FG returns NICON, Nigeria-Re to Jimoh Ibrahim

From Lanre Oyetade and Soji-Eze Fagbemi - 12.05.2008

THE Federal Government will today return both NICON Insurance Plc and Nigeria Re-Insurance Corporation to the company’s core investor, Mr. Jimoh Ibrahim, following a settlement by both parties.

Both the Federal Government and Ibrahim appended to the settlement, following a meeting held in the Federal Ministry of Finance between Ibrahim on one hand, and the Attorney-General of the Federation and Minister of Justice, the Finance Minister and the Director-General of the Bureau for Public Enterprises, on behalf of the Federal Government on the other hand, in Abuja last Wednesday.

According to a clause of the settlement contained in a four-page document signed by all parties to the agreement last Thursday, filed at the Federal High Court, Abuja, on Friday, and made available to the Nigerian Tribune at the weekend, the terms of settlement “are irrevocably binding on all parties and their privies, assigns, servants and agents.”

Informed sources said the agreement followed an insistence of President Umaru Yar’Adua that matters of ownership and recapitalisation of the two companies were not in contention and that the companies should, therefore, be returned to the core investor.

The two parties, as a result, entered into a negotiation and resolved that the companies be recapitalised, their boards and managements be reconstituted and then returned to Ibrahim, upon which he would withdraw his court cases against the Federal Government on the issue.

Part of the terms of the 11-point settlement is also that the companies’ reconstituted boards will openly advertise and recruit managing directors and two executive directors for the companies, while the joint shareholders will appoint a ‘Nigerian of proven integrity’ as chairman.

Ibrahim had instituted cases in court against the Federal Ministry of Finance, citing the Minister of Justice, the BPE and the Inspector-General of Police as co-defendants, after the government had forcefully taken over the two companies from him and constituted new boards and managements for them.

President Yar’Adua later intervened, and by a letter dated February 28, 2008, directed that the contentious matter be settled out of court.

The two parties went into a negotiation and resolved that NICON Insurance be recapitalised to the tune of N17.3 billion and Nigeria Re to the tune of N7.3 billion within 60 days in proportion to the equity holding of each party.

Ibrahim has a majority shareholding of 70 per cent in NICON and about 51 per cent of Nigeria Re, while the Federal Government holds the remaining 30 per cent and 49 per cent respectively.

The additional investment is to meet the financing gap and recapitalisation threshold.

While Ibrahim is to contribute N9 billion, the Federal Government’s share of the required additional investment into NICON will be N8 billion, with many market watchers being doubtful of the possibility of the latter’s willingness to undertake such an additional investment from a company it had earlier divested.

When contacted, Ibrahim indicated his willingness to buy out the Federal Government’s share of the additional investment in the event that the latter is not inclined towards reinvesting.

According to Ibrahim, who spoke on the matter on Saturday, “both parties may, however, not have any need to inject additional fund into NICON,” pointing to clause 3(c) of the terms of agreement, which provides for NICON to “invite the auditors to reconfirm the financing gap of N17.3 billion.

“In the event that any of the auditors confirms that a financing gap does not exist, then no party will be required to bring up any additional fund,” he said.

He expressed appreciation to President Yar’Adua, the press and the general public “for the support and understanding,” adding that he had put the matter behind him.