Dangote accuses Ibeto Cement of tax evasion

Dangote Cement has alleged that Ibeto Cement Company is gaining undue advantage in the importation of cement into the country by evading taxes.

In a suit filed at a Federal High Court sitting in Lagos by its lawyer, Mr. Oluwakemi Balogun (SAN), Dangote Cement Plc is seeking an order of perpetual injunction against the Ibeto Cement Company, IBG Investment Limited, Derima Ventures Limited and their agents from claiming any reliefs, exemption and/or tax waiver under Circular No.BD/12237/S.510/166 of 2007.

In addition, Dangote Cement Plc is seeking an order of perpetual injunction against the three defendants from importing any quality of bulk or bagged cement except as newly approved by the appropriate authority under the current fiscal tax policy stipulation and an order directing the three defendants to repay the sum of $40 million, and N1.9 billion to the Federal Government.

The sums, Dangote Cement Plc contended, are the aggregate of what Ibeto Cement Company, IBG Investment Limited and Derima Ventures Limited fraudulently obtained.

In an affidavit sworn to by one Ekanen Etim, principal officer, Dangote Cement Plc, the company alleged that in 2002, the Federal Government formulated the backward integration policy through which quotas for cement importation were to be allocated based on proven investment by operators in the industry, a qualification Dangote Cement claimed Ibeto and the two other defendants in the suit never had.

Dangote further alleged that having misrepresented its level of compliance with the policy, Ibeto was granted an import allocation of 800,000 metric tons. Following a petition by Dangote Cement, former President Olusegun Obasanjo issued a directive that Ibeto was not allowed to import cement until it provided incontrovertible proof of its investment in local production.

But when the government of the late President Umaru Yar’ Adua succeeded Obasanjo’s, Ibeto, in July 2007, applied for import allocation, falsely claiming to have met the stipulated conditions. It was subsequently granted an allocation of 1.5million metric tons of cement per annum at 5% import duty and tax free under the backward integration policy.

Dangote Cement Plc also alleged that barely four days after the policy was issued, Ibeto Cement Company peremptorily sought a restraining order from the court and deliberately and fraudulently suppressed the fiscal policy regime of 2008, 2009 and 2010.

In line with the consent judgment, the three defendants were to continue to import 1.5million metric tons of cement per annum for the period between 1 October, 2007 and 30 September, 2017. This was in line with the Federal Government guarantee conveyed a letter by the Ministry of Trade and Industry dated 5 June 2002.

By the judgment, the Federal Government was to pay Ibeto Cement Company the sum of $40 million and N1,885,813,592(N1.9billion) being the verified claims by the inter-ministerial committee for losses suffered by Ibeto from the unjustified closure of its bagging plant between December, 2005 and when it resumed operations in October, 2007.

The Federal Government and six of its agencies, which are the other defendants in their counter-affidavit deposed to by one Emmanuel Joel, an Assistant Litigation Officer in the law firm of Kenna Partners, contended that Dangote Cement Plc’s suit was designed to wipe out competition and leave it as a monopoly.

The government said it viewed the cement industry as very crucial to its policy of addressing infrastructure decay in the country and was determined to create and maintain a level playing field. It also averred that Dangote’s claims are anti-competition and designed to control the entire cement industry, leaving Nigerians at its whims and caprices. It therefore considered Dangote’s application as baseless, asking that it be dismissed with substantial costs awarded against the firm.

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It further stated that, after due consideration of the merit of Ibeto Cement’s appeal and upon satisfaction that it had complied with relevant requirements for the granting of import license, former President Yar’Adua granted approval to and conferred certain rights on Ibeto Cement, as contained in the 25 July, 2007 letter by the Federal Ministry of Commerce and Industry.

Ibeto Cement Company, IBG Investment Limited and Derima Ventures Limited, in a counter-affidavit deposed to by Peter Ojih, a senior litigation officer in the law firm of Falcon Chambers, alleged that following fresh efforts to create an oligopoly/monopoly, some industry top guns forced an alteration of government policy contrary to the terms of the letter of 25 July, 2007.

Equally, it described Dangote Cement Plc’s cause of action, being rooted in taxation, as constituting a gross abuse of court process. The presidential and ministerial circulars, Ibeto added, were not made for the sole benefit of Dangote Cement Plc and that its interest was not affected and will not be prejudiced if its application is dismissed.