Fruitless Search For the Missing Trillions
By Tobs Agbaegbu and Mikail Mumuni
Monday, August 11, 2008
Powerful interest groups and chieftains of the ruling People’s Democratic party move to scuttle fraud probes in the national Assembly
Ndudi Elumelu, the youthful chairman of the House of Representatives committee on power and steel left no one in doubt that his 27-member panel would do a thorough job. The committee probed the $16 billion expenditure in the power sector during the administration of former President Olusegun Obasanjo but which had produced no results. At the beginning of the probe on March 11, this year, Elumelu assured that everybody who participated in the looting that crippled progress in the power sector would be brought to book, no matter how highly placed.
On April 10, when the committee visited Enugu on a fact finding mission, Elumelu also spoke of his ability to withstand intimidation by those being investigated. " Do you know [that] some people have gone to the extent of telling my mother to warn me to desist from continuing with the probe? I know the Nigerian factor, but I am resolute about the probe; we will get to the root of the matter."
Six months after, the committee is not anywhere near the roots of the matter. Those that allegedly mismanaged the funds are still walking about free while the committee that investigated them has itself become a subject of a N100 million bribery scandal. The scandal is also threatening the credibility of the committee’s report.
Apart from Elumelu’s, there are five other committees in both the Senate and the House of Representatives trailing trillions of the country’s stolen funds. But like the power and steel committee, none has made appreciable progress to justify the public confidence they inspired at the beginning.
The House committee on finance probing revenue profiles and remittances into the federation account by agencies of the federal government is chaired by John Enoh from Cross River State. Paulinus Igwe, a member from Ebonyi State chairs the committee on public petitions. The committee investigated the activities of the Police Equipment Fund.
Abubakar Sodangi, a senator from Nassarawa State chaired the senate committee that investigated the Federal Capital Territory administration during the tenure of Nasir el-Rufai as minister. Another led by Sylvester Anyanwu, senator from Imo State investigated activities of telecommunication operators in the country while Anyim Udeh, senator from Ebonyi State looked into the N19.5 billion contract scam in the aviation sector, for which two ministers are now standing trial in court.
Four of the committees have concluded their investigations after organising public hearings during which shocking revelations, accusations and counter accusations were made. But full details of their findings, including expenditures by the members and amount recovered from indicted persons are yet to be made public. The committees in this category are those headed by Elumelu, Sodangi, Anyanwu and Udeh. None of their reports has been debated and adopted for implementation by any of the two chambers and the signals that they may never see the light of day are getting stronger.
The house committee on power and steel submitted its report about a month ago, but intense controversy brought about by an allegation that the committee members received a N100 million bribe has made it impossible for it to be discussed on the floor of the house. Elumelu denied the allegation of bribery while speaking at a conference on the power sector in Abuja two weeks ago. He told his audience that taking bribe in connection with the power sector issue was like accepting blood money, which would hunt whoever that collected it. He fingered the contractors who took some of the National Integrated Power Project, NIPP, contracts as the brains behind the bribery allegation.
Elumelu challenged the leadership of the House to release the report of the committee on the probe. "We should not allow that report to be swept under the carpet," he said, adding that "it should be made public for Nigerians to know what went wrong."
Nigerians are still awaiting the official release of the report. But Sahara Reporters an internet-based news agency on Sunday, August 3, reported that it indicted Obasanjo, Olusegun Agagu, Ondo State governor, Liyel Imoke, former governor of Cross River State, and 14 other persons for mismanaging the $16 billion power funds between 1999 and 2007. Agagu and Imoke were ministers of power at different times during Obasanjo’s eight-year tenure.
Also reported to have been indicted are 15 companies which handled the controversial, NIPP; contracts for the Power Holding Company of Nigeria, PHCN, the Transmission Company of Nigeria ,TCN, and Energy Commission of Nigeria ,ECN. The committee was said to have recommended, that Obasanjo and the other persons found culpable in the investigation should be called to "account for the recklessness in the power sector" and should also be investigated further by the Economic and Financial Crimes Commission , EFCC, and the Independent Corrupt Practices Commission, ICPC.
