The N2.5 billion Bribery Scam
By Demola Abimboye and Tobs Agbaegbu
Monday, September 01, 2008
Nigerdock raises alarm over alleged plot by the House of Representatives Committee on Privatisation and Commercialisation to compel it to pay N2.5 billion to its members
Demola Abimboye and Tobs Agbaegbu
For four months, members of the House of Representatives committee on privatisation and commercialisation, did not indicate that they had any petition against Nigerdock Nigeria PLC. As part of their oversight functions, the federal lawmakers visited the company located on Snake Island, directly in front of Nigeria’s biggest port, the Tin-Can Island Port on March 26. They praised the Jagal Group, the new owners of the ship building and repair yard, for doing a good job since it took over the moribund company.
To show appreciation for the hitch-free visit, Jagal invited the members of the lower chamber of the National Assembly to its head office at Oyinkan Abayomi Drive, Ikoyi, Lagos. At the end of the parley, the hosts, Newswatch gathered, offered to offset the legislators’ airfares to the tune of N400,000. But they rejected the "paltry sum." In doing so, one of the enraged lawmakers was said to have exploded: "We talk in billions. If you make it $20 million (about N2.5 billion), fine." Thereafter, they returned to Abuja and bided their time.
Sources said that after waiting for four months and no word came from Nigerdock on the $20 million demand which was also being threatened by an imminent dissolution of the committees by Dimeji Bankole, speaker of the House, the legislators resorted to strong arm-twisting tactics to make a quick kill, an insider revealed.
On July 21, the committee presented a motion on the floor of the House seeking a mandate to conduct a public hearing on the privatisation of Nigerdock. All the lawmakers objected to the idea. They threw the motion out for lack of merit.
The committee members were not satisfied. The following day, July 22, they wrote to the Bureau of Public Enterprise, BPE, intimating it of their plan to visit the company the second time in four months. They chose August 6, for the visit as part of their oversight function. While the BPE was yet to finalise arrangements with Nigerdock’s management, the Njidda Ahmed Gella-led committee on July 25, told BPE orally that it had shifted the date to July 29, nine days ahead of the initial date. BPE duly informed the company.
Surprised by the turn of events, Nigerdock got an injunction from a Federal High Court in Lagos in a suit number FHC/L/CS…4721/08 restraining the committee members from entering its premises. Bankole was served copies of the injunction and summons. Yet the committee members were adamant.
On July 29, in rented vehicles of Cross Country, a Lagos-based transport company, the lawmakers stormed Nigerdock’s office at Tin-Can Port en-route to the Snake Island. They were, however, denied access to the premises. The legislators rebuffed all attempts by the court’s bailiff to serve them the injunction barring them from Nigerdock. They returned to Abuja for the final onslaught. The following day, on the floor of the House, Gella said that Nigerdock rather than concentrate on its principal functions of ship building and repairs was using its jetty for gun-running.
He told the House that the committee received several petitions against the company, alleging misuse of the premises and importation of firearms and ammunition for Niger Delta militants. "Activities of Nigerdock PLC today pre-suppose that allegations of illegal activities against them, including use of the private jetty to import arms and ammunition for militants in the Niger Delta among others, in violation of presidential order/directives prohibiting the use of jetties for ports operations other than what the jetty is licenced for," he said adding "It also violates the Share Purchase Agreement, SPA, the NPA Act and Security Act of the Federal Republic of Nigeria."
He alleged further that GEC/McDermott Ltd, core investors of Nigerdock Nig PLC, were using the premises for commercial activities and logistics support services for oil and gas companies. He claimed that the federal government had written to Nigerdock to prohibit it from turning the premises to an international port.
Gella, who represents Mubi North/South/Maiha Federal Constituency of Adamawa State, said that the committee’s visit of July 29, was specifically to verify the allegations. He told the House: "It is very important to state why Nigerdock oversight visit was scheduled. The visit was to find out whether the Share Purchase Agreement which gave GSMC, Nigerdock core investor additional 29 percent was executed or not; whether the core investor’s performance post acquisition is in compliance with post acquisition plan; whether the core investor is restricted to the core business of ship building, repairs and maintenance."
