ALSCON: N5.9bn Asset-stripping Plot Uncovered

Fresh facts have emerged indicating possible plot by the management of the Aluminium Smelter Company of Nigeria (ALSCON), UC RUSAL of Russia, to strip the plant of its assets by declaring them obsolete.

Revelations in the companys Financial Statements and Audited Accounts for the year ended December 31, 2011 revealed that some of the plants spare parts valued at N5.9 billion, which were part of storeroom supplies were declared obsolete by the managers under questionable circumstances, thus resulting in the Auditors, KPMG giving the statement of accounts a qualified opinion.

Specifically, the Auditors Report indicated that the owners denied them access to some of the assets even as they could not account for the whereabouts of some equipment valued at N5.9 billion when the auditors demanded to know. It was reliably gathered that at the completion of the plant by Reynolds of America, the equipment were not only of world class quality, but that several parts were brought in to keep the company running. Those assets were said to be in their cartons un-tampered with until the plant was sold to UC RUSAL in 2004. Curiously, the same equipment were classified in the 2011 as obsolete and the value taken off the assets of the company.

Attempts by KPMG to physically assess the equipment during their audit were futile as the managers of the plant could not produce evidence that the parts and equipment had indeed become obsolete. The Report noted in respect of assets thus: Included in stocks are storeroom supplies carried at N5.9 billion as at 31 December, 2011. We were not provided with sufficient appropriate audit evidence as to the need to recognise a provision for stock obsolescence irrespective of the fact that some of the items have remained unused for several years.”

In addition, the Auditors also stated that they were also unable to carry out alternative audit procedures to obtain sufficient appropriate audit evidence due to the inability of the company to determine stock obsolescence. Consequently, we were unable to determine whether any adjustment to this balance is necessary” Similarly, the 2011 audited financial statement also indicated that KPMGs attempts to carry out physical assessment on the company’s butts (casks or barrels) carried in the books of the company at N400 million as at December 31, 2011 did not yield any tangible result as UC RUSAL management could not provide any information where the assets were located in the premises.? The audit report stated further that the Auditors were were not provided with sufficient appropriate audit evidence about the physical quantities of butts. We were also unable to carry out alternative audit procedures to obtain sufficient appropriate audit evidence due to the inability of the company to physically verify the quantity of butts. Consequently, we were unable to determine whether any adjustment to this balance is necessary”, the report added.

The report also indicated that while the plant continued to operate at a loss, staff costs and administrative expenses remained on the increase, same as depreciation of assets in what could be termed a calculated attempt to keep the plant operating perpetually at a loss.

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