The other persons listed include Ahmed Abdulhamid, former minister of state for energy, Joseph Makoju, former presidential adviser on energy, and three others whose names were given as G.O.P. Osakwe, C.N.O. Nwachukwu, both engineers and J.A Olotu. "The barefaced looting of the national treasury through the NIPP and PHCN and other projects greatly diminished national capacity to provide electric power leading to wholesale decline in productive business activities and erosion of competitiveness of Nigerian products in the world market," the report read. It specifically stated also the offence of the principal characters it indicted.
Abdulhamid, former minister of state for energy was allegedly indicted for "his patent and willful manipulation of due process, flagrant abuse of due process, gross abuse of financial procedures in the award of contracts and payments, especially during the last few weeks of the Obasanjo administration, exemplified by initiation of requests to the president and procurement of presidential approvals for huge and questionable payments in respect of Papalanto Phase II, Omotosho Phase II, Geregu Phase II, Alaoji Phase II, Mambilla Packages I, Zungeru Hydro, Omoku Expansion, Gbarain-Ubie Expansion and Egbema Expansion (9 additional GE Frame 9 turbines to Rockson International) without due process compliance for contract award and certification for payment."
The committee recommended that he "should be investigated by EFCC and ICPC and if found culpable, banned from holding public office for the next 10 years and if he is already holding any, he should be recalled and the appointment cancelled."
On Agagu, the committee found that numerous contracts were awarded, including huge contracts, to some unregistered companies. The committee said the indicted companies should also be further investigated by EFCC and ICPC to recover "huge sums fraudulently received on power project contracts."
The report on the telecommunication sector has also been submitted to the senate. Anyanwu told Newswatch that instead of improving on the networks, the service providers just sat back and were milking money out of the country. It was this discovery that made us to insist that they should give us a road map and we insisted on a commitment that within a given period, this and that will be done to improve services."
Anyanwu said his committee has been on the watch out. He said it was as a result of their findings poor quality service that a fine of over four billion Naira was imposed against the operators.
The senate committee on aviation, on its part, is investigating Babalola Borishade and Femi Fani-Kayode, two former aviation ministers on the handling of the N19.5 billion Aviation intervention Fund. Being investigated along with them is Felix Iyayi, managing director of National Airspace Management Agency, NAMA. One of the scandals unraveled was how the Safe Tower project contract was inflated from one billion Naira to N6.5 billion.
Not long ago too, after it finished its public sitting, the senate committee on aviation said it had uncovered a plot to smear members of the committee in an attempt to discredit its eventual report to the senate. Some principal actors in the Aviation Intervention Fund saga were said to have mounted pressure on George Eider, managing director of Avsatel Nigeria Limited and contractor for the inflated N6.5 billion Safe Tower Project, to raise allegation of bribery against members of the committee. It was to have been part of a grand act to cover up the scam in which his company benefited by getting the contract in the safe tower project at about N5 billion more than the contract value.
Newswatch learnt that Eider came under intense pressure to say that members of the senate committee on aviation had demanded a bribe of $1million from him. This would have created credibility problem for the committee and possibly stopped it from formally presenting its report to the senate.
Anyim Ude, a senator from Ebonyi State and chairman of the committee made reference to this, when he issued a statement alerting that since the senate took the decision to investigate the fund, "some forces outside the hallowed chambers have been making efforts to introduce some elements of threat, intimidation and blackmail designed to frustrate the investigation." The blackmail plot failed after the Economic and Financial Crimes Commission, EFCC arrested Borishade, Fani Kayode and others implicated in the aviation fund scam.
The reports of the senate probe panel on the FCT has not been officially released by the leadership of the senate. But the details have nevertheless frittered into the public domain. The panel said El-Rufai abused his office and should be barred from holding any public office in future. It also demanded that the former minister and some of his aides should be made to account for N32 billion proceeds from the controversial sale of Federal government owned houses in Abuja. The panel said a total of N96.7 billion was realised from the exercise under El-Rufai and that N34.2 billion was deducted as " refunds and expenses incurred," leaving a balance of N62.19 billion. Members of the panel went further to say that N32 billion out of the balance could not be accounted for by the former minister "despite all demands from him [el-Rufai] and his officers.
