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EFCC to probe N16.4billion ALSCON asset loss

By on April 21, 2013

The controversy surrounding the management of the Aluminium Smelter Company of Nigeria has assumed a different dimension as BFI Group is set to invite the Economic and Financial Crimes Commission to investigate the N16.4bn loss in the company’s asset.

Chairman of BFIG, Dr Rueben Jaja, confirmed the development to our correspondent in Abuja on Friday during an interview.

Jaja said, apart from instituting a $2.8bn suit against RUSAL, the Russian firm currently managing the plant, the EFCC would also be invited to look into the books of ALSCON.

“We will soon be inviting the EFCC to investigate the mismanagement of the plant,” Jaja said.

He said BFIG was aware that the company was being mismanaged, adding that, “It is obvious the money was not used in upgrading the organisation, otherwise the value of ALSCON should have been growing.”

He also said, “It is clear ALSCON is in severe financial difficulty. That explains why production was shut down recently and workers had to be sacked, since there was no money to pay salaries, pay for gas and the repair of the machines and power generators.”

The Supreme Court had in a judgment of July 6, 2012, ruled that the Bureau of Public Enterprises should return ALSCON to BFIG, an American company.

The Russian company had been earlier disqualified by BPE from the financial bid process after it submitted a conditional bid in contravention of the bidding guidelines.

Despite the disqualification of the firm, the Federal Government under former President Olusegun Obasanjo decided to give ALSCON to RUSAL, thereby setting the stage for the preferred bidder, BFIG, to take BPE to court.

ALSCON, which has been managed by the Russian firm for about five years now, is currently facing liquidity crisis owing to huge liabilities in its accounts.

The company’s financial statement, covering 2007 to 2011, which was audited by KPMG Professional Services, showed a sharp decline in the company’s total asset value.

The audited five- year account, a copy of which was obtained by our correspondent in Abuja, put the total value of the company’s net assets as at December 31, 2011 at N14.574bn.

The December 2011 figure of N14.57bn shows a huge decline of N16.40bn or 53 per cent over its total asset value of N30.97bn in 2007.

An analysis of the company’s five year account between 2007 and 2011 showed that the aluminium firm lost N5.79bn of its asset value in 2008; N5.83bn in 2009; N4.50bn in 2010 and N274m in 2011.

Apart from the decline in asset value, the account showed that the company had suffered persistent losses within the period under review.

It recorded a loss before tax of N5.79bn in 2008; N5.83bn in 2009; N4.50bn in 2010 and N274.25m in 2011.

Apart from the loss, KPMG in its audit report of ALSCON identified some discrepancies in the way some items were handled in the account.

For instance, the report said, “Included in stocks are storeroom supplies carried out at N5.9bn as at 31 December, 2011. We were not provided with sufficient appropriate audit evidence as to the need to recognise a provision for stock obsolescence, irrespective of the fact that some of the items have remained unused for several years.

“We were also unable to carry out alternative audit procedures to obtain sufficient appropriate audit evidence due to the inability of the company to determine stock obsolescence. Consequently, we were unable to determine whether any adjustment to this balance is necessary.”

KPMG further stated that it was provided with sufficient appropriate audit evidence about the physical quantities of butts. We were also unable to carry out alternative audit procedures to obtain sufficient appropriate audit evidence due to the inability of the company to physically verify the quantity of butts.

“Consequently, we were unable to determine whether any adjustment to this balance is necessary,” he added

 

 

 

[Punch]