The Ribadu Committee Report on NPA that nailed Bode George, others

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*Courtesy EFCC

The committee’s terms of reference were derived from the letter CM /211 / 455 of 1 April 2005 issued by the former Secretary to the Government of the Federation, Chief Ufot  J. Ekaete, CFR, mni, as stated hereunder:

a) To carry out an in-depth investigation on all contracts awarded by the Nigerian Ports Authority from 2001 to 2003, and to examine all outstanding bills from its creditors;

Ribadu

Ribadu

b) To ascertain whether or not such contracts were awarded in accordance with extant government rules and regulations governing the award of contracts;

c) To identify  the culprits and apportion blame as applicable;

d) To make any other recommendation that the committee deems necessary.

The committee, which was given six months within which to submit its report, had its inaugural meeting on 7th April 2005. In order to adequately address all the relevant issues contained in its terms of reference, the committee adopted the following methodology:

Collation, review, and analysis of relevant Information/documents of all contracts awarded by the NPA during the period under review.

Bode George

Bode George

In order to achieve this objective, the authority was requested to provide the committee with all information and documents pertaining to the contracts being reviewed, in a format specifically designed for this purpose. The committee also co-opted relevant professionals, particularly lawyers, quantity surveyors, civil, electrical and mechanical engineers, accountants, information technology specialists etc. to assist in the review and analysis of all the documents relating to the contracts in order to determine whether or not extant government rules and regulations and relevant professional standards were followed in the award of the contracts.

• Site visits and physical verification of contracts said to have been executed.

The committee visited some of the locations where the contracts were said to have been executed, for physical verification of such contracts.

The committee undertook such visits to the Apapa Port Complex, Apapa Dockyard, Tin Can Island Port, RORO Port, NPA Corporate Headquarters, Marina, Engineering Department of the Authority at No.1 Joseph Street, Marina and the container Terminal Port.

Chief Olabode George, Captain Gbenga Abidoye and Alhaji Abdulahi Aminu Tafida in the court before the judgment yesterday.

Chief Olabode George, Captain Gbenga Abidoye and Alhaji Abdulahi Aminu Tafida in the court before the judgment yesterday.

The committee also interviewed operators of equipment/vehicles, which were said to have undergone maintenance/repairs through contracts.

• Visit to the stores for an on-the spot assessment of store inventories/records.

The committee visited the stores to confirm the delivery and physical existence of the items supplied or evidence of utilization of such items.

Contract Pricing: Going by the large scale of contract price inflation, the committee made serious and painstaking efforts to establish fair prices for the contracts. The committee has been able to establish conclusively fair prices in respect of contracts awarded by the Board, the Management Committee, Managing Directors and the Executive Directors. However, due to constraint of logistics and time, the committee was not able to carry out an exhaustive exercise required to arrive at fair prices for the numerous contracts awarded by the General Managers and Port Managers. But the committee is convinced that the results of such exercises, if conclusively carried out, would not depart significantly from the results obtained in respect of the awards by the Board, Executive Management, etc.

In respect of supply contracts, the committee carried out market surveys on the prices of goods and equipment supplied to the NPA during the period under review.

Reference was also made to some established prices like those used in the Messrs J.K. Randle audit-report, as well as Building and Engineering Price Book, published by Cosines Nigeria Ltd. The committee also used other criteria in determining the appropriate price range, which include the use of catalogue of equipment price from manufacturers, personal visits to manufacturers’ representatives, dealers and distributors, based in Lagos.

The Committee also obtained useful information through the following:  Review of the report of the Engineer Bukar Committee on Review and Verification of contracts awarded by NPA between 2001 and 2003.

Review of the report of the Economic and Financial Crimes Commission (EFCC) on NPA Review and analysis of submissions made to the committee by various stakeholders on issues relating to the committee’s assignment.

Use of government financial regulations and other relevant treasury circulars including the federal treasury circulars ref. No. F.l5775, dated 27th June 2001 and Ref No. TRYA4 & 84/2002, dated th July, 2002, issued by the Federal Ministry of Finance and Office of the Accountant General of the Federation respectively regarding the award of contracts.

