Written on Monday, 15 August 2011
The just ended public hearing by the Senate Ad Hoc committee on the privatisation of Nigeria’s public enterprises have exposed how politicians connived with wealthy businessmen to loot our commonwealth in the name of privatisation. It was one dirty detail after another as the Senate Ad-Hoc Committee investigating the privatization process heard that the rift between the former President Olusegun Obasanjo and his deputy, Vice President Atiku Abubakar adversely affected the privatisation process.
The Senate ad hoc commitee also heard how:
1. A DG claimed he collected bribe from Mike Adenuga for Nasir El-Rufai.
2. ALSCON valued at 3.2 billion dollars was sold for 130 million dollars and Nigeria lost N473 billion in
that transaction alone.
3. The World Bank’s mid-term report indicted the former FCT Minister, Mallam Nasiru El-Rufai who served in the Bureau from 1999 to 2003.
4. There was no proper internal audit arrangement for the project.
5. Former President Olusegun Obasanjo breached due process in the sale of some public assets especially the multi- billion dollars Ajaokuta Steel complex.
6. The overbearing interference of former President Olusegun Obasanjo and his Vice then, Atiku Abubakar, crippled the privatization programme.
7. Folio communications limited bought daily times from BPE in 2004 at the sum of 1.250 billion naira and stripped Nigeria's flag-ship newspaper of all of its assets.
8. Businessman Jimoh Ibrahim acquired the Nigeria Insurance Corporation illegally
Please Read on:
The former Director General of the Bureau of Public Enterprises (BPE), Mrs. Irene Chigbue told the committee that the conflict between Obasanjo and Atiku Abubakar got to a point where the office of the supervising National Council on Privatization under former Vice President Atiku Abubakar was treated as irrelevant.
The Senate Committee heard a former Deputy Director of the Bureau of Public Enterprises, Mr. Charles Osuji, brazenly say he collected bribe from Globalcom Chairman, Mike Adenuga for Mallam Nasir El-Rufai, after the sale of National Oil.
Osuji, who shamelessly admitted going to Adenuga on behalf of El-Rufai even when the transactions on the sale of National Oil had been concluded, said he acted on the directive of El-Rufai.
He also said that when he brought the money to El-Rufai, he refused to collect it because, “Adenuga brought the money in bits and so it was incomplete.”
According to Osuji, El-Rufai eventually ordered his dismissal from the BPE. Although he did not disclose the amount that was given to him as bribe for El-Rufai, Osuji explained that he could not deliver the entire bribe sum because the money was given to him in bits.
But El-Rufai in his reaction, told journalists that Osuji first brought a N25m Zenith Bank cheque to him.
He said after he ordered Osuji to return the money to Adenuga, who had already acquired National Oil, Osuji subsequently returned with $100,000 cash which he did not accept.
El-Rufai said: “I reported the matter to the Vice President who was the Chairman of the NCP, and he and the then Attorney General, Bola Ige requested that Osuji be prosecuted.”
The former FCT minister said Osuji could not be prosecuted because Ige died shortly after that, but the NCP directed that he should be dismissed.
Chairman of the committee, Ahmed Lawan and members of the committee were shocked to hear the story and they said Osuji should have been arrested and prosecuted for his actions.
Lawan said, “This is sad. A deputy director collected money for BPE, if this is happening in BPE, it is additional misery for Nigeria. He should have been arrested and prosecuted.”
Ajaokuta Steel Company
Minister of mines and steel development, Architect Mohammed Musa Sada on his part told the senate committee that former President Olusegun Obasanjo approved the concession of the Ajaokuta Steel Complex to Global Infrastructure Limited against due process.
Architect Sada said the federal government spends N300 million per month to the workers in Ajaokuta, resulting to N3.6 billion annually on the wages of workers of the moribund Ajaokuta Steel Complex.
The minister, who alleged that the concessioner Global Infrastructure ruined the Ajaokuta Complex by stripping it of all valuable equipment and machineries, leading to the cancellation of the entire process by the federal government, however added that plans are under way to get some part of the complex working, and that the ministry will require only N650 million to bring the company up to a production level where it can generate funds to sustain itself.
