It owes hundreds of workers in Nigeria and Bulgaria their salaries, and it now emerges that Global Steel Holdings Ltd’s Indian hires in Libya are also facing delays in salary payments.
Meanwhile, some two dozen Indian executives in Nigeria have declared a self-imposed “house arrest” to demand full settlement of their arrears.
Feeling the heat? Under Pramod Mittal, who is also brother of steel magnate and Arcelor-Mittal head Lakshmi N. Mittal, Global Steel’s operations have floundered in Nigeria and Bulgaria.
A fortnight ago, the new Nigerian government cancelled Global Steel’s contract to run a steel plant and mine iron ore in the country’s central region that had been issued by the earlier government. On 2 April, Mint reported in a front-page story that the Indian government had been unsuccessfully trying to reach Global Steel promoter Pramod Mittal to answer workers’ claims that they had not been paid.
Under Mittal, who is also brother of steel magnate and Arcelor-Mittal head Lakshmi N. Mittal, Global Steel’s operation has floundered in Nigeria and Bulgaria.
In Libya, salary dues to the 120-odd Indian workers have piled up by some five months, employees confirmed in interviews with Mint.
Because the employees hope to be repaid, they declined to be identified by name. Mittal, who lives in the UK, did not return calls or emails for comment, nor did a company spokesman in Mumbai.
Pramod Mittal and his younger brother, Vinod Mittal, alongside other promoters, also own 45.95% of India-based publicly traded Ispat Industries Ltd, in which Global Steel owns 2.63%. Mittal’s strategy was to take ailing steel plants in developing countries and turn them around; he hired about 600 workers from India, mostly in senior engineering and management roles, to spearhead that effort.
Now, in the Nigerian steel township of Ajaokuta, about 47 Indian workers, the wives of some of them and around half-a-dozen children besides 17 Ukrainian expatriates have been living inside a colony amid tight police security, 15km from the steel plant which was shut down following the government’s 1 April order. They refuse to leave until they are paid because those who have left have not seen any money owed to them. One employee, who reached home in the first week of April, said he had been asking his family to send money.
Employees have not received salaries for two months to 11 months across Global Steel’s operations in Nigeria, Bulgaria and Libya.
On Wednesday evening, scepticism among employees in Nigeria mounted as the management of the company backtracked on a promise made two weeks ago to pay three months’ salaries and an air ticket home. During a meeting with the workers, two of them claimed, acting chief executive S.B. Das Adhikari said that only air tickets can be arranged “under the current circumstances” while the remaining dues will be paid in India along with relocation of jobs.
The offer has been refused by all employees, the two added. Das could not be reached for comment.
Global Infrastructure Holdings Ltd, a group company that signed two concessions to run the Ajaokuta Steel Co. Ltd and the National Iron Ore Mining Co. Ltd in 2004, faces allegations of asset stripping and borrowing $192 million from local banks by pledging company assets. The Nigerian government claimed this led it to cancel the contracts. The company’s third unit in Nigeria, Delta Steel Co. Ltd, was acquired in 2005 amid allegedly favourable treatment by the previous government.
In an earlier press release, Global Steel denied any wrongdoing and said that it has initiated arbitration proceedings in an international court. The company, however, did not reply to questions on exactly how and where it is proceeding with this.
In Libya, where the company was awarded a management contract to run the 2 million tonne Libya Iron and Steel Co. Ltd, salary arrears run into five months, down from seven months after the company paid two months’ backlog in the first week of this month, confirmed a dozen employees currently located in Libya. At least two former employees said they’ve received their payments but only a year-and-a-half after leaving the company.
According to several executives, the Libyan plant is running smoothly and faces little of the troubles at the other plants.
“Because there are troubles in Nigeria and Bulgaria, we are suffering. But they’re (the company is) hurting and said they will clear all dues this month,” said one worker.
Employees in Libya earn $1,500-5,000 a month apart from $400 paid in local Libyan dinar. Workers say the local payments — partly made by the Libyan government — have been made, however.
Employees confirmed that, like in Nigeria and Bulgaria, salaries are made by the company’s office in Dubai, but routed through a dollar account of Bank of India’s Singapore branch before being credited to their bank in India.
Meanwhile, the company also faces accusations that it owes several lakhs of rupees to suppliers in India and Nigeria. Thomas John, managing director of Thejo Engineering Services (Pvt.) Ltd, said Global Steel owes his company Rs35 lakh for installing a conveyor belt at the Ajaokuta plant.
“We have a long-term relationship with one of their group companies which is Ispat Industries, which has not defaulted in payment. We have certain constraints and we are still thinking how to go about it (getting the payment),” said John.
According to an executive at Mumbai-based Transweigh India Pvt. Ltd, which supplied Rs18 lakh worth of goods, including a weighing system, to Global Steel between 2006 and early 2007, the company has received half that amount for the delivery and services. “The last payment was made in 7 April 2007. Since then nobody has been able to help us out or responded,” this person said.
Speaking from Nigeria, one supplier, Emeka, who gave only one name, said he has been supplying machine tools to Ajaokuta for two years and his outstandings stood at $56,000. Another person, Immanuel Anagor, who lives in Onitsha, about 250km from Ajaokuta, said the company owes him between $7,000 and $8,000.
Mint sent three emails to Global Steel with detailed questions about the allegations. Till Thursday night, none had been answered.
The workers from Nigeria and Bulgaria have been writing to various government and embassy officials to exert pressure on Global Steel to pay them. Some of them have also turned to immigration officers and the economic fraud and crime commission in Nigeria for help. At least one person has written to the Financial Supervision Commission in Isle of Man, the tax haven where Global Steel is headquartered.
In two separate letters to Prime Minister Manmohan Singh, Gurudas Das Gupta, general secretary of All India Trade Union Congress, has urged the Indian government to respond.
“Corporate overlords, who have increased in number since the advent of the so-called globalization, should not be allowed to manoeuvre around the rules,” he wrote. “It has sadly become the standard practice to manipulate regulations and then slip through them.”
In an earlier interview with Mint, a spokesman for Ispat denied that Mittal had been absconding or avoiding the Indian government.
Anil Trigunayat, the Indian deputy high commissioner based in Abuja, the capital of Nigeria, said embassy staff on Monday visited the workers refusing to leave.
“We have kept all the authorities in India informed and been in touch with the employees. We have been persuading the management to settle all the dues of the Indian expatriate staff,” Trigunayat said. “Unfortunately, not much progress has been made by the company in settling the long standing dues.”