Date Published: 08/11/09

Agagu left N117bn debt -ODSG

Ondo State Governor, Dr Olusegun Mimiko on Monday laid to rest the controversy surrounding the State’s finances with a revelation that Dr Olusegun Agagu who left office on February 23 this year via the Court of Appeal’s judgement, bequeathed a whopping N117billion debt for his government.

Specifically, the Governor came down hard on the Agagu administration and rapped it over what he termed “its mindless and questionable spending” saying that this suggested “a deliberate action, particularly after the July 25, 2008 Tribunal verdict, to render the State bankrupt as well as a hint of a predatory mindset determined to lay the finances of the State to waste rather than leave behind a healthy balance in the event of a court-ordered ejection from power.” The state of the State’s finances had been a source of serious debates in recent time with Agagu and his Finance Commissioner, Mr. Tayo Alasoadura giving conflicting figures of what the administration left behind. The State House of Assembly which has a majority of the Peoples Democratic Party (PDP) members equally joined the fray threatening to sanction the State government if it does not come out with the true position of the State’s finances.

Dr Mimiko who disclosed this in a State-wide address on Monday regretted that the N117bn left behind by Agagu as commitment on contracts and other liability was about 300% above the sum of Thirty Four Billion, Two Hundred Million Naira (N34.2b) which his government met as liquid assets from the Agagu administration.

The Governor lamented that given the wide gulf between the inherited State’s liquid assets of Thirty Four Billion, Two Hundred Million Naira (N34.2b) and the liabilities of One Hundred and Seventeen Billion Naira (N117b), saying that the situation had placed a lot of stress on government in meeting the genuine aspirations of the people of the State as encapsulated in its manifesto.

His words: “At the present level of income, and even without government embarking on any new capital project expenditure, it will take us at least Ten years to meet these commitments. The reality from the foregoing therefore is that the State will have to re-prioritize ongoing capital projects.”

While disclosing that his government had been under intense pressure to make these disclosures before now especially when some operatives of the previous Administration embarked on a self adulation public relation blitz aimed at distorting the true financial position of the state, government, the Governor said, bided its time in order to be painstaking and factual despite the fact that it was running a Government without the benefit of Hand over Notes from its predecessor.

Mimiko while insisting that what appeared to be an “uncommon profligacy” took place in the last administration, disclosed that from the facts available to his government, contracts awarded through the State Executive Council in the over Five-and -half years of the Agagu Administration revealed something particularly interesting. His words:“The value of such contracts awarded between July 25, 2008 when Election Petition Tribunal gave its verdict and the Court of Appeal affirmation of February 2009 (that is, seven month period), was in the excess of N51.1Billion. This exceeded the value of those awarded (N30.8Billion) in the entire first four years of the administration.” He equally revealed that contracts for road construction and buildings attracted 50% mobilisation fee in those seven months of contract bazaar as against the 30% obtainable in the preceding era and as sanctioned by extant financial regulations.

He listed some of these projects with funny payments obviously used to skimmed the State of billions of naira as: the Ajagba-Iyasan Road whose earthwork component worth Three Hundred Million Naira (N300Mn), earlier done early in the Agagu Administration was duplicated and the entire contract was re-awarded to Messrs GSQ Ltd, believed to be owned by a member of the last administration, for Nine Hundred and Two Million, Two Hundred and Twenty Three Thousand, Nine Hundred and Seventy One Naira, Ninety Two Kobo (N902, 223,971.92 Mn). The sum of Four Hundred and Fifty One Million, One Hundred and Eleven Thousand, Nine Hundred and Eighty Five Naira, Ninety Six Kobo (N451, 111,985.96 Mn), or 50% of contract value, was thereafter paid as Mobilisation Fee. Despite this, the road project has since been abandoned. Supply of Lawn mower As part of the Golf Course project in Idanre, a lawnmower was supplied for One Million, Seventy Eight Thousand, Eight Hundred and Sixty Seven Naira, Fifty Kobo (N1, 078,867.50), when a lawnmower of the same specification sells for Sixty Five Thousand Naira (N65, 000.00) per unit in the open market in Arakale, Akure. The Owena Multipurpose Dam, a contract of N14Billion was hurriedly rushed through, out of which N3.8Bn was paid few days to the exit of the administration.