"At a point in time, there was a share purchase agreement signed by the BPE. It was signed but never put into use, and I could not find any reason anywhere why it was not use. And the reason why the ministry was driving that process as against the BPE is something I am not privy to.
“But as of now that concession has already been terminated because of certain findings by government. A committee was setup which found out so many illegal things been done by Global holding running Ajaokuta. It was cancelled."
Still speaking about the huge funds being spent monthly to pay the company’s workers, Sada noted that the federal government pays N300 million per month to the workers while only N650 million is required to bring the company up to a production level where it can generate funds to sustain itself.
In his words, "We need a meagre N650 million to fix the complex to a level where it will be raising money to pay the workers there, but government is spending N300 million per month on workers salary for doing nothing."
Architect Sada however lamented that privatization has failed in the steel sector and there is a need for government to continue to run that sector, if it does not want to lose all of its investment in the development of steel in Nigeria, stressing that "All I will want to say is that I want to concur with everybody that the privatization of the steel sector which I am very familiar with is in a sorry state. We have not been able to move forward. The sole purpose of privatization is to drive value, generate wealth employment and be able to take the country forward."
The Minister also told the committee that Global Infrastructure ruined the Ajaokuta complex by stripping it of all valuable equipment and machineries, leading to the cancellation of the entire process by the federal government.
Another Confusion that greeted the Hearing was the investigation into the privatization of the daily times of Nigeria as two parties claimed the ownership of the tabloid.
Core investor, folio communications limited represented by Fidelis Anosike, claimed to have bought daily times from BPE in 2004 at the sum of 1.250 billion naira insisting that he is still the owner of the firm.
However, DSV Limited represented by Senator Ikechukwu Obiorah claimed that it actually paid for the 96.05% Federal Government shares in Daily Times of Nigeria (DTN).
Mr.Anosike admitted to have borrowed money from DSV Limited, however told the committee that DSV has been trying to hijack Daily Times from folio Communications Ltd.
He added that the Daily Times started publication under him in November 2006 but the firm was forced to stop publication in 2009 due to the antics of Senator Obiorah.
Mr. Anosike disclosed that four ultramodern printing plants procured to turn around the fortunes of the Daily Times, were impounded by his investment partner, DSV since May 2010 in an effort to hijack the firm.
But Senator Ikechukwu Obiorah, who appeared before the committee as Chairman of DSV and Director Daily Times, disagreed, stressing that it was Folio Communications that failed to pay for the 96.05% of the Federal Government shares in Daily Times.
He told the committee that Folio Communications has been stripping and looting assets of Daily Times, and a Federal High Court has declared Folio Communications Ltd not the owner of Daily Times.
The Committee Chairman, Ahmed Lawan directed the two parties to submit all relevant documents in order to ascertain the rightful ownership of the firm.
The Senate Committee also heard how risks giant NICON was acquired by businessman Jimoh Ibrahim: Ibrahim acquired the Nigeria Insurance Corporation illegally at over N18 billion. But Ibrahim in a statement dismissed this allegation, saying he injected N17.5 billion and met no money in NICON account when he acquired the company.
KPMG and Assurance Acquisition Limited (AAL), in a report submitted to the panel, disclosed that the Global Fleet chief used forged documents to acquire.
It claimed that Ibrahim withdrew 20 million pounds from NICON foreign account in London and stripped the company of N6.37 billion.
“The total assets taken out of the company either directly or through companies wholly owned and controlled by Barrister Jimoh Ibrahim and not properly accounted for amounts to N6.37 billion made up as follows: Investment in NICON Investment Limited, N2.484 billion, proceeds from closure of HSBC Bank 1-Day call and Euro currency accounts, N1.739 billion, balance in the Oceanic Bank Plc domiciliary Account, N1.623 billion, investment in NICON Airways Limited, N350 million.”