He insisted that the Notice on Motion and a writ of summons filed by Nigerdock on July 28, was in bad faith. "In an attempt to prevent the committee from carrying out its oversight function, the court bailiff was present ahead of our arrival to serve the committee with court process," he said.
Abdullahi Umar Farouk, former chairman, House Committee on National Security and Intelligence, supported Gella. He said he had documents which showed that Nigerdock was operating beyond its mandate and constituted a security risk to the country. He implored the House to invite two of the then service chiefs - General Andrew Owoye Azazi and Admiral Ganiyu Adekeye, chief of Defence Staff and chief of Naval Staff, respectively and Afakirya Gadzama, director-general of the State Security Services, SSS, to brief Bankole on Nigerdock’s activities.
Two days after President Umar Yar’Adua sacked the service chiefs, the House on August 22, invited their successors – Maj. Gen. Abdulrahman Dambazau, chief of Army Staff, Rear Admiral Ishaya Iko-Ibrahim, chief of Naval Staff and Air Marshal Oluseyi Petinrin, chief of Air Staff and Yayale Ahmed, defence minister for a meeting. Others invited were Diezani Alison-Madueke, transportation minister and Maj. Gen. Sarki Mukhtar (rtd), national security adviser to the president for a briefing on Monday, August 25. "Their invitation has become necessary because the matter has to do with national security," Ita Enang, chairman, rules and business committee of the House had said.
But the meeting could not hold as none of the invitees turned up. Enang attributed this to the fact that the service chiefs were newly appointed. They pleaded for time to properly settle down in their new offices before keeping the appointment.
The gun-running allegation, however, took another dimension last Monday when the Movement for the Emancipation of the Niger Delta, MEND, claimed that the House of Representatives, through a member from the Niger Delta, proposed a bribe of $500,000, about N58 million to a top commander in the organisation on Friday, August 22, in order to implicate Nigerdock as the supplier of arms and navigational equipment used in the attack on the Bonga off-shore oil rig. The attack last May 3, shut down 10 percent of Nigeria’s oil production. The project located 120 kilometres offshore was considered out of reach of the militants. It produces 200,000 barrels per day.
The attack clearly demonstrated the militants’ prowess and sophistication. It convinced government that all Nigeria’s oil installations are within the range of the attackers.
Jomo Gbomo, MEND’s leader said that the militant group did not take the bribe offer seriously until the emissary of the lawmakers, one George Oye, delivered an advance sum of $200,000 in cash late Sunday night August 24, at 22.45 hours. "MEND has no intention of returning the money which will be put to better use and will not connive with the Nigerian government through its dishonorable lower house to perpetrate such a wicked and criminal conspiracy against an innocent company," he said in an e-mail.
He said that government used the same style to fabricate charges of gun running against Henry Okah and Edward Atatah which led to their arrest in Angola on September 3, 2007. Henry was accused of being behind a phantom coup in Equatorial Guinea and a large scale theft and supply of light and heavy weapons from the Nigerian army armouries to militants in the Niger Delta. A secret trial of Okah is going on in Jos, the Plateau State capital. "We expect the government to deny this allegation as usual, but the important thing is that today, MEND is proud to have stood on the side of justice, truth and integrity; virtues required in our fight to emancipate the Niger Delta from over 50 years of bondage," he said, adding "Yesterday, it was Henry Okah, and today it is Nigerdock. Who next will be accused tomorrow?"
Newswatch could not confirm the authenticity of this statement crafted in a manner to completely absolve Nigerdock of allegations of gun-running. MEND is a faceless organisation and it is possible that this facelessness is being exploited in favour of Nigerdock.
