I know Transcorp is a newbie big conglomerate in Nigeria. And I know Seun (admin) has created a thread about this company. But I read this write up from The Guardian, and much as the writeup may not rhyme well with some people, I want to take it as[b] a true picture of this company[/b]. This is not because I'm one of the anti-OBJ fans, but because the story as presented by the newspaper firm looks convincing and logical enough - except of course someone has contrary convincing info.

If you're not one of those who likes reading long posts, please back off.


The Truth About Transcorp

It is projected as the Nigerian Chaebol, one of the giant corporations, such as Daewoo. Ssangyong, Hyundai and Co. that saw to South Korea becoming a developed economy in less than half a century. But the Transnational Corporation Nigeria PLC would appear to have started off with a lot of controversy, scepticism, even doubts, in the minds of the investing Nigerian public whose good will it can do a lot with. So, can it play Chaebol?.

Mr. Tajudeen Fola Adeola has always come across as the poster boy of the Nigerian corporate establishment. Handsome and urbane, Adeola came into limelight in the early 90's when he became the founding managing director of the very successful Guarantee Trust Bank (GTB), one of the new generation banks that broke the staid protocols of the old order to impose on the banking public new methods that have seen the fortunes of banks soar. Adeola was to re-write the rules of engagement, as it were, in corporate partnership in these shores of business treachery, when he stepped down about seven years ago for his friend and deputy to take over as MD/CEO of GTB. In doing so, Adeola presented himself as a man to be trusted to keep agreements, one who placed higher premium on corporate progress than self interest.

There is no doubt that it is this exemplary display of business integrity and personal credibility that has propelled Mr. Adeola to the top and made him to remain an influential player in the Nigerian political economy, since his retirement from GTB. When, therefore, news came over a week ago that Adeola had been relieved of his post as the Group Managing Director of TansCorp Nigeria PLC, and, barely two days after, as the chairman of the nation's Pensions Commission, the development was bound to raise eyes in many quarters. What really happened?

Transnational Corporation of Nigeria Plc (Transcorp). Indeed, since this particular company graced the nation's economic clime in November 2004, it has been viewed with a lot of suspicion by Nigerians. Even though its avowed mission is plausible, the manner of its emergence and its activities up till date, have continued to throw up subdued controversies.

But just what is it all about? What is the mission of this company in a country where the field of entrepreneuership in Nigeria is littered with the carcasses of businesses founded and influenced by government. Said Mr. Nicholas Okoye, a board member, in a telephone chat with The Guardian: "Transcorp was set up to take advantage of the reforms of this administration and play a role in the private participation in the Nigerian economy."

He explained that the nation's private sector could not play such expected role effectively without setting up a vehicle that could mobilise capital, both locally and internationally, stressing that the local firms that exist today do not have the wherewithal to do this."

He pointed out that the only companies available in the country with such financial muscles are Shell, NB PLC, Uniliver etc. and that "they are all foreign-controlled and the dividend accruing are taken out.

"So, the only way we can get it done is to get the local entrepreneurs and get the centre together and mobilise the capital as a group."

Okoye also disclosed that the company planned to invest in five key areas of the economy, namely, Technology, Energy, Agriculture, Hospitality Business and Trade. He revealed that Transcorp had decided to invest in these areas because such investment would put Nigeria on the path of national development as was the case in Malaysia and other energy economies of the world.

On insinuations that Transcorp is a front for the presidency, he explained that though "it was the president that asked them to come together," most of the board members were actually motivated by love of country, respect for the president and merit of the business to join company. He explained that it had to be so because, in Nigeria today "our economy is managed by foreigners, the oil industry is managed by foreigners, and the only way to have a say is for us to have big companies that can compete nationally and internationally with these foreign concerns."

On Transcorp's funding, he explained that the corporation borrowed from the big banks to finance its bids, and that the sum borrowed was $105 million, which would be repaid.

He informed that the company realised over N18 billion from its private placement offer and that the board had also approved the sum of $18 billion as its share capital.

Accused that Transcorp is a big offshoot of Corporate Nigeria, Okoye vehemently denied, saying that "it will be unfair to link the two organisations, as Madam (Dr. Okereke Onyiuke) belongs to so many organisations.

Okoye also took out time to debunk the notion that those behind Transcorp do not have the managerial skills to run the outfit.

His words: "When you are building a conglomerate, the person investing needs not have the skills. His job is to raise money and then pick skilled Nigerians world-wide to manage it. There are Nigerians managing companies in Japan, US, Britain and the rest of the world. And most importantly, Nigerians abroad are now trying to come back.

TransCorp will discourage brain-drain and all our decisions will be made in Nigeria. That's the whole idea."

Okoye told The Guardian that Festus Odimegwu, one of the board members and former CEO of NB PLC was on leave abroad and had, indeed, requested the board's approval for the holiday.

And then, the raging controversy. Why did Mr. Adeola relinquish his post as the CEO of Transcorp? Disagreement with the board? Political pressure? Reports had it that Adeola was forced to resign by high quarters for his temerity to want to contest the Ogun Central Senatorial District seat with Iyabo, President Olusegun Obasanjo's eldest daughter.