“Expenses incurred on behalf of NICON Airways Limited, N192 million; erstwhile GMD’s drawings, N12.9 million; expenses incurred on behalf of NICON properties Ltd, N12.5 million; expenses incurred on behalf of NICON investment Ltd, N10.2 million and liquidation of placement with NICON Investment Ltd, N51 million,” it stated.
A representative of AAL, Mr Ifeanyichukwu Osuala, speaking before the committee maintained that Ibrahim posed as Director of Oceanic Bank to fraudulently acquire NICON Insurance from the preferred bidder, AAL.
The representative of NICON Pensioners, Mr Awa Mmaju, at the public hearing, gave the same account of the alleged shady deals by Global Fleet in the acquisition of NICON Insurance.
Asked to confirm the allegations, the Director-General of BPE, Ms Bolanle Onagoruwa, claimed ignorance of the alleged shady deals, stressing that she was not aware of the illegalities levelled against the Chairman of Global Fleet.
The Managing Director of NICON, Emmanuel Jegede, in his presentation before the committee, said the involvement of NICON Insurance and Global Fleet in Air Nigeria erased liabilities of over $250 million at the time of acquisition. He said, apart from the purchase price of $47 million paid by the core investor of the NICON Seguros, N17. 3 billion was injected into the business in 2008 by the core investor.
He said the company’s operation, payment of claims of N113 million was for the Sosoliso Air crash that happened during the transition period of the privatisation. Meanwhile, Ibrahim said he acquired NICON from the Federal Government for $48 million which was bigger than what the other bidders offered.
The Global Fleet boss said he has paid N11 billion on general pension since the acquisition.
He added that it is the BPE’s responsibilities to pay staff pension.
The statement said an audit carried out by KPMD confirmed that NICON was indebted to Ibrahim to the tune of N2 billion when the Federal Government forcefully took over the company from him.
Privatisation process lacked transparency
Former Director General of the Bureau of Public Enterprises, Dr. Julius Bala, asserted that the privatisation process lacked transparency and accountability between 1999 and 2003.
Speaking at the Senate’s public hearing on privatisation, Bala, who took over from Mallam Nasir El-Rufai, at the BPE, relied on a World Bank midterm report of 2003, which reviewed the privatisation process from inception and indicted Mallam el rufai. He said before he took over at the BPE, there was a serious lull on the privatisation process and the World Bank had threatened to withdraw its funding of the privatisation process as a result of the situation. Citing the World Bank report, Bala said that BPE under el-Rufai flouted the rules and failed to follow due process, even as financial expenditures were poorly accounted for. The report as submitted to the committee, read, “ There is no proper internal audit arrangement for the projects; a manual financial system is currently being used; there were major lapses in the retirement of advances; charges made by the project commercial bankers are deemed excessive and inconsistent; interest have not been credited on special account balance; expenses that date back to late 2001 and 2002 were submitted in 2003; expenses are incurred before no-objection was sought from the Bank.
“The most important public enterprises in terms of economic and social impact have not yet been divested. Moreover the bank expressed serious concern about inadequate transparency in some transactions, (e.g NITEL), and failure to comply with the Federal Government’s privatisation procedures in a consistent fashion.”
Bala added that, “In addition, fiduciary oversight and accountability of the privatisation proceeds account have been inadequate to date. The audit of this account has been long overdue. This was the assessment of the World Bank of the privatisation that took place from 1999 to 2003 when I took over.”
He said after a year after he took over, the World Bank released another report which indicated that BPE had refocused and was on track to achieve the privatisation goals. But during his presentation on Thursday, 11 August 2011, El-Rufai had blamed the appointment of his successor, which he did not name, for the derailment of the privatisation process. He told the committee that before he left, he made a recommendation on who should succeed him as DG of the BPE, but former President Olusegun Obasanjo, instead appointed a person whom the BPE had investigated over corruption.
Bala however could not account for his role in granting approval for the sale of some of the assets of Daily Times by Folio Communications, promising to return with details after taking another look at the files.
But he gave details of how BFIG won the bid for ALSCON but was denied the rights to own it because of a security report from the Office of the National Security Adviser.