A source said that if the company imported arms, it would have been offloaded on the high sea. "It would be foolish of the importer to bring it to Lagos. Rather, the militants would collect it in barges on the sea now that it is established that they can go so far into the sea to hit an oil platform like Bonga," he said.
The source said further that under this arrangement, Nigerdock could evade detection since the Police, Customs or SSS or even the armed forces could not go to the high sea to monitor ships offloading illegal cargoes.
But in an interview, Gella insisted that the suspicion is very strong. "Since we made the allegation of gun running in the place, you can see that activities of the militants in the Niger Delta are fast reducing. So clearly, these Nigerdock owners must be party to the illegal and other dirty arms business in Niger Delta area," he said.
Other issues raised against Nigerdock were contained in the petition allegedly written by a ‘Coalition of Displaced Nigerdock Workers’ in 2005. It was not signed. Even so, the sacked workers did not accuse the company of gun running. Rather, they complained that the privatisation of the company did not follow due process. "Whereas Global Energy proposed to purchase the firm for three billion Naira other firms like West Africa Shipyards and Hereema proposed a higher amount and were more technically experienced," they wrote. They said that independent valuers put Nigerdock’s worth at between five billion Naira and six billion Naira, meaning that government lost about N3 billion Naira in the privatisation deal.
Also, the aggrieved ex-workers accused the management of non-payment of the severance benefits of 750 workers sacked between June 2003 and November 2004; discriminatory policies against Nigerian managers and influx of expatriates into the company.
But Kayode Ogunjobi of RouQ & Company, solicitors to Nigerdock and GSMC, who spoke to Newswatch last week, refuted all the petitioners’ claims. He said it was sponsored and could have been written two weeks ago just to destroy Nigerdock. He said that BPE followed due process in the privatisation of Nigerdock and that the Jagal Group paid over three billion Naira, contrary to the petitioners’ claim. Indeed, paragraph one of the share purchase agreement, SPA, dated December 20, 2001 states: "Following a competitive bid process for the selection of a strategic/core investor undertaken by BPE, and upon successful bidding by the purchaser for the shares, the NCP at its meeting held on Monday 12, November 2001, authorised BPE to sell and the purchaser (acting in its capacity as the selected strategic investor has agreed to buy 504,900,000 (Five hundred and four million, nine hundred thousand) ordinary shares representing 51 percent (Fifty one percent) of the issued share capital of the company at the price of N6.75 (Six naira, seventy five kobo) per share amounting to N3,408,075,000 (Three billion, four hundred and eight million, seventy five thousand naira)."
He said that in January 2003, GEC with the approval of NCP transferred its 51 percent core investor shares to GEC Shipyard Marine Contractors (Africa) Limited. He revealed that GEC and the technical partner formed GSMC which became the core investor of Nigerdock and that it was only GEC’s shares in GSMC that Jagal Ventures Limited bought. "The original core investor remains as core investor till date. It has not changed. It is just that JVL is the majority shareholder in GSMC," he told Newswatch.
On the mode of payment, he said that section 3.1 of the Framework Agreement between JVL and GEC dated May 14, 2003, stipulated that the payment of $29.5 million should be structured through FSB International Bank PLC and made direct to First Bank of Nigeria PLC which at that time had a charge over GSMC’s 51 percent core investor shares in Nigerdock.
Furthermore, he said that in July 2004, GSMC, with the consent of the BPE and NCP acquired additional 29 percent of the remaining 49 percent shares of Nigerdock.
On the disengagement of workers, Ogunjobi said that at the time of privatisation, the investor’s due diligence revealed that Nigerdock, for instance, had 22 drivers for three cars. Only one of these was functional. "How could we have kept the excess members of staff," he asked. However, he said, all ex-employees received their terminal benefits. He charged anyone who has not been paid to come out.