The House Committee on public petitions sprang into action in February, probing allegations of fraud and diversion of government funds by officials of the Police Equipment Fund, PEF, a non governmental organisation formed by Kenny Martins, a brother-in-law of Obasanjo and some of his associates to help equip the police in Nigeria. Many petitioners told the committee headed by Paulinus Igwe, from Ebonyi State, that officials of the fund changed the name to Police Equipment Foundation, to enable them have full grip of the organisation after huge sums of money had been raised from the public, with the assistance of Obasanjo. Martins and some of his lieutenants are being prosecuted in court by the EFCC following revelations made at the committee’s sittings.
During one of the sittings, a revelation was made by Aliyu Yahaya Gusau, a deputy director in the federal ministry of Finance that N7.74 billion was donated to the fund by the 774 local government areas of the states in May last year. Rather than the money being deducted in two installments as authorised by the Local government chairmen, Obasanjo allegedly gave a counter directive that the money be deducted from the Excess Drude Account, after the 2007 general elections.
Based on the directive from Obasanjo, Gusau explained, "the accountant general of the federation was instructed to warehouse the N7.74bn into the account of the Police Equipment Fund in Zenith Bank PLC Ikeja branch, Lagos. Zenith Bank official confirmed the payment. Other banks such as First Inland Bank Plc, FCMB, Wema UBA, GTB, Diamond, Spring and Fidelity made presentations, confirming that Martins and some of his associates opened the account in the name of PEF. Martins and Ibrahim Dumuje, a co-director of the PEF are presently facing prosecution in Abuja in connection with the mismanagement of the funds.
The committee also queried, Mike Okiro, the inspector-general of police, IG, on the two billion Naira realised from the sale of police’s on-line recruitment form.
Okiro explained that the police engaged the services of a consultant to handle the exercise, which he said generated about two billion Naira. He explained that under an arrangement, the consultant took N1.2bn while the NPF took N800 million.
But Ibrahim Nafada, deputy speaker of the house frowned at the development. He said: "I can’t understand why a total of N1.2bn out of N2bn which the police will realize from this exercise will be given to a consultant and only N800million came to the police. I can’t understand. Even if we want to make consultants richer than the government agencies, we should not do it openly."
Another report came from the House of Representatives committee on finance investigating remittances into the federation account. The committee recently revealed that only N1.36 trillion was paid into the federation account out of a revenue of N3.56 trillion generated by some ministries, departments and agencies, MDAs, between January 1, 2003 and March 31, 2007. John Enoh, chairman of the committee told Newswatch that the figure only came from 60% of the preliminary investigations carried out already and wondered what the picture would look like, after full investigations by the committee. The lawmaker said the money could have boosted the budget of the federation if there were enabling laws to curtail the MDAs from spending the funds they generated.
More than 10 categories of MDAs are being investigated. These include all organs of government under the presidency, all federal executive bodies, all federal ministries, departments and agencies as well as federal universities, teaching hospitals, polytechnics, colleges of education, research institutes, agricultural institutes and unity schools. Others are the river basin development authorities, directorate of petroleum resources, Nigerian National Petroleum Corporation, NNPC and other parastatals in the petroleum sector. The investigation will also look at revenue remittances by the National Electricity Regulatory Commission, NERC, Power Holding Company of Nigeria, PHCN, the Nigerian Customs Service, NCS, and the federal Inland Revenue service, FIRS.
Nigerian missions abroad were found to have topped the list of MDAs that flouted the law on remittances. According to documents submitted to the committee by B.K. Kaigama, permanent secretary, ministry of external affairs, the 98 missions abroad collectively generated $11.65 billion from January 2003 to May 2008 but remitted only N1.35 billion. This revelation angered the chairman of the committee and he directed that the difference of N10.2 billion be remitted into the federation account, otherwise he will declare it missing.
Enoh said it was curious for a government agency to collect money and refuse to remit it into the Federation Account. "They know the rule and we have told them. If before we submit our final report to the House they have not remitted, certainly, we’re going to declare the money missing and we would call for actions to be taken against them," he added.
The revenue generated by the foreign missions came from the sale of visas and issuance of Nigerian passports in their respective mission offices. In the document submitted, the Nigerian Mission in London recorded the highest revenue of N1.293 billion but remitted only N488 million, leaving a balance of N804 million. The New York office generated N1.2 billion but remitted only N58 million.