Interview of some key officials, contractors and other stakeholders: Officials of the Nigerian Ports Authority interviewed The following former top management and other principal officers of the Authority were invited and interviewed by the Committee: Chief Adebayo Sarunmi; Managing Director/CEO; Alh. Abba M. Mohammed; Executive Director, Finance; Alh. Wasiu Yaro; Executive Director; Corporate Services; Mr. Desmond Akawor; Executive Director, Estate and Technical

Services; Ms C.A.O. Etseyatse; Ag. GM Legal/Secretary to the Board; Mr.Omatsola Aragho; GM Audit; Mr. Amechi Oraka, GM (Land and Technical  Services); Mr. N.B.C. Akani, General Manager, Westem Operations and Alh.

Abdusalam Mohanuned then General Manager, Eastern Operations, but presently, Managing Director Lagos Ports and Harbour Authority and others. The committee also invited and interviewed the following former Executive Directors and other principal officers of NPA: Mallam Bello Gwandu, former Managing Director; Engr. J. Y. Akagwu, Executive Director/former Acting Managing Director; Arc; Aminu Dabo, former Managing Director; Mr. DI. Udensi, former Executive Director (Marine and Operations); Capt. 0. Abidoye, former Executive Director (Marine and Operations); Alh. Zubairu Abdullahi Danbatta, former Executive Director (Corporate Services); M. T. Ibrahim, former Executive Director, (Finance); Engr. B. G. Yakassai, former Executive Director; (Engineering and Technical Services).

Ministers and officials of the Federal Ministry of Transport interviewed:

The following former Ministers of Transport and officials from the supervising Ministry (Federal Ministry of Transport) were interviewed: Dr. Abiye Sekibo, Chief Ojo Maduekwe, Alh. isa Yuguda, former Minister of State for Transport; Mt C. D. Adeola, Director, Planning, Research and Statistics; Alh. W. M. Kurawa, former Director, Maritime Services Department, Federal Ministry of Transport. Former board members of the Nigerian Ports Authority interviewed:

The following former Board Members of the Nigerian Ports Authority were  interviewed:  Chief Olabode George, NPA Board Chairman; Alh. W. M. Kurawa, Director, Maritime Services Department, Federal Ministry of Transport, who was the representative of the Hon. Minister on the NPA Board, during the period under review. Contractors of the Nigerian Ports Authority interviewed:

The Committee considered it necessary to invite and interview some contractors who handled critical projects of Nigerian Ports Authority. These were mainly projects for which Agreements and Memoranda of Understanding (MOU) were entered into.

They include those represented by Managing Director; African Circle Limited represented by Abubakar M. Mukhtar, Executive Director (Operation), Ayoade Emmanuel, Abdullahi N. Mangoro, Executive Director (F/A) ACL; Intels Nigeria Limited represented by Chuks Ihuoma, Deputy General Manager, ishiaku M. Shekarau, and Mike N. Epelle, Legal/Corporate Affairs Manager; Flour Mills Nigeria Plc, represented by Mt Anthony Ogbebor, Technical Adviser, Alhaji Olalukan Saliu, Finance Director/Company Secretary, Capt E. S. Omotayo. Executive Director Shipping, Gboye Ayoade & Co. represented by Mt A. Akande; Messrs Aminu Ibrahim & Co. represented by Sunday Arowologbe and Ogom Chuks Ugoji Partners; Rynwaal Nigeria Limited, represented by Mr. Eshel Pesti, General Manager; Marine Mutual, represented by Mr. V. Adcock, Managing Director; Nigerian Liquefied Natural Gas, represented by Mt E. Bestman; Mr. Rick Hibbert, and Mr. J. Eke; Julius Berger Nigeria Limited, represented by Mr. Gunseh Matthias.

Head of Department Road and Infrastructure and Site Manager, Apapa and Engr. Austin Gunwa, Chief Engineer; Intercontinental Port, Managing Director and Capt. R. I. Hassan; Mobil Plc represented by Mt Val Ogu, Joint Interest Manager; Captain R. I. Hassan. Marine Consultant on the Dredging of Escravos Warn -Aladja Channel: Dr. A. A. Abubakar, Deputy Director, T. C.I.D. Federal Ministry of Transport was also invited and interviewed.