He dismissed the former workers reference to Jarmakani as a Syrian, saying that he naturalised as a Nigerian in 1987. The problem, according to him, is that he has turned round what Nigerians before him could not manage successfully. "Jarmakani did not naturalise for the purpose of acquiring Nigerdock. It is just a campaign of calumny," he said, adding "of all the companies under privatisation, Nigerdock is the only success story. It is doing excellently well today."
Nigerdock’s directors also refuted the allegations. Anwar Jarmakani, group executive chairman of Jagal Group, described all the allegations by the committee members as "entirely false, baseless, unfounded and detrimental to national interest." According to him, Nigerdock, which is located within the Snake Island Integrated Free Zone, SIIFZ, operates under the direct supervision and monitoring of the Nigerian Export Processing Zones Authority, NEPZA, Nigerian Ports Authority, NPA, Nigeria Customs Service, Nigeria Immigration Service and the Nigerian Police. He wondered how the illegal activities would have taken place without being detected by any of these agencies.
General I.B.M Haruna, another director, said that even if the legislators had suspected illegal activities, the due process in respect of crime was to intimate the executive arm of government which would authorise the Police, SSS, Customs and other relevant agencies to investigate. "The oversight function of the House is for legislation," he argued, adding "We expected the committee to respect the court injunction."
He said that he could not fathom why the allegation of gun-running was made. "We won’t attribute motives to a man who had visited and praised us and suddenly wants to visit even when it lacked support of the whole House." The former army top brass-turned-lawyer said that in the last five years, many committees of the two chambers of the National Assembly had visited Nigerdock while it received every energy and transport minister, high-ranking government officials and senior and management staff of the Nigerian National Petroleum Corporation, NNPC, and National Petroleum Investments and Management Services, NAPIMS. "We have always welcomed visitors but in this particular instance, it was not in line with the law," he said.
General Emmanuel Abisoye, who is also on the board of Nigerdock, said that since the whole House had rejected the motion to probe the company, the committee should have directed further enquiries to the BPE. "Once they did not have the endorsement of the whole House, they have no business coming here," he said, adding "They should give respect to the law and we should have a convenient visit."
David Chun-Gyang, an official of NEPZA, said given the strict rules of operation in free trade zones and the presence of eagle-eyed security operatives on Snake Island, Nigerdock could not have imported arms and ammunition. "It is a restricted area, so much that no investor is permitted to engage in that type of industry," he said. He added that NEPZA’s presence at the free trade zone was to ensure that operations are carried out in strict compliance with the rules and regulations of the Federal Republic of Nigeria.
Contrary to assertions by the House Committee that Nigerdock was going beyond its mandate, Jarmakani said that his company was not restricted to ship building, repairs and fabrication but could also provide deepwater logistics support and maritime services to the oil and gas industry. Thus, the company has built highly complex and technical components for deepwater field development. It built four of the world’s largest deepwater buoys for oil and gas giants including Shell’s Bonga oil platform. "The 1200-ton buoy was built 100 percent in Nigeria," he boasted.
Similarly, it built buoys for Chevron, Mobil and most recently, Total. Nigerdock, according to Jarmakani, was the first Nigerian company to export a buoy to Cameroon.
Apart from these, the company is the foremost manufacturer of pressure vessels in Africa and the only company to be awarded the American Society of Mechanical Engineers, ASME, U& R certification for the manufacture of pressure vessels.
Nigerdock was established in 1986. Before privatisation in 2001, the company was in comatose. It had low capital base, inadequate long-term planning, poor cash management, leading to liquidity problems, obsolete machinery and poor marketing of its services and products. It lost substantial money annually despite being heavily subsidised by the federal government.
But since Jarmakani and his team moved in, the company has developed into a world-class ship yard capable of meeting the demands of Nigeria’s maritime service needs. Today, it provides the necessary dry-docking, hull repairs, mechanical and topsides maintenance services, thus attracting for the first time, non-Nigerian vessels into its quays for repairs as it has established its reputation as the leading West African shipyard.
Will the on-going crisis torpedo these gains? Time will tell.
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