Other figures showed that the foreign missions collectively generated N289.8 million in 2004, N5.08bn in 2005, N1.985bn in 2006, N1.604bn in 2007 and N529.467m in 2008 but there was no record of revenue generated by the missions in 2003. The only record of revenue for the year came from the headquarters.
The oil sector is also being probed. The period covered by the probe is 1999 to date. One of the contentious issues was the allocation of oil blocks. The committee was told by officials of the Department of Petroleum Resources, DPR, that essential projects tied to allocation of oil blocks had their completion date extended from 2007 to 2013. The committee was also told by DPR that some sensitive documents relating to 2005 oil block allocations were missing.
Mohammed Aliyu Sabo, acting director of DPR, said the agency had carried out a search for the documents in the office but could not locate them in the files. "We can only give out what we have and cannot give what we don’t have. We can’t find some of the documents," he told the committee.
The committee members got infuriated when another official of DPR gave conflicting information on the sale of oil blocks. Tony Chukwueke, DPR director who is on compulsory leave told the panel that the department put a total of 44 oil blocks on sale whereas the report presented by DPR accounted for only 36 blocks. The statement made the committee to infer that eight oil blocks and their proceeds were missing from the record. "The report presented shows a total of 36 oil blocks instead of the 44 that the director said. It means eight blocks are somewhere," the committee chairman said.
Chukwueke explained that it was possible that some bidders who were offered did not make payment and, therefore, they would not be reflected in the report. "I have never told you that there are 44 blocks; 44 blocks were awarded but there were some people who did not pay. That must have been the difference. Let me come back tomorrow. I will consult with my people and get back," he reacted, opting to withdraw his statement. His request was granted.
The committee chairman made an observation during an earlier proceedings that some signature bonuses were paid in naira contrary to the provisions of the guidelines issued by the DPR and that from the records available to the committee, there was a shortfall in the proceeds of signature bonuses. He said the records of the signature bonuses in 2005 showed a total of over $2bn but only the sum of $1.6bn was paid while some payments were made in local currency.
Chukwueke explained that he was directed by the minister of state for Petroleum to do so."I received signature bonus in naira because of instructions from above," he said. Asked why a company named 321 Equator Exploration Nigeria Limited got the oil block called 321, he said he needed to make further consultations, adding "the ministry issued instruction to us to give right of first refusal while the bidding was going on.
Chukwueke explained that some oil blocks were awarded after the bid rounds based on the instruction of the minister. "We were instructed by the minister to award OPL 236 to Oando," he said.
The committee also found out that some companies were given oil blocks without information on their local content but the director explained that the selection of local content vehicles was only after a bid had been won. The companies that won OPL 332, particularly Sahara Energy, did not submit application for the bid.
At this stage, the committee asked the DPR to supply comprehensive information on OPL 236 and all other files that were discretionarily given out. The committee also asked the Nigerian National Petroleum Corporation ,NNPC, to submit a situation report on the investments in the down-stream sector so far by those given oil blocks.
It further sought explanations on a number of other issues it considered to be anomalous. The committee noted, for instance, that Elf Petroleum Ltd paid the sum of $30 million for an oil block, but the block was not mentioned.
It also expressed worry over the process of the 2005 bid rounds. "A company with a particular director got many juicy blocks. It is either a collusion or such company must be working for some people somewhere. You could see one name in about seven companies. You have Nuel Ojei everywhere. In some cases three companies with one director bidding for the same blocks.
Reasons such as non-disclosure of directors and other sharp practices were given for denying some bidders oil blocks while some companies with such records were given blocks. Some of them were not prequalified and some of them did not have application forms. The committee demanded explanation on the guidelines for allocation.
In response, Chukwueke said the DPR recommended that those who did not submit identities of directors should be disqualified. "We did not have time to go to CAC. The ministry said we should allow merger of companies. Because of the merger programme, we decided to give conditions for them to encourage local content. Seven companies, for instance, came out of the merger and at the end, 45 emerged," he said.
The committee demanded further explanation in writing on the companies that won oil blocks and their promoters between 1999 and 2008. "It should have the names of directors, shareholders and changes in such structures," the panel said.
