Date Published: 05/04/10

EFCC Interim Report on Ribadu's Disposal of Assets

The Executive Chairman of the Economic and Financial Crimes Commission (EFCC), Chief (Mrs) Farida Mzamber Waziri directed five (5) other officers to study the position and disposition of assets forfeited to the Federal Government of Nigeria through the EFCC. The terms of reference of the Committee include to:  

The cases treated in this Interim Report includemainly:  

Other cases also identified but which would feature in the Final Report include:  

A. COMMENTS ON THE SALE OF ASSETS OF TAFA BALOGUN  

1. Diya Fatimilehin & Co  

The circumstances surrounding Diya Fatimilehin & Co.’s appointment are unsavory. Suffice it to say however, that Diya Fatimilehin & Co. had three (3) roles in the sale of Tafa Balogun’s property. They were appointed as (a) Valuers; (b) Rent Collectors (See Appendix 19) and (c) Managers of the forfeited property. The Committee also observes what constitutes unlawful practices by Diya Fatimilehin & Co. These include:  

The Committee is therefore of the opinion that Diya Fatimilehin & Co. be made to account for and refund interests accruing from all such unlawful lodgments.  

2. Rotimi Jacobs & Co.  

Rotimi Jacobs & Co was the sole prosecutor of EFCC cases. Diya, Fatimilehin & Co was also instructed to liaise with the company as the legal counsel in the asset disposal process. Despite letters and telephone calls, the Principal Partner, Mr. Rotimi Jacobs failed to appear before the Committee.  

3. Observations of the Committee on Due Process and Due Diligence Questions  

3.1 The Briefing of Parties  

The Committee observes that the Attorney-General of the Federation; The Minister of Work; The Accountant-General of the Federation and the Auditor-General, who ought to be parties in the disposal of property forfeited to the Federal Government as stipulated in the EFCC Establishment Act and as required by Financial Regulations 2520 (Revised 2006) were not briefed by the Secretary of the Commission when assets were sold.  

3.2. Valuation of Forfeited Property  

The Committee observes that the rules for evaluating forfeited property were not followed. Financial Regulation 2509 (d) (Revised 2006) provides for the involvement of the Ministry of Works in the valuation process, while 2510 (Revised 2006) provides for consultation with the Accountant-General of the Federation.  

What the Committee observed in Tafa Balogun’s case was the unilateral appointment of Diya Fatimilehin & Co. by the Management of the EFCC as sole valuer; Manager; Rent Collector and Auctioneer. This negates the checks and balances necessary for the transparent disposition of the forfeited assets.  This may explain why the Committee observed that Tafa Balogun’s properties were sold below their prevailing market value. Glaring examples of under-valuation in our opinion are the cases of Plot 2220 Suez Crescent Ibrahim Abacha Estate, Wuse Zone 4, Abuja a property whose land alone would sell for more than the paltry N280 Million for which its Five (5) Bedroom Five (5) Detached Duplexes was sold. This is in spite of the fact that the owner’s own evaluation of the five (5) duplexes stood at N500 Million. Other cases of under-evaluation are YASHUA and SHAKIR plazas, properties located in the heartland of Abuja commercial district for N200 Million and N300 Million respectively, sums the Committee believes do not reflect the true market values of these properties. The Chairman may wish to seek professional advice on this judgment.   

4. Due Process Questions- Due Diligence and Know Your Customer Requirements.  

The Committee observed due diligence and Know Your Customer (KYC) requirements was not observed in the sale of Tafa Balogun’s property. This is evidenced in the fact that of the nine (9) persons who bought Tafa Balogun’s houses, only three are legal persons. These are:  

From inquiries made at the Corporate Affairs Commission (CAC) and based on their letter Ref/PRD/9/Vol XX/072 dated 12 th February 2009 (See Appendix 23), the Committee can authoritatively aver that the other “buyers” do not legally exist. These are:  

One of the main dangers attending such in-diligence include the risk of convicts buying back forfeited assets through proxies. There also is the danger of the sales forfeiture process becoming an avenue for money laundering and practices inimical to the Establishment Act.  

5. Deposit of the Proceeds of Sales of Forfeited Property.  

Regarding the deposit of proceeds of the sale of Tafa Balogun’s property, the Committee observed the following:  

Our opinion is upheld by the letter of the Accountant General of the Federation Ref/FST/AB/EFCC/1/Vol.1/ dated 4 th March 2009, where he affirmed:  

“…records in Our Office and the Consolidated Revenue Funds Account of the Federal Government of Nigeria did not confirm receipt of the proceeds of sales in respect of the listed properties.”  

In his letter Ref/1094/2004/CONF./30 dated 12 th February 2009, the Auditor-General of the Federation also affirmed the non-inclusion of his Office in the asset disposal process,  

“…The Auditor-General for the Federation was neither informed of the sale of the assets…nor provided with the reference number, date and amount of the Treasury Receipts for the proceeds of the sale of the same contrary to Financial Regulation 2520 (Revised 2006).”  

6. Management of the Proceeds of Sales/Rents of Forfeited Property  

The Committee would also want to observe further that the lodgment of proceeds of sales of forfeited assets and forfeited cash in what the Commission calls the Recovery Account is a violation of the EFCC Establishment Act and Extant Financial Regulations.  