Appeals and petitions: Based on the appeals and petitions written by some NPA contractors, the committee invited the following contractors for more clarification on their petitions. Generic Consortium Ltd; Gima Nigeria Enterprises Cyrax Investment Ltd; Transec Investment Ltd; Princadaz Nig. Ltd; Tajudeen Owoyemi & Co.; Project Wheel Engineering Ltd; The committee also received a petition from a company called Starz Ship Repair yard, on the award of contract for the repair of the thirty-two (32) vessels to Messrs Rynwaal Nigeria Ltd, by the NPA. The committee, therefore, invited the Managing Director of Stan Ship Repair Yard, Port Harcourt, Mr. Greg. Ogbeifun, for further clarification.

THE ALLEGED FINDINGS

•Information available to the committee indicated that NPA; during the period under review, awarded a total number of 24,252 contracts. However, the committee strongly believes that the figures could be considerably higher, but for poor record keeping by NPA.

•Total value of contracts awarded: The total value of contracts awarded were as follows: N46, 942,402,776.13 (Forty-six billion, nine hundred and forty-two million, four hundred and two thousand, seven hundred and seventy-six naira, thirteen kobo) $236,913,986.84 (Two hundred and thirty-six million, nine hundred and thirteen thousand, nine hundred and eighty-six Dollars, eighty-four Cents.) £24,905,588.23 (Twenty- four million, nine hundred and five thousand, five hundred and eighty-eight Pounds, twenty- three pence). DM1, 461,936.65 (One million, four hundred and sixty-one thousand, nine hundred and thirty-six point sixty-five Dutch Mark. €147,926,597.99 (One hundred forty-seven million, nine hundred and twenty-six thousand, five hundred and ninety-seven point ninety-nine Euros). SEK 4,087,918.70. (Four million and eighty seven thousand, nine hundred and eighteen point seven zero Swedish Krona).
Outstanding contract bills: Substantial amount of the bills for the contracts awarded during the period under review had already been paid upfront.

The total outstanding bills for the contracts awarded by the NPA during the period under review were as follows: N4 1,264,411,701.94, US$1,634,772.60, GBP £2,920,575.40; Euro 919,001.76, DM41, 052.28

The above figures exclude those of contracts awarded by the General Managers, -Western and Eastern Operations and Port Managers for the seven ports as well as that of Abuja Liaison Office. The committee was not furnished with the figures.

•There were six principal contract approving authorities in the NPA viz:

The Board; Executive Management; Managing Director; Executive Directors,

General Managers; Port Managers. The NPA Board and Management conferred upon themselves various approval limits, in clear violation of the extant government rules and regulations guiding the award of contracts as succinctly outlined in Federal Treasury Circulars Ret No. F. 15775 dated 27th June 2001 and Ref. No. TRY AS&B4/2002 dated 5th July 2002, issued by the Federal Ministry of Finance and Office of the Accountant General of the Federation, respectively.

The circular under reference clearly stated that all contracts above N50 million should be referred to the Federal Executive Council, while those between N20 million and N50 million are to be referred to ministerial Tenders Board, contracts worth between one million Naira and N20 million are to be approved by the Board of Directors, One million Naira contracts by Permanent Secretaries and contracts worth seven hundred thousand Naira and below are to be approved by Chief Executives of Parastatals.

However the NPA Board and Management, hiding under the canopy of a letter Ref. No. T.0160/S.103/T dated 4th May 1999 issued by Mrs. B. 0. Williams, the then Director, Maritime Services, Federal Ministry of Transport, conferred the following approval limits on the various strata of the organization

The Board, N60 million; Executive Management, N30 million; Managing Director, N 10 million; Executive Directors, N2 million; General Managers, N700, 000.00; Port Managers, N500, 000.00.