On whether the DPR took independent decision in all the bid rounds, Chukwueke said: In all issues, the DPR was not independent but depended on instructions from the ministry because we are under the ministry. There is no due diligence report as far as the issue of CAC was concerned. Our lawyers went to CAC with a sample.
Some oil companies including Obekpa Petroleum Company and Starcrest Investment Ltd. came to the committee with complaints of unfair treatment in the allocation of oil blocks. Starcrest Investment Ltd, represented by Emefor Udo, the company secretary, alleged that about 10 powerful individuals connived and cornered $35 million from oil blocks allocation.
The committee listened as he gave details of what transpired. "We have a record of money that exchanged hands. They used one company which is non-existent called China Petroleum Corporation. They used funny means to sieze OPL 229. On August 6, 2006, Tony Chukwueke issued them OPL, 2911 and committed himself to make another offer in the name of Starcrest Nigeria Energy. The pay master was Addax Petroleum. On June 24, 2006, Addax paid $13million without taking part in the 2006 bid round. They paid for a block that they did not participate in bidding for. One Illiasu handled the case as IPO. They used $35 million. Please, summon Diamond Bank, Port Harcourt, you will get further facts. The issue about the $35 million is on the Internet. The company was not in operation when the right of first refusal was purportedly granted. The minister of state for petroleum, Odein Ajumogobia, without going through the petition, told us that we had no case. Starcrest Energy Nigeria paid processing fee, and got the oil block, all on May 19, 2006," he alleged.
At the senate, some committees have also been vigorously investigating activities of agencies of government where huge sums of money have been expended. And various revelations have emerged too, about how the public treasury was looted under various guises.
One area where it has so far uncovered misdeeds is in the award of contracts for the construction of silos for the strategic grains reserve project embarked upon by the federal government during the administration of former President Obasanjo. The investigation is being handled by an adhoc committee on food crises led, by Idris Umar, a senator from Gombe State.
It has been discovered for instance, that the contractor who constructed the Ikenne Silos project in Ogun State, in 1999 received $1.9 million from the government but abandoned the project soon afterwards. Lawal Garba, chairman of Emerald Packing Nigeria Limited, an indigenous firm which got the contract, blamed thieves for the failure of his firm to execute the contract.
Lawal who appeared before the committee said the company delivered all the equipment required for the project to the site, but they were stolen by thieves from the community. "I have done no wrong. I was paid N64 million for the contract. I imported the equipment and they were stolen. We were responsible for security on the site but we had no power over the people coming to steal."
But Femi Okunnu, deputy director in the Federal Ministry of Agriculture and Water resources contradicted the contractor. Okunnu told the committee that "nobody confirmed in the ministry that he imported the equipment, which he said were in 27 containers. A visit to the site showed that only containers were there. The equipment is heavy and even if it was fire that gutted the site, they would not have disappeared completely. But nothing was seen there when we visited the site."
He said a committee set up by the ministry under the chairmanship of one Husseini Dikko had recommended that Emerald Packing Company and other defaulting firms in the Silo projects should refund monies paid by government. Emerald Packing was paid 1.9million pounds to construct the Ikenne Silo but abandoned the project with zero percent of work done.
At one of the sittings organised by the senate Ad hoc Committee on food crisis, on Thursday, July 17, it was revealed that two senators and some traditional rulers were among influential personalities who benefitted from the distribution of the 2008 federal government strategic grains reserves.
A document titled: "2008 Grain Release Beneficiaries" submitted to the senate ad-hoc committee by officials of the ministry of agriculture and water resources showed that Adamu Garba Talba from Yobe and Ibrahim Ida from Katsina, both senators, were among the beneficiaries. Each of the two senators was said to have got 120 metric tonnes of grains. The list also included five traditional rulers from the North, including the Etsu Nupe, who got 120 tonnes and the Emir of Biu in Borno State who received 60 tonnes. Listed as beneficiaries also are the Emirs of Lafia in Nassarawa State, 120 metric tonnes, Daura and Katsina state, both of whom got 120 metric tonnes each.
The document also showed the state-by-state distribution of the grains. Nineteen states from the North, and the Federal Capital Territory, FCT, got 36,000 metric tonnes. The 17 southern states got 10,200 metric tonnes out of the 65 metric tonnes distributed.
