Presco?s $46 million takeover of Saro Oil Palm delivers a windfall to its own chairman, deepening questions over governance.

Presco Plc is set to hand its chairman, Rasheed Sarumi, a $46-million windfall after agreeing to acquire his privately held oil palm company in a deal that raises fresh questions about corporate governance in Nigeria?s fast-growing agribusiness sector.

The NGX-listed, Edo-based palm oil producer said Thursday it will buy Saro Oil Palm Ltd., a subsidiary of Saro Africa International, the conglomerate Sarumi controls. The acquisition is part of a $171.6-million expansion drive that also includes a larger play in Ghana.

Saro Oil Palm?s key asset is a 10,000-hectare plantation in Edo State, though the project has drawn controversy, with local communities accusing the company of land grabs, according to watchdog group farmlandgrab.org. Presco expects the deal to contribute as much as ?85 billion ($55-million) in operating profit by 2029.

The chairman?s payday comes little more than a year after Saro Africa used a special purpose vehicle to take control of Presco itself, buying an 86.7% stake from Belgium?s SIAT SA. That transaction marked the end of three decades of foreign ownership of the Nigerian company.

Presco?s appetite for growth is being financed through a rights issue and debt refinancing, aimed at funding both the domestic purchase and the $124.9-million acquisition of Ghana Oil Palm Development Company. Presco already holds a 52% interest in the Ghanaian operator, which runs estates producing more than 35,000 tonnes of palm oil annually.

Rasheed Sarumi is the founder and managing director of Saroafrica Ltd., a Nigerian agro-industrial and consumer goods conglomerate with multiple subsidiaries. He also chairs the Oil Palm Investors Group in Edo State and the Board of Trustees of the Large-Scale Cassava and Derivatives Processors in Nigeria. Sarumi sits on the Presidential Economic Coordination Council and co-founded the Youth Advocacy for Social Change Foundation. He was appointed Chairman of Presco Plc in May last year.(BONI)

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