According to him, the State government  had approached the World Bank to help procure the services of a consultant of international repute to help re-assess the project. The Adagbakuja New Town, a project initiated by the Adefarati Administration under the name, Ugbo New Town and for which that administration had carried out an Environmental Impact Assessment through the Ondo State Oil Producing Area Development Commission
(OSOPADEC) for Eleven Million Naira (N11Mn).  The governor disclosed that when Dr. Agagu came on board, the Environmental Impact Assessment
was replicated for the sum of Twenty Five Million Naira (N25m), followed by a Master Plan design (Urban and Regional) at Ninety Five Million Naira (N95m). Yet, according to Mimiko, another Seventy Million Naira (N70Mn) was spent on a purported ‘Master Plan (Engineering).’ Then, a contract of Six Billion, Seven Hundred Million Naira (N6.7Bn) was awarded for sand filling of the area with 100% payment already made without retention fee for post-consolidation period as conventional practice requires. While expressing dismay that presently, about half of the sand-filled area has been submerged under water, he assured that the State government hope to engage the services of a reputable expert to unravel this Adagbakuja mystery.

Governor Mimiko further disclosed that one of the embarrassing features of some of the transactions on the finances of the State under the past government was the personalization of government accounts by political office holders. He buttressed his point with the case of the Multilateral Relations Unit of the Governor’s office where the then Coordinator of the Unit, a political appointee, operated a secret account supposedly on behalf of the unit with a bank (name withheld) in Akure.“The said official was the sole signatory to the account with No 0122070235677001 and he solely operated it contrary to the regulation governing the operation of public accounts.

Our preliminary findings show that about One Billion Naira (N1Bn) went through this single account! Curiously, this official still withdrew money from the account after government froze all accounts. The last withdrawal, the sum of Nine Million, One Hundred Thousand Naira (N9.1Mn), was in June 2009, four months after leaving office.“We also found out that other accounts were opened outside of the State in government’s name in manners that did not conform to laid-down rules,” he stated.

Mimiko also spoke about cases of unwholesome stock manipulations running into billions of Naira by known functionaries of the past government. Several of the State’s inherited stocks were auctioned in very suspicious manners and at equally suspicious values. He disclosed that available information “indicates that the state may have been short-changed to the tune of about N3Billion from unhealthy deals in shares of the State in several business concerns.”

We have commissioned further investigations to unravel the full dimension of such shady deals as this government will leave no stone unturned in the planned effort to retrieve what rightly belongs to our people. On the vexed Operating License 241 (OPL 241) which the Agagu government has of recent quoted as one of the blue-chip investments it left behind, the Governor posited that the stakes of the State in the POL241 needed to be laid bare now because of the falsehood that has been thrown to the public.

“It is true that the last administration, through the state-owned Owena Oil and Gas Company Ltd, put in and lost a bid for OPL 241. Oilworld Ltd, a private business concern, won the bid at Twenty Million US Dollars ($20Million); Eight Million Dollars ($8Million) above ODSG’s bid of Twelve Million Dollars ($12Million).“Curiously however, the State thereafter paid the sum of $20million to Oilworld Ltd for 80% stake of the same oil block. Not done, the past
administration also made commitments to pay another $4million as profit margin for the said fraction of the total stake upon Production Sharing Contract (PSC) signature.

“The import of the arrangement is that Owena Oil and Gas paid an instant 50% premium on the block without the benefit of any compelling technical analysis to warrant such. More worrisome however is the fact that this government has no record of any offer for the block other than a fathom offer of $37Milliom claimed by functionaries of the past administration. Yet, management and consultancy fees of about $1Million have accumulated; the PSC signature is still pending and the company – Professional Expert and Energy Company Limited (PEECO) owned by the Managing Director of Owena Oil and Gas, doubles as consultant for the transaction.

“Such a deal has been categorised by the past administration as a worthy investment; our findings show something akin to fraud. We have commenced action to fully unravel the mystery surrounding this initiative. We assure that we will spare no energy in the bid to get the full worth of the State’s involvement in OPL 241.” To Dr Mimiko therefore, the myriad of financial transactions through mindless and questionable spending by the last Administration“suggests a deliberate action, particularly after the July 25, 2008 Tribunal verdict, to render the State bankrupt.” Said he: “At the Ministry of Education for example, over 240 contracts were awarded within one week each amounting to about Nine Hundred Thousand Naira in January 2009 alone.“Obviously, there is more than a hint of a predatory mindset determined to lay the finances of the State to waste rather than leave behind a healthy balance in the event of a court-ordered ejection from power. This explains why the former Commissioner for Finance boasted, a few days to the Judgement of the Court of Appeal, precisely on February 9, 2009 that: “we cannot allow the opposition to spend our hard-earned resources”. He had added that the past government ‘will not fold our arms and watch some people expend the money on frivolities’. This statement, which obviously defined the mindset of the last administration in its final days was widely reported by the mass media”