The Board and Management of NPA, during the period under review did not take cognizance of the subsequent government circulars issued by the former administration to ensure transparency, accountability and prudence in the management and conduct of government affairs. Based on the above approval limits, and information made available to the Committee, various hierarchies of the NPA awarded contracts during the period under review as follows:

Chief Bode George: The board of NPA awarded contracts with a total value of N9, 386,265,067.65 (Nine Billion, three hundred and eighty-six million, two hundred and sixty-five thousand, sixty-seven Naira, sixty five kobo); $213,655,866.23 (Two hundred and thirteen million, six hundred and fifty- five thousand, eight hundred and sixty-six dollars, twenty three Cents); £9,698,508.02 (Nine million, six hundred and ninety eight thousand, five, hundred and eight pounds, two pence.); Euro 47,204,395.00 (Forty Seven million, Two hundred and four thousand, three hundred and ninety-five Euros) and DM 9,056,220.00 (Nine million and Fifty-six thousand, two hundred and twenty Dutch Mark)

It should be noted that the committee could not obtain some of the documents in respect of vital contracts awarded by the Board of the NPA. The committee, however, relied on the various minutes of the boards meetings in which such contracts were approved

Contracts awarded by the Managing Directors:

Contracts awarded by Managing Directors of the NPA, during the period  under review are as follows:

Mallam Bello Gwandu: Mallam Gwandu was the Managing Director of the  NPA between January 2001 and October 2001. Within the 10 months period he was the Chief Executive of the Authority, committee established that he awarded contracts worth the follow N3, 095,953,055.52 (Three bill ninety-five million, nine hundred fifty-three thousand. and fifty-five Naira, fifty-two kobo); $2,414,345.85 (Two million, four hundred and four thousand, three hundred and forty Dollars, eighty-five Cents,); £701,702.45 (Seven hundred and one thousand, seven hundred and two Pounds. forty-five Pence); DM382,226.65 (Three hundred and eighty- two thousand, two hundred and twenty-six point sixty-five De’ mark) and SEK 3,706,405.30.

Engr J. V Akagwu: Engr Akagwu was the acting Managing Director of the NPA between November 2001 and April, 2002. During the six months period, he was the Chief Executive in acting capacity, he awarded contracts with the following value: N1, 611,188,705.64 (One billion, six hundred and eleven million, one hundred and eighty-eight thousand, seven hundred and five Naira, sixty-four kobo,  $1,970,865.29 (One million, nine hundred and seventy thousand, eight hundred and sixty five dollars, twenty nine cents; £349,532.17 (three hundred and forty-nine thousand, five hundred and thirty-two Pounds, seventy Pence); Euro 110,556.60 (One hundred and ten thousand, five hundred fifty-six point six zero Euros); E 545,607.96 (Five hundred and forty-f Thousand, six hundred and seven p ninety six Deutch Mark) and SI 381,513.40.

Architect Aminu Dabo: Arc. Dabo was the Managing Director of the NPA between May 2002 and October 2003. During his tenure as Chief Executive, he awarded contracts worth the following; N17, 008,214,715.81 (Seventeen billion, eight million, two hundred and fourteen thousand, seven hundred and fifteen Naira, eighty-one kobo); $13,770,884.80 (Thirteen million, seven hundred seventy thousand, eight hundred and eighty four dollars eighty Cent); £4,840,515.65 (Four million, eight hundred and forty thousand, five hundred and fifteen Pounds, sixty-five Pence) and Euro 569,411.49 (five hundred and sixty nine thousand, four hundred and eleven point four nine Euros).

THE REPORT OF THE NUHU RIBADU COMMITTEE ON NPA THAT CAUSED TROUBLE FOR CHIEF BODE GEORGE AND OTHERS

PART TWO

Contracts awarded by Executive Directors: Similarly, the Executive Directors awarded contracts as follows:

Oyewole A. – Mr. Oyewole was the Executive Director (Finance) of the NPA between January 2001 and October 2001. During his 10 months tenure as Executive Director, he awarded contracts valued at N22, 798,25000 (Twenty-two million, seven hundred and ninety-eight thousand, two hundred and fifty Naira).

