Report: How Pramod Mittal, Global Steel owner, got a bailout with $496m Ajaokuta settlement claim

Pramod Mittal, chairman of Global Steel Holdings Ltd (GSHL), is effectively getting a helping hand — and a possible way out of financial distress — from Nigerian taxpayers, Bloomberg is reporting. 

GSHL, with headquarters in the United Arab Emirates (UAE), entered the Nigerian steel industry in 2004, acquiring five major concessions and share purchase contracts, during the Olusegun Obasanjo administration.

The agreement included an arrangement to first manage and later buy the Ajaokuta Steel Company Limited.

However, the contracts were revoked in 2008 after the federal government accused the firm of asset stripping.

In 2013, Smart Adeyemi, a lawmaker from Kogi state, had said the Goodluck Jonathan administration — which was in power at the time — recovered the Ajaokuta steel mill “without any attendant financial obligation whatsoever”.

Years later, after the Muhammadu Buhari administration took over in 2016, the federal government approved the execution of the modified concession agreement with Global Steel, which allowed the foreign firm to retain the Nigerian Iron Ore Mining Company (NIOMCO) in Itakpe.

Three years later, the Buhari administration reportedly backed out of the agreement, leading to a legal battle involving both parties.

In September 2022, Malami announced that the federal government had finally resolved the “long-standing contractual dispute” with Global Steel over the Ajaokuta Steel Company Limited (ASCL) and the NIOMCO concessions.

Malami was said to have modified the terms of the deal to take back the mining firm and award a payment — raising questions as to why the federal government decided to pay the settlement claim shrouded in controversy.

He said instead of paying the original claim of $5.258 billion by GSHL over the termination of the concessions by the Olusegun Obasanjo administration, Nigeria had secured a 91 percent reduction and would pay $496 million only.

Malami would later be questioned over five suspicious deals, including the $496 million payment.

PRAMOD AND A STRING OF ABANDONED PROJECTS 

According to Bloomberg, Pramod, who is a younger brother to billionaire Lakshmi Mittal (owner of the ArcelorMittal SA conglomerate), has a string of abandoned factories and a trail of unpaid debts attached to his name.

Five years ago, the report said, Global Steel was put into liquidation over $167 million owed to Moorgate Industries Ltd.

While a UK court weighed Moorgate’s request to declare Pramod personally bankrupt three years ago, Mittal held out the prospect of a payout from Nigeria to clear his debt, the report added.

“The judge was unconvinced at the time, but the settlement subsequently reached with Nigeria last year now looks like the 67-year-old’s best route out of insolvency,” the report reads.

Still, while payments from the Nigerian government have reached GSH’s liquidators, “as of October 4”, Moorgate had yet to see any of those funds despite having asked for them, court documents quoted by Bloomberg said.

With Pramod’s bankruptcy winding its way through English courtrooms, President Bola Tinubu took office.

“Pramod’s steel ambitions took him not only to Nigeria, but also to Bosnia, Bulgaria, Libya, Zimbabwe and the Philippines where his companies ran up nearly a billion dollars in debts,” Bloomberg said.

PRAMOD’S INVOLVEMENT

Pramod had signed two agreements with the Nigerian government — in 2014 and 2016 — that would have seen his firm retain the right to manage the mining company — but receive no payout.

Since April 2021, GSH’s Nigerian unit — the settlement’s beneficiary — has been owned by a Mauritian entity named Luminous Star Ltd, classified as defunct for a decade and with a director who was formerly a GSH employee. 

While Pramod ceased to be a director of the Nigerian firm in late 2020, his son sits on the board, the report noted.

In January, Lai Mohammed, former minister of information, had said the government paid $446 million to GSH’s local unit in multiple installments under the settlement.

Quoting reports filed by the company’s liquidators, Bloomberg said King & Spalding LLP, the law firm hired by the Nigerian subsidiary for the mediation, made six transfers from these funds to GSH’s account, totalling £219 million ($272 million) between October 2022 and February 2023.

On November 15, 2023, Shuaibu Audu, minister of steel development, said the government would facilitate the completion of the Ajaokuta steel company.