Socio-Economic Rights and Accountability Project, (SERAP) has sent an open
letter to President Muhammadu Buhari requesting him to use his “good
offices and leadership position to revisit and refer the allegations of
corruption and abuse of process in the privatisation of public enterprises
in Nigeria between 1999—2011 to the Economic and Financial Crimes
Commission (EFCC) and the Independent Corrupt Practices and Other Related
Offences Commission (ICPC) for further investigation, and if there is
relevant and sufficient admissible evidence, for anyone suspected to be
involved to face prosecution.”
The organization urged Buhari to “reform the Bureau of Public Enterprise
(BPE) to remove opportunities for corruption in privatisation process, and
to instruct the EFCC and ICPC to ensure the recovery of proceeds of
corruption. We request that you take the steps within 14 days of the
receipt and/or publication of this letter, failing which SERAP will
institute legal proceedings to compel your government to act in the public
interest.”
In the letter dated 1 December 2017 and signed by SERAP executive director
Adetokunbo Mumuni the organization said: “SERAP has obtained and carefully
read the full report of the Senate Ad-Hoc Committee on Investigation of
the Privatisation and Commercialisation Activities of the Bureau of Public
Enterprise (BPE) from 1999 to 2011, which contains damaging allegations of
corruption, presidential interference, and abuse of due process in the
selection of core investor, valuation of public enterprises, pricing of
shares/assets, determination of workers terminal benefits, and use of
proceeds of privatisation.”
According to the organization, “Many cases of presidential
directives/interference during the period under review (1999-2011)
affected the process of core investor selection. The BPE was negligent and
ineffective in monitoring of privatised companies. In some cases, BPE
never monitored the companies for the entire lock-in period and in other
cases their reports were complete opposite of what was on the ground.”
The letter copied to Vice President Yemi Osinbajo, who is also the chair
of the National Council on Privatization (NCP), read in part: “It is in
the public interest that any sales of public assets will get the best
value but the Senate report shows exactly the opposite. By revisiting the
privatisation process and referring the allegations of corruption
documented in the report to the EFCC and ICPC, your government would be
demonstrating that it’s willing and able to fight impunity of perpetrators
of corruption, which is responsible for legacy of grand corruption and
abuse of office in the country.”
“Specifically, the committee among others found that: A total sum of
N301bn was realised as proceeds of privatisation from 1999 to 2011. N900m
of that was used as loan to Nigeria Re-insurance Plc for recapitalization,
in violation of section 19(2) of the Public Enterprises (Privatisation and
Commercialisation) Act 1999. Folio Communications Limited pledged the
assets of Daily Times Nigeria Plc to obtain loan from bank(s) and utilized
the loan to pay for the share of the company.”
“Core investor converted the premises of Volkswagen Nigeria Limited into
bonded warehouses for storage of contrabands mainly rice, vegetable oils,
fertilizer, but was not reported by the BPE. Former Director-General of
BPE, Mrs Irene Nkechi Chigbue sought and received direct approvals of
former President Olusegun Obasanjo for many privatisation transactions, in
violation of Section 11 of the Public Enterprise Act and the Bureau
Procedure Manual.”
“Aluminium Smelter Compny of Nigeria (ALSCON)—BFIG Corporation of the USA
was declared preferred bidder and winner with a bid of $410 million after
going through the bidding process but was denied its legal right to
negotiate terms, sign Share Purchase Agreement and pay 10% initial
payment. However, BPE approved a Willing Seller Willing Buyer to
Rusal/Dayson for $250m and cancelled BFIG Corporation $410m offer.
Aluminium Smelter Company of Nigeria was grossly undervalued, having being
built for $3.2bn and was privatized by BPE for $130m excluding $120m Imo
River Channel Dredging cost from the purchase consideration.”
“Michelle Nigeria Limited emerged as the preferred bidder of the Apapa
Port Complex Terminal “C” but it was given to ENL Consortium Limited which
already had one, in breach of Ground Rule 7, which states: “No single
bidder/concessionaire would be allowed to have more than one concession in
Apapa Port Complex.” BPE reversed the process instead and gave Terminal
“C” to ENL Consortium Ltd without cancelling the Michelle Nigeria Limited
offer, in breach of the core investor selection process.”
“Former Director General of BPE Ms Bolanle Onagoruwa abused the approval
process in the sale of 5% Federal Government’s residual shares in EPCL to
Indorama Group, in contravention of the First Schedule of the Public
Enterprises (Privatisation and Commercialisation) Act 1999. Indorama Group
has already acquired the maximum 75% shares reserved for core investor in
EPCL as provided in the First Schedule Section 1(1) no. 6 of the Act.”
“The share purchase agreement created an escrow account into which all the
monies shall be paid. However, the escrow account was not opened. The
enterprise was handed over to the purchaser without payment of the
purchase consideration. Former president Olusegun Obasanjo approved the
addendum, in violation of the Privatisation Act and the share purchase
agreement.”
