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Steel sultan versus rice king

- Court battle brews between Mittal and Varma over Nigerian oil deal

London, March 3: They are two of Britain’s most prominent Asian businessmen. One is the nation’s richest man who made his 12.7-billion fortune in the steel business and gave millions to Tony Blair’s new Labour. The other is the “UK rice king” and owns a firm with a turnover of 200 million selling boil-in-the-bag meals.

Lakshmi Mittal and Moni Varma used to be friends who attended each other’s birthday parties. Now they are at loggerheads as they prepare for a showdown in the witness box this week as part of a vicious high court battle that is expected to throw new light on their business methods.

At issue is a multi-billion pound oil deal Varma claims he brokered for Mittal for licences in the oil-rich Niger Delta. Mittal says no oil was ever found.

Varma, the owner of Veetee Rice who was once voted Asian of the Year by Asian Who’s Who, says he used his contacts with the then President of Nigeria, Gen. Olusegun Obasanjo, to help Mittal win two oil exploration contracts in 2006.

But he says Mittal, the chairman of ArcelorMittal, the world’s largest steel company, behaved in an “ungentlemanly manner” after allegedly reneging on a promise to pay him up to 15 per cent commission for setting up the deal.

In a statement this weekend, Mittal dismissed the claim as “opportunistic and speculative”. He said he would be attending the court to “vigorously defend” the writ.

While there is no suggestion of wrongdoing on the part of Mittal or Varma, their dealings with Obasanjo are likely to be exposed in detail in the case, according to court papers.

That could prove discomfiting for Mittal as the Nigerian government has opened an inquiry into unconnected claims that Obasanjo’s aides and officials may have received more than $100 million in bribes from the American oil services giant Halliburton.

Obasanjo has reportedly offered to repay some of the money, although he has been cleared of complicity in the alleged corruption.

According to the high court documents, the Asian tycoons first discussed the oil deal over dinner at Amaya, an Indian restaurant in Knightsbridge, west London, in August 2005. Mittal had just become one of Labour’s biggest donors after he gave 2 million to the party in the run-up to the 2005 general election.

Varma claims that at the dinner Mittal asked him to intervene with Obasanjo’s office as part of his attempt to become involved in oil concessions in Nigeria.

A series of meetings followed, including a dinner at Mittal’s London home in which it was agreed that Varma would contact Obasanjo directly to push the deal. The pair then flew by Mittal’s private jet to meet Obasanjo at the Westin Palace hotel in Madrid.

According to the writ, Varma raised the issue of his brokerage fee and before they got on the flight to Madrid in September 2005, saying he expected to get between 5 per cent and 15 per cent of the value of the deal.

Mittal allegedly replied: “I will cover you (or) you will be covered. The reward could be even bigger than 15 per cent depending on the size of the deal.”

Mittal says no such conversation took place. He says he already knew Obasanjo so Varma’s role was less than he has claimed.

Whatever was said, the Madrid meeting apparently convinced Obasanjo that he could do business with Mittal. In October 2005, the President invited both men to his private residence in Abuja.

The next year Mittal was awarded two oil exploration blocks thought to have a combined potential of 650,000 barrels a day. Varma claims in court papers that none of this would have been possible were it not for the fact that he persuaded Obasanjo that he could deal with Mittal.

Varma claims that Nigerians were initially unwilling to negotiate because Mittal’s brother and father were already involved there and “sought actively to prevent (Mittal’s) investment in Nigeria”, apparently the result of a family disagreement.

Stories of a rift surfaced in 2008 when the family were forced to deny rumours of a feud after Mittal was reported to have tried to buy an ailing Bulgarian steel plant owned by his brother Pramod at a price lower than Pramod had expected.

Varma says Mittal later cut him out of the oil deal. “I just need justice — nothing more, nothing less,” he said.