EMI Rejects $120m Fraud Allegation Against Its Co-founder

The Energy and Metals Industries Limited (EMI) has rejected allegations that its Co-founder, Dr. Innocent Ozoemena Ezuma, defrauded a foreign investor of approximately $120 million in connection with mining and power development projects in Nigeria, describing media reports on the matter as misleading and lacking the necessary commercial, contractual and regulatory context. The company, in a statement issued in Abuja, said the allegations could not be properly assessed without examining the investment agreements executed by the parties, the corporate structure of their business relationship, project development activities and the judicial proceedings arising from their commercial dealings. EMI maintained that its relationship with the foreign investment partners was established through formal investment and corporate agreements designed to facilitate mining, energy and industrial projects in Nigeria, rather than a personal financial transaction involving alleged fraud. The company said the relationship dated back to a Memorandum of Understanding (MoU) executed on March 23, 2008, in Kyiv, Ukraine. According to EMI, the agreement provided for the establishment and development of the company in Nigeria, with a mandate to acquire mineral exploration and extraction licences and develop facilities for mineral production and processing. It said the MoU contemplated an investment portfolio of up to $1.5 billion, with approximately 20 per cent of the proposed investment to be contributed by the investor through interest-free credits, while the balance was expected to be sourced from independent financial institutions. The agreement also provided for equal participation in the company’s capital by the authorised representatives of the founders, it added. EMI said the arrangement was subsequently complemented by a Corporate Agreement dated January 30, 2013, which provided for the development of a coal-fired power generation project at Itobe, Kogi State. It argued that the agreements established a corporate investment and project-development framework involving shareholder participation, capital commitments and the development of strategic industrial assets in Nigeria. Consequently, the company disputed the portrayal of the relationship as a straightforward case of personal indebtedness or misappropriation of funds by Ezuma, insisting that the allegation involving approximately $120 million should be examined against the executed agreements and relevant financial and corporate records. On the development of the mining projects, EMI said suggestions in some media reports that the projects were never implemented or that nothing substantial was achieved overlooked regulatory, technical and project-development milestones recorded over several years. It disclosed that the Federal Ministry of Mines and Steel Development, now the Ministry of Solid Minerals Development, granted reconnaissance permits, exploration licences and mining leases for the exploration and mining of copper, gold, lead and zinc. According to the company, the mining lease became effective on September 10, 2014, and remains valid until September 9, 2039. EMI also said extensive exploration and technical resource evaluation activities were undertaken at its Kogi and Zamfara projects, culminating in technical reports, mineral resource estimates and pre-project feasibility studies. At the Kogi project, the exploration programme included 57 boreholes covering a total of 6,025 metres, 11 trenches covering 970 metres and 78 test pits, in addition to geological mapping and geophysical surveys. In Zamfara, the company said activities included geological mapping, 385 soil geochemical samples, geophysical surveys, trench investigations and shallow prospect workings, which produced a preliminary inferred gold resource estimate. It added that the exploration programmes underwent technical reviews by SRK Exploration Services of the United Kingdom and CSA Global of Australia, including assessments of sampling procedures and quality assurance protocols. The company, however, acknowledged that a 2015 study identified additional drilling, metallurgical testing, environmental assessments and full feasibility studies as necessary steps towards a final investment decision. On the power project, EMI said Itobe-1 Coal Power Limited obtained a Nigerian Electricity Regulatory Commission (NERC) licence for the development of a 300-megawatt on-grid coal-fired power generation project. The licence became effective in December 2014 and was subsequently renewed until September 29, 2031, the company stated. EMI said the mining and power project milestones demonstrated that the investment relationship progressed beyond the conceptual stage and involved tangible corporate, regulatory and technical processes. The company also addressed allegations concerning the purported diversion of investment funds to companies and individuals allegedly associated with Ezuma, including members of his family. It disputed attempts to present the allegations as established facts without a comprehensive examination of the transactions, their commercial purposes, the entities involved and the supporting financial records. According to EMI, business or family associations do not, in themselves, constitute evidence of financial misconduct, adding that allegations concerning specific transfers should be supported by verifiable evidence and assessed within the appropriate corporate and commercial context. The company further addressed references to the Jos Steel Mill in media reports concerning the allegations. It said its transaction team led the acquisition of the assets of the defunct Jos Steel Rolling Company Limited in 2005, before the investment relationship with the foreign partner was formalised in 2008. EMI stated that Zuma Steel West Africa Limited acquired the assets from the Federal Government following a court-supervised liquidation process guided by the Bureau of Public Enterprises and executed the Asset Purchase Agreement. On the legal dispute, EMI disclosed that it was a respondent in London Court of International Arbitration (LCIA) Arbitration No. 194203, Tooley Property Company Limited v. Energy and Metals Industries Limited, one of five arbitral awards dated January 17, 2020. It added that enforcement applications were separately filed in Suit Nos. FCT/HC/CV/1811 to 1815/2022, seeking recognition and enforcement of the awards, including the one involving EMI. The company and its associates, it said, had opposed the applications. The company also acknowledged the statutory responsibility of the Economic and Financial Crimes Commission (EFCC) to investigate allegations of financial and economic crimes, adding that it did not seek to obstruct any lawful investigation. However, EMI maintained that allegations under investigation should not be presented as established findings of guilt, noting that Ezuma had not been convicted of any offence in connection with the allegations.