Displaying items by tag: Legal

Mexico: Cemex has paid 20% of the US$361m in taxes it owes the Mexican government, with the rest due in January 2013.

The company said it made a US$72m payment on 1 March 2012. It said it has an option to extend the January 2013 obligation and opt for 36 instalments instead, a move that would cost the company a bit more.

"Cemex thinks it has adequate provisions to meet the (tax) requirement," the company said in a statement.

In 2008 the Supreme Court overturned a ruling that protected Cemex from paying taxes linked to investments in offshore tax havens. The court cited several articles in Mexico's income tax law that required Mexican companies to pay taxes locally on investments in countries where there are no taxes or where levies are 75% lower than in Mexico.

Saudi Arabia: The Ministry of Commerce and the department of customs has tightened its surveillance on Saudi cement outlets to ensure a strict implementation of the ban on exporting cement, which came into effect on 18 February 2012.Industry sources said that no cement or clinker bricks had been exported since the ban was imposed. Only Bahrain is exempt from the ban, receiving about 25,000 bags of cement per week.

Some cement companies took advantage of a grace period that preceded the start of the ban to export large quantities of cement. Keen not to confuse or disturb the companies, the ministry warned producers beforehand, enabling factories to coordinate with distributors. A meeting was held in January 2012 warning that such a move was becoming likely.

Following the ban on exports Al Jouf cement announced an immediate 30% price increase. The company justified its move by saying that it was done to reduce the losses it might incur as a result of the ban.

The ministry said that it had stopped exports in order to put an end to the cement crisis, which has seen cement become very scarce in certain regions of the country. It asked factories to produce at full capacity to provide enough cement for local consumers. A cement shortage in Makkah is expected to end with the ban on exports and an extra 10,000t/day, produced for the Makkah region.

Earlier, more than 70 people were arrested and are to be investigated in connection with a cement crisis in Jeddah, which had seen cement become expensive and scarce since the start of 2012. Trucks owned by the accused were captured while selling cement at inflated black market prices in various parts of the city.

Russia: Ciments Français has gone to court to keep a Euro50m advance payment from OAO Sibtsem Holding for Turkish cement assets that the latter company did not acquire.

Ciments Français filed a suit with the Russian supreme arbitration court on 20 December 2011 to recognise the ruling of the Istanbul arbitration court as of 7 December 2010. Under this ruling the French company does not have to return the advance payment to Siberian Cement for the acquisition of Turkish Set Group, which has four cement plants with a capacity 5Mt/yr. On 26 December 2011 the court accepted the suit for consideration.

In March 2008 Sibtsement announced that it would acquire Set Group from Ciments Français, having paid Euro377m and about 5% of its shares, estimated at Euro200m. The first instalment stood at Euro50m. However, the world financial crisis prevented the companies from closing the deal. In the autumn of 2008 the parties began discussing payment for the deal by instalments but they failed to reach an agreement.

In the summer of 2010 the arbitration court of the Kemerovo region in Russia confirmed that Ciments Français had to return the advance payment as the agreement was null and void. In early 2011 the Kemerovo court refused to confirm the Istanbul court ruling.

Kenya: Court papers have started to reveal why the Kenyan government may have dismissed the directors of the East African Portland Cement Company (EAPCC) on 22 December 2011. The papers allege that the board spent US$11m on goods without following competitive bidding and in another instance overruled the tender committee to vary the terms of a clinker contract.

"Those purchases were made by direct procurement or restricted tendering," an affidavit by acting Industrialisation Minister Amason Kingi said. "These processes were not authorised by the Public Procurement Oversight Authority."

According to the affidavit, the irregular purchases were made between 15 August 2011 and 30 November 2011. Mr Kingi said that the Kenya National Audit Office had raised a query over the expenditure of US$140,000 that was overpaid to the chairman, Mark ole Karbolo, and the suspended directors.

The affidavit also said that the board changed the terms of a contract to supply 140,000t of clinker after the supplier, Sanghi Industrial, requested to increase the price after supplying only 67,000t. After the company's tender committee rejected the increase, the board granted the variation which ended up costing the company US$850,000.

"The suspended board overruled the tender committee and awarded a price increase for the delivered products as well as for further products to be delivered," said Kingi. The government said that it could not reveal more without jeopardising a forensic audit currently under way.

The ousted directors have previously blamed their removal from office on a multi-million dollar tender that the government wanted swayed in favour of a local supplier. They said that the award of the kiln upgrade contract to South Korean firm, Posco Plantec, in late November 2011 had upset government officials who wanted the tender given to construction firm H Young for US$43m.

EAPCC's directors settled on Posco Plantec on the strength of its financial bid of US$21m. H Young, however, had a superior technical bid. Karbolo and three other directors, Titus Naikuni, Hamish Keith and chief executive Kephar Tande, are seeking to reverse the minister's decision, arguing that EAPCC is not a state-controlled company.