Lawal Mohammed Ila, director of strategic reserves in the ministry explained to the committee that some of the beneficiaries applied for the grains and collected on behalf of their subjects and constituents. The committee frowned at the distribution formular adopted by the ministry, saying it was a disservice to the ordinary people for whom the grains were meant.
The committee also expressed dismay at the N10.5bn extra-budgetary expenditure on the procurement of grains this year. The panel’s chairman expressed shock that despite the rule of law policy of the Yar’Adua administration, funds were still being spent by the executive arm of government without due regards for the provisions of the constitution.
Ademola Rasak Seriki, the minister of state for agriculture had, in response to questions, told the committee that the N10.5bn represented the total amount collected as levies on rice importation after obtaining an approval from President Yar’Adua to that effect. He disclosed also that the ministry had spent the money to procure grains.
The panel also frowned at the non- compliance with the Public Procurement Act and other due processes in the purchase of grains. The panel’s anger resulted from Seriki’s submission that instead of the ministry advertising for persons to apply to be selected for the procurement, its usual practice was to simply ask any member of the public to supply the grains. Seriki also said the practice equally applied to the distribution of the grains.
The question being asked in many quarters since the probes began is whether they would lead to the recovery of the trillions of Naira that have gone down the drain. Many Nigerians do not think so. They are not optimistic that the exercise would lead to reasonable recoveries of the funds.
The first source of public misgivings about the probes is the attitude of the presidency. There are signals from the presidency that the findings of the committees may not be implemented by the government. President Umaru Yar’Adua said he was not interested in probing the Obasanjo administration but said he would not stop the National Assembly from conducting the probes either. This has led to a loss of public interest in the exercise. Many of those being probed believe that nothing would come out of it.
Yinka Odumakin, publicity secretary of Afenifere said the lawmakers’ search for the stolen trillions would come to naught. Indeed, he is of the opinion that the probes are only meant to divert the attention of Nigerians from what he call the ‘inactivity’ of the Yar’Adua administration. "I don’t think the probe panels were meant to achieve anything. They were simply set up for Nigerians to keep talking about Obasanjo and his regime without looking at the inactivity of the Yar’Adua’s government,"
But Festus Keyamo, radical Lagos lawyer, has a contrary view. He told Newswatch that the probes are good for the country as they have helped to expose the corrupt tendencies of some Nigerian leaders. He said the skepticism of Nigerians on what becomes of the reports was because similar exercises in the past were swept under the carpet.
Chukwuemeke Ezeife, former governor of Anambra State said the country will not reap any benefit from the probes unless there are legal frameworks put in place to check abuse of public office "I have said that nothing can be made of them."
The probes are not serious probes, judgments cannot be derived from them. Punitive judgments cannot be derived from them. It is more like moral restitution, something that has no force of law," he said.
Jimi Agbaje, gubernatorial candidate of the Democratic Peoples Alliance, DPA, for Lagos State during the 2007 general elections said probes were worthwhile to a certain extent but advised the National Assembly not to lose sight of its primary duties of lawmaking.
Newswatch learnt that the ruling Peoples Democratic Party, PDP, is unhappy about the probes and wants them stopped. Vincent Ogbulafor, the party’s National chairman is said to have met with Yar’ Adua and the leadership of the National assembly with a view to stopping the probes because majority of the people fingered to have been involved in the malpractices are PDP members who funded its candidates. To put the situation under control, the party was said to have called for an urgent dissolution of the committees in the national assembly.
Newswatch gathered that the dissolution of the House committees by Dimeji Bankole, speaker, two weeks ago, is in furtherance of the party’s directive. Dimeji spared only the committee on Finance and that of rules and services. The idea, according to a source, is to weaken interest in the reports, such that individual interests of members would now be on how to get appointed to juicy committees.
For now, the probes have only succeeded in generating public awareness on the huge amounts of money stolen during the obasanjo administration but have not been productive in terms of recovery of the funds. With the PDP leadership’s intervention, hopes that they could become productive are diminishing. If, eventually, the probes fail, the exercise would have only succeeded in inflicting more financial losses on the country. Sources told Newswatch that not less than four billion Naira has been spent by the National Assembly on the probes so far.
Additional reports by Chris Ajaero, Kazeem Akintunde and Emmanuel Uffot.
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