It is believed that originally, Transcorp Board, after an interview with Adeola and Bernard Longe, the former managing director of First Bank, had actually settled for Longe, but was overruled by Obasanjo who imposed Adeola as MD/CEO. But, when it was time for 'pay back', when Adeola was expected to back the ill-fated third term project, the former chairman of Pension Reforms Commission (PENCOM), was said to have been found rather wanting: he backed out.

To worsen the matter, he dared to indicate his interest in the Ogun Central Senatorial election in 2007 and that put him in direct confrontation with the Obasanjo family. Perceived as wanting to bite the finger than fed him, Adeola was promptly stripped of his high profile appointments by the government. Was it really what happened?

Said Mr. Okoye: "The board and Adeola decided to part ways. It is the board that decides who they want to manage their company."

That may well be so. But in the views of many discerning corporate players in the country, Transcorp as a business entity is neither here nor there. Chief Akintunde Asalu, President of Nigerian Shareholders Solidarity Association (NSSA), said he did not believe in the company as a corporate entity capable of doing what it was established to do.

"I was at the launching in Aso Rock and I see it as a non-existent company, but the President gave us the impression that it exists. We were given forms to fill and buy shares at N6 per share," he told The Guardian.

"I look at it as a company that does not exist at all. Why should I buy it, because it does not exist. The people on the board of the company are unemployed managing directors. They should ordinarily not have time to run other companies if they had enough to do in their own companies.

"I thumped them down. They made efforts to get us to subscribe, but I had no intention of subscribing, and I did not subscribe. I learnt they did private placement which they said was successful at N10 per share.

"They later bought Nicon Hilton Hotel and they borrowed to pay and the money they used to pay is from a bank whose MD is on the board.

"Hotel management is not a very profitable one. None of them has experience in hotel management. They paid in dollars and they will pay back for a non-existent company."

On the recent purchase of NITEL, Asalu said: "You remember that two months ago or last month, NITEL workers went on strike. Nobody uses NITEL anymore. It is now a ghost of itself. What does Transcorp know about telecommunication that they will rival with experts. May be they are out to buy NITEL that is already dead. What is the technical competence of these people?"

When asked to explain what he thinks is the idea behind Transcorp, Asalu said: "One can only guess. The people who packaged the launching may not know what is behind it. I cannot see any justification for Transcorp. The President said they will be executing projects.

"You seek the assistance of such companies to win big contracts. If so, is Hilton, refinery and NITEL part of that project? The president told us something totally different from what we are seeing. It is not just international investments, but something different.

"The chairman has been involved in some failed business before. Look at Coral properties, they could not muster 25 per cent subscription, so SEC had to cancel it. I believe at the end of the day, people will regret putting their money there."

On the implications of Transcorp to the economy, Asalu said: "How many people does Nicon employ? About 300 people. How many will a petroleum refinery employ? NITEL cannot also need many people because of technology.

"If we are really looking for a company that will help the economy, I will look at Railway. If they say they are going to build a railway, the effect will be tremendous.

"Another area is agriculture. There they will have a beneficial influence on our people. They are going to narrow places and not income yielding ventures. They have something in mind that they are not sharing with us, which is selfish. It is not impossible that there is a hidden agenda. The easiest way not to lose in this type of business is to keep your hands off it and you become a spectator."

On Fola Adeola's removal, Asalu said: "I did not know how he got appointed, but I believe he is a good banker and I believe he is successful.

"As PENCOM boss, he brought some seriousness to the job. What he did was to make the exercise as transparent as possible because I am involved in one of the companies. He can be strict and when you are like that you may not fit into some places. I believe he was strict and got removed, but I believe he will have less regrets by now anyway."

On whether shareholders have asked questions on the involvement of some publicly owned banks in the promotion of funds for Transcorp, Asalu said: "The truth about it has not been told. The father and mother of Transcorp is Corporate Nigeria. Some of them are putting their mouth where their money is."

But for his part, the Chief Executive Officer of Transglobe Investment and Finance Company Limited, Mr. Osita Odilo said the sale of NITEL to Transitional Corporation (Transcorp) could have been intended to encourage indigenous groups to purchase vital nationa assets due for privatisation, although he is sceptical that some of the sales could be justified.

"The government might be selling for security reasons also or other things because if you look at it, I am not sure Transcorp has the capacity, there is no track record to show they have managed such a big thing, though they are claiming they can do it," he said.

"If you look at it that way, I'm sure there are people out there that bided, who can confidently do it better than Transcorp but I guess they have some other considerations in giving it to them. Definitely, there will be eye brows raised here and there, especially when people have linked this government with this Transcorp thing, even though they have continued to deny that government has a hand in it."

The purchase of NITEL by Transcorp has particularly generated a lot of heat, apparently because of the controversies that have trailed attempts to privatise the telephone giant all this while. Will Transcorp be able to handle a big company like NITEL?

"I want to believe they (Transcorp) have to do something extra to be able to manage NITEL," said Odilo. "I would have actually thought those who have been in the business for long enough would be able to do better but these people keep saying they are capable of doing it. The Transcorp I know here in Nigeria would have to need something else to manage NITEL well."

thats a good one; it appears our president does not have substantial shares in transcorp so he will be a fair umpire. it however raises doubt on their ability to raise $750 for the purchase of NITEL.