Meanwhile, former Aviation Minister, Ambassador Kema Chikwe, took time to reply El-Rufai over the sale of Nigeria Airways and said the former FCT Minister frustrated its turn around.
She said El-Rufai was merely venting his political frustration on her, as he only wanted the decay of the airways before it was sold.
According to Chikwe, El-Rufai frustrated every effort to turn around the airways by some foreign companies.
She said, “El-Rufai frustrated the offer of AFREXIM Bank to inject $30m into Nigeria Airways and turn it around. The AFREXIM Chief Executive then was a Nigerian and the venue of the meeting held with him was the Presidency. Lufthansa Engineering was also to turn around Nigeria Airways but El-Rufai refused every attempt to turn around Nigeria Airways.”
The rift between the former President Olusegun Obasanjo and his deputy, Vice President Atiku Abubakar adversely affected the process . According to The former Director General of the Bureau of Public Enterprises (BPE), Mrs. Irene, former President Obasanjo directed her to avoid the NCP and pass all issues on Privatization through the office of the then Minister of Finance, Mrs. Nenadi Usman.
She said: “There was a political lacuna between offices of the President and the Vice President.”
“The President in his wisdom said we should be relating with the then Finance Minister, who is now a senator.”
“Because of that, we were getting approval directly from the President.”
She said that in the situation many bidders were replaced with other companies entirely outside the bidding process.
The current Director General of BPE, Ms. Bolanle Onagoruwa agreed with the position of the former DG stressing that there was a time letters were sent to the President and Vice President simultaneously.
According to her, the Bureau decided to do that because of the political situation in the country at the time.
Many speakers at the Public hearing openly accused former President Olusegun Obasanjo of breaching due process in the sale of some public assets especially the multi- billion dollars Ajaokuta Steel complex. Former Director General of the Bureau of Public Enterprises, Nasir El-Rufai accused Obasanjo of the same offense.
The former Minister of the Federal Capital Territory Administration, FCTA, Mallam Nasir Ahmad El-Rufai, told the Senate Adhoc Committee investigating activities of the Bureau of Public Enterprises, BPE, that the overbearing interference of former President Olusegun Obasanjo and his Vice then, Atiku Abubakar, crippled the privatization programme.
El-Rufai who was the Director-General of BPE from 1999 to 2003 noted that the decline of the privatisation programme started when somebody who had earlier been sacked by the BPE, was brought to replace him.
He said that he repeatedly disagreed with the former President when he made moves to dictate to him. He said he also disagreed with Atiku Abubakar when he (Rufai) insisted that the laws must be followed, even as he said that former President Obasanjo blocked the successful privatization of Nigeria Airways following the stories he received from former Minister of Aviation, Chief Kema Chikwe.
El-Rufai appearing before the Committee said: “All I can say is that during my tenure in BPE we tried to do everything by the law. We tried to resist any attempt at political interference. There was never a time that either President Obasanjo or Atiku Abubakar told me to sell an enterprise to A or B and I listened.
We follow due process. Privatisation was a mechanical process and there was never a time that we deviated from that process. In the 33 transactions that we did we followed the book. If there were lapses that came after I left it was because authorities appointed people that did not understand what privatisation was about but saw BPE as cash cow. Before I left the President called me and said now that you are going to FCT how can we continue what you have started.
The President and I were always quarrelling over privatisation. On Nigeria Airways we quarrelled on the pages of newspapers but he called me and said you have done a decent job give us idea of who should be appointed. I then wrote a memo addressed to the vice president and suggested that my successors should come from within because we have spent a lot of money to train them. I recommended three directors and three deputy directors.
The government of the day decided they were not going to appoint anybody from inside BPE. They brought someone who literarily was fired from BPE and that was the beginning of discarding of rules, doing things capriciously promoting people from one level to three levels and the institution have suffered from it since then. You should have a session with the BPE staff themselves they were 120 in number.
“Except when the vice president called me and said I got call from A and B to help the guy win this bid and I said Mr. Vice president you know the rules. Tell him to bid the highest prices because the highest price wins. He replied saying I know but I want to tell you in case they contact you I don’t want them to say I didn’t pass on their message.
