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HomeOpinionHow Saraki traded Kwara’s interest away in Kwara Mall Project

How Saraki traded Kwara’s interest away in Kwara Mall Project

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By Kwara Must Change

The magnitude of destruction done to Kwara State by the defeated dynasty, led by Dr. Bukola Saraki cannot be over emphasized.

As a matter of fact, one may simply say that, Kwara State may never fully recover from the destructiveness of the dynasty and this is the conclusion we came to, after going through what transpired in the Kwara Mall Development Project.

Truly, we have heard and seen many of the atrocities of the defeated dynasty in Kwara State such as the Shonga criminality, Cargo mismanagement etc.

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However, the magnitude of economic sabotage of state interest, perpetrated by the Saraki led dynasty in Kwara Mall project is not only mind blowing; reversing such massive sell out may only remain in the realm of imagination, at least for now.

The idea of having a modern shopping centre in the likeness of the palms shopping mall in Lagos State was said to have been conceived sometimes in the 2009.

To put thought to action, Kwara State government signed a memorandum of understanding with a private company to jointly carry out the development of the project now known as Kwara Mall and a company was incorporated to that regard, named Kwara Mall Development Company Limited(Kwara Mall).

Kwara Mall was expected to be constructed within a land mass of approximately 30,240 square meters along fate road, GRA Ilorin and the incorporation of Kwara Mall as well as the execution of the mall project was agreed to be run as a joint venture company between Kwara State government and the private company.

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Following the success of otoge political revolution and the subsequent takeover of government by Mallam Abdulrahman Abdulrazaq as the executive governor of Kwara State, the governor set up a committee led by Senator Makanjuola Ajadi to investigate the status of state owned assets and Kwara Mall was one of the properties investigated.

In the findings of the committee, critical questions were raised about the status, establishment and management of Kwara Mall project.

According to findings of the committee, in October 2009, Kwara State government executed a memorandum of understanding with the private company with the aim of promoting a company to be called Kwara Mall Development Company Limited. The company was agreed to execute, manage and own the project called Kwara Mall.

In the agreement signed by both parties, Kwara State government was to transfer the ownership of 30,240 square meters land to Kwara Mall and to this end, issue a certificate of occupancy in the name of the company at no cost to the private company. The government was also to bear the cost of all approvals for the project, including but not limited to consent fees, registration fees, stamp fees, capital gains tax and every other administrative charges relating to the execution of the project.

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In addition to this, Kwara State government was also to inject a cash payment of N500 million into the project as take off.

The private company on the other hand was to have the exclusive role as the developer and manager of the project and to this end, the company shall be responsible for the development and management of the mall project. The company is to cause the incorporation of Kwara Mall. It was to bear the cost of appointing concept architecture and of the design of the project. This cost was to be paid back to the company by Kwara Mall upon incorporation.

Furthermore, the company was to secure necessary financial funding either by way of equity or debt for the mall project and it was to also secure all anchor tenant in the mall, which it has done to include Shoprite, The palms, Chronicle, Heatlab, Domino Pizza, Kfc and others.

It is important to explain that, the land transferred by Kwara State government to the company and other associated fees are valued at 17% of Kwara Mall, while the N500 million take off capital contributed by the state was valued at 13% of the share, making the shareholding of the state in Kwara mall to be 30% only.

However, the shares of the private company which only provided skills stand at 70% of the issued capital, which is strange and questionable.

Again, as part of the agreement, if at any time, the private company feel like acquiring the shares of Kwara State government in the business, the company reserve an exclusive right to acquire the entire shareholding of Kwara State, but that 20% of the shareholding will be acquired at a price equivalent to the initial investment while the remaining 10% of Kwara State government share, would be acquired by the company at fair market value agreeable to the private company.

Additionally, it was also agreed that the board of directors of Kwara Mall should not be more than 7 at every point in time, out of which Kwara state is entitled to nominate only one member, who cannot be the chairman, executive director (operations) and the executive director (finance).

Furthermore, it was equally agreed that in event of a change in administration of the state and the new governor is not comfortable with the above arrangements, and seek to end same, then at the choice of the company, Kwara State shall immediately be bound to acquire the company’s share in Kwara Mall at a price agreeable to the company or in the alternative, the company shall immediately be entitled to acquire all of Kwara State’s share in Kwara Mall at a price only agreeable to them.

To say this differently, Kwara State government, which offers land with all its extra costs including Certificate of Occupancy and N500million cash got only 30% of Kwara Mall share, while the private company which had no kobo, apart from its services got 70% shares and in event of the need to acquire each other, the company has the right to acquire government share at the original rate, while government can only acquire the company’s shares at a price only agreeable to the company. This is apart from the company nominating 6 out of a possible 7 board directors.

What this means basically is that, Kwara State government is not the owner of Kwara Mall. The name, Kwara Mall Development Company is actually a misnomer and it was crafted to deceive Kwarans to think the project is owned by the state.

According to Sen Ajadi committee, Kwara state was deliberately and without financial justification made a minority shareholder in Kwara Mall in an unconscionable Joint Ventures arrangement and shareholders agreement that are suggestive of a deliberate compromise of the state interest by state functionaries, case in point is the magnitude of shareholding allocated to the company without justification, the provisions allowing the company to determine whether to be bought out or to buy Kwara State out at a price agreeable to them in the event that a subsequent government in Kwara seek to end the joint ownership of Kwara Mall.

The actual contribution of the private company to the project cannot justify the 70% shareholding allotted to her in the project.

In the MOU between the company and Kwara State government, 60% shares of Kwara Mall was allocated to the company as sweat equity, which is unjustifiable, as such cannot be supported by specific ascertainable and quantifiable ‘other than cash’ contributions made to the mall project which are of such magnitude as to attract a whopping 60% shareholding allocation, especially when compared to the contribution by Kwara state government, comprising the value and cost of allocation of the land and N500million cash, which only attracted 30%.

It is a known fact that in standard practice, the norm in valuing contribution other than cash as sweat equity for a non-pioneering project or non-cash contribution that is not intellectual property is in the range of 5 to 10% shareholding. Therefore, the allocation of 60% shareholding as sweat equity is not only unjustified and questionable, it is also unacceptable and a calculated attempt to swindle the state government.

It is therefore important to conclude by saying that, many believe that the lopsided arrangement against Kwara State government in the Kwara Mall project was done deliberately by the former state actors, because they not only have vested interest in the private company known as Parsianas Investment Limited, but shall actually channel state interest to private pocket through second hand and behind the scene dealing with the company.

How Kwara State government would go about this is yet to be known.

Kwara Must Change

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