The newly formed merger of United Company Rusal has been ordered to face trial for fraud and unfair competition claims in a Nigerian court, according to the ruling of the US federal appeals court issued on March 23.
Rusal, which this week closed its merger with SUAL and Glencore's alumina assets, issued a deal closure announcement on March 27. The new company combines 4 bauxite mines, 10 alumina refineries, 14 aluminium smelters and 3 foil mills. It has estimated sales revenues of approximately $12 billion, and s production capacity totalling 4 million tonnes of aluminium and 11 million tonnes of alumina. Neither Rusal nor SUAL, which were privately owned in their pre-merger forms, has issued a public financial statement. The new controlling shareholder is Rusal owner, Oleg Deripaska. The board chairman is former owner of SUAL, Victor Vekselberg.
Vekselberg claimed the merger "will promote a world class corporate governance structure, enabling us to meet the highest international standards and strengthen our relationships with our customers, partners, investors and employees in the regions where we operate around the world."
The first test of this policy has been ordered by US federal judge William Conner in a 22-page ruling. In exchange for agreeing to dismiss the lawsuit brought against Rusal in the US court, Conner's judgement imposes an unprecedented set of conditions on Rusal. Ruling that the complainants against Rusal, a Nigerian-American group known as BFI Group, have an "adequate forum" in the Nigerian courts, he ordered dismissal of their claim in the US. But the judge made this "condition[al] on defendants [Rusal] submitting to the Court within fourteen days of the entry of this Opinion and Order a stipulation with respect to the claims pleaded in Plaintiff's Complaint agreeing to (1) submit to jurisdiction and waive service of process in a Nigerian court; and (2 waive any statute or other law of limitations that would otherwise apply under Nigerian law to any action hereafter brought by plaintiff in a Nigerian court."
Rusal has won technical dismissals from US courts before on the legal ground of forum non conveniens; meaning that courts of other countries are available to try the claims. This is the first time the US court has obligated Rusal to accept trial in a foreign court, without technical objections or delay.
A Rusal statement, posted on the company website, claimed "RUSAL has always believed that this case is entirely without merit and now welcomes the court's decision." Judge Conner's decision, however, did not rule on the merits of the case. BFI Group (BFIG) lawyer Jimmie Williams and chief executive Reuben Jaja claimed victory, telling Mineweb they are "pleased with Judge Conner's decision".
BFIG has already litigated against the Nigerian government's privatization award of the Aluminium Smelter Company of Nigeria (ALSCON), charging the company with corruptly violating Nigerian law in overruling BFIG's high bid, and favouring Rusal's low bid. Jaja told Mineweb the US case is quite different from the pending Nigerian case. Inter alia, the first charges Rusal with "conspiracy to commit fraud". The pending Nigerian case is against the Nigerian government. Jaja added that final closing argument in the latter case was heard on February 19; a ruling is expected within 90 days.
Mineweb has reported in detail on the claims and counter-claims in the case, involving Rusal's takeover of the relatively new, but idle Nigerian smelter with capacity to produce about 200,000 tonnes of aluminium per annum
The core of BFIG's case, according to the text of Judge Conner's ruling, is that Rusal conditioned its takeover bid with a series of demands that were illegal under Nigeria's privatization law, but were granted to enable Rusal to take over the plant without making the required payments to the government; relieved Rusal of the obligation to pay Alscon's debts, mostly for p
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