President Obasanjo blocked the privatisation of Nigeria Airways practically because Kema Chikwe will go and tell him stories and what is the result today? The company is dead. 2000 jobs have been lost.
“We never investigated anyone for corruption except in my last three months and the only person we investigated ended up being the DG so it is part of the problem. BPE can be improved but I think the key is to have the right people in there and protect them from political interference and fund them properly.”
According to him as the DG, ‘’I supervised the privatization of 23 of the 122 enterprises that have been privatized to date (amounting to 18% of the total). These enterprises came from sectors including hotels and hospitality, banking, cement and oil marketing. Most of them are doing well, and a few have even gone international. For instance, Oando is now listed on the Johannesburg Stock Exchange. Some of the companies are listed below: Unipetrol (now Oando) African Petroleum; National Oil (now Conoil) Ashaka Cement; WAPCO, CCNN; BCC Calabar Cement, Capital Hotel, Abuja (Abuja Sheraton); Festac ’77; Nigerian Hotels Limited (now Southern Sun, Ikoyi); Nigerian Hotels (Caterers’ Court, Ikoyi) Nigerian Hotels (House 8 & 9 Lees Road, Ikoyi); and Nigerian Hotels (Audit Section, Ikoyi)”
Returned N57bn to FG
The former Minister who reminded the public what the goals were when the government decided to pursue the policy of privatisation, said that the government decided to reduce or eliminate the drain inefficient public enterprises constituted on the public treasury, adding that he had 33 transactions, closed 23 and returned N57 billion to the Federal government Treasury, adding that from 1970 to 1999, the Federal government invested over $100 billion in building enterprises, but earned only 0.5% return on investment from the. He said that the companies were costing the government N265 billion annually to maintain.
According to El-Rufai ‘’what has happened by the late 1970s it was a period that public enterprises were not working instead they were not only a drain on the economy they were providing services, they were not solving the problem they were meant to solve but they were captured by the elites for their own benefits.
“In the BPE then we crafted a phrase which we called the ‘the reverse Robin hood’ they were stealing from the poor and givento the rich. Because only the rich and the connected get the services. Nigeria’s privatisation was not driven by any ideology.”
From subsidised foreign exchange, to import duty and tax exemptions and not paying VAT, to revenues they don’t remit this is what the FG paid to keep public enterprises. “In that during Abdusalami’s regime, the budget of the Federal government was N300,000 but we spent N265 billion supporting inefficient, corrupt, and epileptic public enterprises.
That was the philosophy behind privatisation and commercialisation of the companies. 33 privatisation a transaction, 23 were closed as at the time we left, and we remitted N57 billion to the treasury. Apart from one of the companies all were doing very well.”
So to blame privatisation for these companies not doing well is being economical with the truth.
‘’We spent over $100 billion USD from 1973 to 1995 to establish public enterprises. But their return was 0.5 percent per annum it is in the vision 2020 report. Tell who will keep such companies? Only an idiot will do that.
‘’Example NITEL for 25 years only provided 400,000 telephone lines after putting in $7 billion USD the most expensive phone system in the world and they actually think they were doing you a favour if they give you a telephone line.
‘’So this is where I want us to begin from. And to say that the purpose is to create jobs is wrong. That was not the mandate to BPE is to reduce these companies from the treasury, make them more efficient, open up the market for competition so that other operators can come in. NITEL had 11,000 employees, they will lose jobs but how many jobs were created by the telecom industry?
‘’In the year 2000, as at December, 2000 the total liabilities of 39 public enterprises was in excess of N1.1 trillion and they have accumulated loses of N92 billion naira and they consume over $3 billion USD per annum or about N10 million a day. The justification for selling them was very clear and we did it.
‘’The only thing that is working in Nigeria today is what is run by private sector. Today we produced 9000 mega watts of power in our homes with generators and NEPA is giving us 3000.”