“All former Directors-General of BPE (Mallam Nasir el-Rufai-1999-2003; Dr
Julius Baba-2003-2004; Mrs Irene Chigbue-2004-2009; Dr Chris
Anyanwu-2009-2010; and Ms Bolanle Onagoruwa-2010-2012) established several
accounts with various commercial banks, in violation of Section 19(1) of
the Public Enterprises (Privatisation and Commercialisation) Act 1999.”
“All former Directors-General used privatisation proceeds to pay
transaction expenses, consultancy fees and staff terminal benefits without
appropriation by the National Assembly, in violation of Section 19(2) of
the Public Enterprises Act. Former Director-General of BPE Mrs Irene
Chigbue used privatisation proceeds to execute capital projects (Office
extension) in 2007 in violation of this provision.”
“The process of privatisation of public enterprises was totally set aside
in the concession to Global Infrastructure Holdings Limited and Global
Infrastructure Nigeria Limited by the then Federal Ministry of Power and
Steel Development in breach of Section 11(c) of thee Public Enterprises
Act. BPE later converted the Concession Agreement to a core investor
agreement, in breach of the transaction process.”
“The N1.9bn Privatisation Proceeds loaned for recapitalisation of Nigeria
Re-insurance Plc and Nicon Insurance Plc was not used for that purpose and
the BPE is yet to recover the money. Contract for dredging Imo River
Channel was overvalued at $120m by BPE. This would cost less than $100
today (2011). 43 enterprises of 122 privatised companies are not
performing.”
“The core investor of Transcorp Hilton Hotel agreed among others to within
3 years construct a shopping mall within the Hotel grounds; and construct
short/long stay serviced apartments on the available land within the hotel
premises. However, to date the core investor has failed to deliver in
breach of clause 8.4 of the share purchase agreement and BPE also failed
to apply sanctions as provided in clause 10.”
“The core investor of Abuja International Hotels Limited (Nicon Luxury
Hotel) agreed to invest at least additional N2bn to complete the
furnishing of the hotel and provision of ancillary services to a 5-year
deluxe status within 9 months. However, the core investor has failed to
comply, in violation of clause 7.3 of the share purchase agreement and BPE
has failed to apply sanctions as provided in clause 9. Also, the core
investor of Sheraton Hotel and Towers, Abuja has failed to comply with the
share purchase agreement, in violation of clause 8.6 and the BPE has
failed to apply sanctions as provided in clause 9.”
“The core investor in Nigerian Cement Company Plc (Nigercem) has woefully
failed to fulfil its technical and financial obligations several years
after privatisation. The core investor in Delta Steel Company agreed to
invest $100.65m within 15 months but no evidence of such investment. The
Delta Steel Township 1 Housing Estate is comprised of 4,500 housing units;
1,109 unauthorised plots were illegally sold/allocated by the BPE.”
“Dr Julius Bala should be investigated by anti-graft agencies for giving
approval to Folio Communication Limited for the illegal sale of assets of
Daily Times Nigeria Plc. Ms Bolanle Onagoruwa showed gross incompetence in
the management of the BPE and she illegally and fraudulently sold 5%
Federal Government residual shares in Eleme Petrochemicals Company Limited
(EPCL).”
“Poor privatisation monitoring, skewed share purchase agreements in favour
of investors in many instances and abuse of process in utilizing
privatisation proceeds further marred the privatisation programme. Some of
the share purchase agreements were skewed in favour of private investors
against public interests. In the Nicon Insurance Plc share purchase
agreement, the BPE deliberately removed the protective clause on sales of
assets without BPE’s written consent within the first 5 years.”
“Bid bonds are usually refunded to bidders after closure of bidding. In
the case of crystallized bid bonds transaction expenses are deducted
before refunds. BPE abused this process in the sense that National Council
on Privatization (NCP) approvals for funds are kept for years without
payment.”
“Terminal benefits of workers of companies slated for privatisation are
usually computed by management or by an appointed BPE Actuarial Consultant
before payment. The processes are often abused by BPE. In NITEL, workers
were forced to accept less than 5 years pension buy-out where it was
agreed earlier for 5 years. BPE owed workers in Delta Steel Company
(N5.2bn); and ALSCON (N2.7bn). In Federal Superphosphate Fertilizer
Company the Actuarist computed and recommended full payment of N457m but
BPE paid only N383m leaving a difference of N73m.”
“Workers of National Steel Raw Materials Exploration Agency, Kaduna are
owed gratuities of N150m by Nicon Insurance Plc. Workers often benefit
from allotments of shares in companies undergoing privatisation on
request. The reserve shares are however not granted on free carriage in
compliance with provisions of the First Schedule Section 1(1) in line with
Nigeria Individuals Participation as Percentage Post Privatisation. Out of
the 122 privatised public enterprises only 14 enterprises had shares
reserved for workers. 11,000 jobs were lost in Nitel/M-Tel; 2000 jobs were
in Daily Times; and 1000 jobs were lost in ALSCON.”