This situation is further compounded by the habit of failing to promptly cash and appropriately deposit forfeitures made out in cheques and drafts. As at the time of writing this Interim Report, the Committee has identified N3.4 Billion in stale cheques; N484, 385, 904.69 in un-cashed banks drafts; and $554, 878, 78 lying dormant in the Lagos Exhibit Room alone.  The figures would be higher when the Committee visits the Abuja Exhibit Room. The Committee understands some of these cheques have been revalidated. But what use is the re-validation when such cheques remain locked up in the vaults of the Exhibit Room? This hoarding of cheques; drafts and financial instruments is a violation of the law and continues to hinder the movement of the funds into the Consolidated Revenue Fund of the Federal Government. The continued custody of proceeds of these sales not only violates the Establishment Act, but provides grounds for abuse and misuse.  
 

B. COMMENTS ON THE SALE OF ASSETS BSD ALAMIEYESEIGHA  
 

1. Due Process and Due Diligence Questions on the Disposal of DSP Alamieyeseigha’s Assets  

The Committee again wishes to observe that as was the situation in Tafa Balogun’s case these briefings as required by law were not done.  

2. Valuation of Alamieyeseigha’s Property  

The Valuation Process involves the Attorney-General of the Federation setting the rules of the sales as indicated above and further entails:  

As was the case in the disposal of Tafa Balogun assets, officers of the Commission did not involve these relevant parties in the valuation of the properties earmarked for disposal.  

3. The Secretary of the Commission and Rules for the Sale of Alamieyeseigha’s Property.

In the verbal interview with the Secretary on the 23 rd of February 2009, he stated he initiated a letter to the Attorney General of the Federation on the disposal process, but got no response. However, he proceeded to set rules for the disposal process. These include:  

(1) Advertisement for the engagement of Estate Valuers.  

(2) Enunciation of the rule that Valuers cannot also be sellers.

(3) The setting-up of a DEDICATED ACCOUNT to receive proceeds of the sales in Access Bank.  

(4) That Estate Agents be paid by the buyers of the property while the Commission paid JIDE TAIWO & CO. and Okoli & Associates as Valuers of property in Lagos and Abuja.  

4. Due Diligence; Know Your Customer Requirements and the Disposal of Alamieyeseigha’s Property  

The Committee wishes to observe that unlike in the Tafa Balogun case, there were attempts to initiate activities akin to the requirements of the EFCC Establishment Act by the Secretary of the Commission. The Committee recognizes his limitations and challenges as conditioned by an atmosphere where the over-arching paraphernalia of authority was not predisposed to due process. However, the law should have been obeyed and the sales process kept in abeyance until all relevant parties had been briefed as required by the Establishment Act. In our opinion, the process initiated by the Secretary of the Commission was generally more transparent as Valuers did not become sellers as we saw in the Tafa Balogun case.

We however wish to observe the absence of due diligence in the process of the sales. The buyer of 18 Mississippi Street, AEROBELL NIG LTD does not legally exist Further proof of lapses in due diligence is indicated by the Commission’s omission of the oligopolistic grabbing demonstrated by Chief Victor Ifeanyi Odili. Chief Victor Odili who paid for 18 Mississippi Street under the legal non-entity AEROBELL NIG. LTD also bought 20 Obagi Street Port Harcourt, under the name BRAWAL SHIPPNG NIG LTD and also proceeded to buy 34 Amazon Street Ministers Hill Maitama. This sort of consummate acquisitionist should have raised an alarm for an anti-money laundering agency.  In general, the omissions of the Secretary of the Commission in the asset forfeiture process must be judged within the context of an atmosphere where civility and due process were swamped by an essentially operational culture.  

5. Deposit of Proceeds of Sales and Rents of Forfeited Property.  

As indicated above in Section 31 (2) of EFCC Establishment Act 2004 and Financial Regulation (Revised 2006 2520) requires that proceeds be deposited in the Consolidated Revenue Fund of the Federation within FORTY-EIGHT HOURS of receipt of sale in the nearest Sub-Treasury. The law further requires that receipts of sales be deposited with the Auditor-General of the Federation pursuant to Financial Regulation 2520 (Revised 2006).  

On the crucial subject of deposit of proceeds of the sale of Alamieyeseigha’s property, the Committee wishes to observe that the creation of a dedicated account violated the rule that proceeds of sale be sent to the nearest Sub-Treasury within 48 hours. The Committee observed:  

(a)  The non-involvement of the Accountant-General of the Federation as required by the Establishment Act and extant Financial Regulations.

(b)  The non-involvement of the Auditor-General of the Federation as required by the Establishment Act and extant Financial Regulation, especially Regulation 2520.  

(c)  The neglect or omission to deposit proceeds of the sale of the forfeited property in the Consolidated Revenue Fund as required by the EFCC Establishment Act and extant Financial Regulations.  

6. Chelsea Hotel  

Having read and perused the statements of accounts and returns made by Diya Fatimilehin & Co. the Committee wishes to disagree with the image of degradation hoisted on Chelsea Hotel as if it were some wasting asset. What we observed are acts of mismanagement resulting in the proceeds of the hotel being ploughed into wasteful expenditure.In 2006, Chelsea Hotel made N155, 359,727.02. This rose by 35% when they made N373, 335, 421.12 in 2007. In 2008 Chelsea Hotel made N50, 570, 624.26 in the first two (2) months (January and February). At that rate, it would have repeated the feat of 2007 with a projected income of N372 Million. What we observed in the management of Chelsea Hotel under Diya Fatimilehin & Co was a “plundering of plunder” which made it impossible for the hotel to break even. Infact, under Diya’s Fatimilehin & Co. Chelsea Hotel has been unable to hit the N29 million naira net income achieved under the previous management.  On hindsight, this Committee is of the opinion that letting an estate agent manage a hotel of the status of Chelsea was a gross miscalculation.