When asked to say whether the privatisation process was beneficial to Nigerians as a whole?, he said, ‘’I am reluctant to judge my successors. So when I ever I do job I move on and don’t look at what my successors do. We were working 20 hours in day and seven days a week.”
With Obasanjo’s name featuring prominently in the shady deals, human right activist, Femi Falana yesterday urged the Senate Ad-Hoc committee to summon former President Obasanjo to come and defend himself on the allegations made against him.
Falana, who spoke before the committee ended its six - day public hearing, said that it should not give the impression that certain persons were being protected.
He said: “I want to appeal to you; there are people that have been mentioned here like President Obasanjo. He was in Switzerland two months ago and he told the whole world that Nigeria is not fighting corruption again.”
“Please pursuant to your power under the constitution you can summon anybody and I appeal to you to summon President Obasanjo who has been accused repeatedly of violating the law and due process to give away these assets at below their actual value and I want you to take this very seriously.”
“Other people that have been mentioned must also be brought here otherwise your committee will be accused of covering up certain people and I know with the way you have conducted this proceedings you meant well for Nigeria.”
Falana continued: “ALSCON valued at 3.2 billion dollars was sold for 130 million dollars. What we lost in that transaction alone is N473 billion. You pay Russians to come and fix Ajaokuta, it is not possible because you want to compete with them. You said we should stop public monopoly but we now have bastardized private monopoly. We are currently nationalizing our banks because these so called private investors destroy those banks and destroy families in Nigeria and if we are not careful this economy will be totally grounded.”
“With privatization, we have violated the constitution of Nigeria. This is all about foreigners and these foreigners were brought to destroy Nigeria. These Indians came to Nigeria with their briefcases and they went to our banks to take loans and use our assets as collateral. I have not seen anything like that before. In other countries where there has been privatization you bring in capital to refuel the economy but that is not what they do here.”
“Since we started privatization in 1988, we have always been looking for these foreign people to come and take over Nigeria. There are assets of Nigeria that are not listed for privatization that have been privatized, among them are the 1004 quarters in Lagos. I urge you to revoke all these illegal sales, nationalize them and get good people to run them.”
“When he was military Head of State, he nationalised the companies. There is no country in the world that has engaged in total privatisation. How can you construct an industry for N480bn and seel that asset for less than N10bn?”
The Public hearing ended on Friday with the Senate Committee saying they will now study and harmonize all the submitted memoranda and visit some of the erstwhile public companies being investigated.
President Goodluck Jonathan set the ball rolling when on 4 August 2011 he expressed dissatisfaction with the ongoing privatisation process in the country, saying it has not reached the expectations of Nigerians. The president directed that industries still moribund after they had been privatised should be sanctioned.
Jonathan said that he was of the opinion that a number of privatised enterprises were not doing well. The president, expressed his displeasure that some companies that had been privatised for over 10 years had not been working. The Senate then ordered a sweeping probe of sales of several national companies to private investors since 1999 in "flawed processes", which lawmakers say have resulted in mass loss of jobs and the collapse of the corporations.
A seven-member committee was then mandated to submit, within four weeks, a report on the privatisation of hundreds of public-owned companies since the creation of the Bureau of Public Enterprise in 1999. "This is the biggest fraud this country has witnessed. There is nothing wrong with privatisation, but unfortunately, it has been improperly done," said Abdul Ningi, a senator from Bauchi State.
Vice president, Namadi Sambo - who heads the National Council on Privatisation - said 80 per cent of sold government companies have failed "due to lapses in the privatisation process." Lawmakers questioned all the sales of previous companies and noted that privatised companies in steel sector that used to employ up to 20,000 workers, now have less than 4,000 after the exercise. The electricity meter company of Nigeria, Zaria, that was privatised in December 2002, recently fired about 90 per cent of its workforce.
Members of the senate committee are Ahmed Lawan (Yobe North), Babafemi Ojodu (Ekiti Central), Ali Ndume (Borno South), Philip Aduda (FCT), Ifeanyi Okowa (Delta North), Hope Uzodima (Imo West), and Mohammed Magoro (Kebbi)