining justice to all parties”. Similar letters, in an intercessory tone, were sent to the ministry of interior and the office of the president to save their scalps. The current chief of staff, Mike Oghiadomhe, as revealed in some documents available to National Standard, equally watches out for the Vaswani interest in Aso Rock. To pave way for their last return, the big shots at the presidency argued that the return of the Vaswanis would assist the EFCC conclude it’s investigations into allegations of gross economic crimes levelled against them. Checks by National Standard at the anti-graft agency showed no sign of any investigation since their return. “That is a no-go area,” said a senior operative of the commission who did not want his name in print. He however added that the new leadership of the EFCC can only dare the Vaswanis if Mr. President distances himself from the Indian-born businessmen. Going by some kind of relationship tree, this magazine discovers it is just about six degree, or less, separating Atiku from the Indians. They are familiar strangers. Their path might have crossed when the former vice president was a senior officer with the Nigeria Customs Service. And the familiarity could only get better. Since their interests are always well represented in Aso Villa, they drop in on any President any time. They can flout their orders, too like they did NCP chairman, Vice President Namadi Sambo’s.

According to presidency sources, they cut the second citizen of the country dead when he invited the warring VON shareholders for negotiation. And Jonathan can’t hammer them either. He’s morally bound to give their waivers proposal a favourable nod. The Stallion business was said to be among the deep pockets that bank-rolled Jonathan’s campaign last year. That the BPE and CAC overlooked the brazen forgery of seal, an allegation against the BVI in one of the representations to the presidential committee of enquiry is more proof the Vaswanis are omnipresent. It worries Industry watchers. “The report was a confirmation of the earlier letter written to the CAC by the BPE exonerating the Vaswani brothers and BPE of any wrong doing,” says one of the concerned Nigerians watching the development closely.

Security Allies

The biggest fan of the brothers is the Nigeria Customs Service, NCS. The agency has never found any fault in the operations of the group over the years. Even when the House Sub-Committee on Customs, headed by Hon. Gummel Abdullahi, ordered the NCS to probe the company, following a petition from the Automotive Marketers Association of Nigeria, the result, as contained in a report marked NCS/INV/08/00/AB/HQ, gave The Honda Place a clean bill of health. The Customs was also involved in the Thailand importation scam where a shipload of rice yet to leave the exporting country was already cleared in Nigeria. Although the Vaswanis hoard their imported goods in an assembling plant, the NCS still approved of it as a bonded terminal.
National Standard can reveal that the Vaswanis in connivance with some Customs Officers imported 1,000,000mt (40,000 20ft containers) and the duty lost to the country on this transactions amounts to N 70.56 Billion (seventy billion, fifty six million naira). On the various criminal manipulation of the economy, the Indians out of which carry British passports, will be carting out a total income of N6.981 trillion (six trillion, nine hundred and eighty one billion naira). The sales and import were in the name of Masco Agro Allied Industries Ltd (Stallion wholly owned subsidiary).

One can’t just dismiss how much the chummy relationship between the NCS and the Vaswanis has cost Nigeria. In 2007, former Finance Minister Esther Nenadi Usman told Nigerians that the NCS was milking the country dry.

The Nigeria Police, which often come under serious attack for their corruption profile, appear not to be willing to miss out of the action. While the case of shareholding dispute is in a Federal High Court in Abuja, the BVI used its influence to purportedly seal-up the VON premises, especially the part that belongs to their rival in the VON ownership battle, with police officers.

The Vaswani controlled warehouses, however, remain a beehive of loading and off-loading. As of May 4, months after the Senate Committee mission, the police were on guard as over 150 cars, out of the several thousand parked on the Apapa bonded terminal were driven out to another of the Stallion Group terminals in Lekki, beside Mercedes Benz, in Lagos. The security agencies are believed to always be their friends.

The Vaswanis, this magazine learnt, used them to cow the DANA Group and other competitors when Tafa Balogun was Inspector General of Police, and also due to overbearing influence by former VP. “So it would be music to the ears if the cops didn’t help the Indian business mafia cover their track,” another source wondered.

The Senate Committee would have to follow-up on its probe to rescue the economy from the Vaswanis. Many believe something, hopefully, may give at the end of ongoing investigations as President Jonathan has reportedly warned that if there is any established fact in the allegations of gross economic crimes being perpetrated against the country by the Vaswanis, they may not be third time lucky.

The Senate Committee is already asking for the Share Purchase Agreement to be rescinded and re-advertised for non-performance. The report also ordered the EFCC to examine the sleight of hands used to cheat Nigeria out of its share, and the boardroom war raging among the VON shareholders. While the tone of the committee findings now may sound harsh, Sunil, Haresh, and Mahesh fear no evil.

They’ll get justice, and will be safer as soon as the EFCC is liquidated, going by the recommendations of the Orosanye Committee on Public Service Reforms. Or the panel report could also disappear -like thousands of others before. For how long will those who have the responsibility to protect and grow local content (including the Ibrahim Lamorde-led EFCC) in Nigeria’s efforts at becoming one of the top 20 industrialised nations of the world by
the year 2020? The British, Indian and UAE authorities and Nigeria’s cannot claim ignorance of these economic abracadabras being practiced by the Vaswanis; only time will tell whether they would be brought to justice this time around.

Uncanny savvy

On good authority, National Standard gathered that the brothers have desisted from coordinating their operations from their registered offices. The Indian staff in the Stallion Group, sources revealed, carry the data for importation, supply and sales in their lap tops from where they control the movement and delivery of these items.

The reason behind this change of operation is none other than the need to elude the officials of the EFCC who had a well structured raid on the Vaswanis in 2002. To avoid a repeat performance of the well orchestrated clampdown, the brothers resorted to keep every business detail and operations mobile. The bank details are said to be also stored in these laptops to the extent that no matter the invasion by security agencies no incriminating information will be found. The strategy is also made easy by the fact that they have their main operational bases in their homes to which they hardly allow anybody access. They are again believed to have a highly restricted office.

Sources within the banking sector also disclosed to this magazine that about N130billion has been borrowed by the Vaswanis from three banks (names withheld), using VON premises as collateral while original title documents to the properties are with Kashim Shettima, their rival, so how did they get the mortgage and perfect it big? This may just be another case of high level forgery. National Standard Intelligence will continue investigations to establish the authenticity of these fresh allegations.

Source (National Standard Magazine)




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