M. T. Ibrahim who was Executive Director (Finance from November, 2001 to October, 2003, awarded contracts valued at N209, 420,805.O0 (Two hundred and nine million, four hundred and twenty thousand, eight hundred and five) in about twenty-four (24) months in office.

J. Y. Akagwu was Executive Director (Engineering and Technical Services) from January, 2001 to October 2001, and awarded contracts valued at Nl89, 017, 728.24 (One hundred and eighty-nine million, seventeen thousand, seven hundred and twenty-eight Naira, twenty four kobo) in about ten (10) months in office.

L. 0. Udensi: Executive Director (Marine and Operations) from January 2001 to April 2002. He awarded contracts valued at N57, 634,514.70 (Fifty-seven million, six hundred and thirty- four thousand, five hundred and fourteen Naira, seventy Kobo) in about sixteen (16) months in office.

Zubairu Dambata, Executive Director (Corporate Services) from January 2001 to April 2002. From the records made available to the committee, he awarded contracts valued at N5, 881,370.0O only (Five million, eight hundred and eighty-one thousand, three hundred and seventy Naira) in about sixteen (16) months in office.

Capt. 0. Abidoye was Executive Director (Marine & Operation) from April 2003 to October 2003. He incredibly awarded contracts valued at N249, 533,722.5O (Two hundred and forty-nine million, five hundred and thirty- three thousand, seven hundred and twenty-two Naira, fifty kobo) in about six (6) months in office.

B.G. Yakassai, Executive Director (Civil Engineering & Estate) from April 2002 to October 2003. He awarded contracts valued at N307, 700,655,13 (Three hundred and seven million, seven hundred thousand, six hundred and fifty-five Naira, Thirteen Kobo), and $78,797.67 in about eighteen (18) months in office.

Contract pricing:

Nigerian Ports Authority had a dismal contract pricing system. Prices were so arbitrarily fixed as if such a critical exercise was not governed by any principle whatsoever but solely the discretion of the approving officers-.There is little evidence that the prevailing price situation was ever seriously taken into consideration. Although, the Authority had a Price Intelligence Unit, our investigation revealed that the Unit seemed to have been totally disregarded.

Emergency maintenance:

One of the contributory factors to high contract prices particularly in respect of maintenance contracts, is the so-called “emergency maintenance” prevalent within NPA

According to NPA officials, since the Ports are expected to operate without break, there was need for a mechanism to keep the plants and equipment going and avoid the delay that could be caused by bureaucracy of processing job order/contract for every break down The Authority long evolved a policy of emergency supply by which the manufacturers of their plants had specific agents through whom the parts for machines could be procured. The Authority therefore had no choice but to enter into maintenance agreements with these agents who were mandated to supply the parts whenever breakdown occurred even before seeking approval from the management.

In this wise, there were as many as seven different contractors undertaking maintenance work on generators, power distribution, cargo handling equipment even cutting of grass/trees etc. The NPA officials claimed that their staff lacked the appropriate skill to maintain these plants and equipments and that any attempt to adopt an in-house maintenance strategy would be ultimately more expensive. However, in our well considered view, this and the similar arrangements on which NPA exercised little or no control but simply opened its purse to various interests, often dubious, are clearly self-serving and a strong manifestation of poor resource management in total disregard of cost effectiveness and healthy financial returns.

The committee found it inconceivable that with its core of seasoned professionals and skilled engineers, NPA should resort to a maintenance strategy in which it took no input whatsoever into pricing of the spares/items/jobs; had no control of both quality and quantity of materials supplied; totally disregards quality and scope of job done at whatever frequency; ignores due process.

Contract splitting:

Evidence before the committee shows conclusively that there were brazen cases of contract splitting. For example, eleven contracts for eleven Air Laser Cartridges bought by the Security Department on 10th March 2003 at about N9.8 million each totaling about N107.8 million at a go. If proper procedure had been adopted, this contract would have gone to the Federal Executive Council. But the contracts were brazenly split and irregularly awarded by the then Managing Director, Arch. Aminu Dabo. There is even evidence that a contract ofN900 million was spilt into hundred units and awarded to two contractors at 50 contracts each.

On 9th August 2003, 12 contracts were in similar vein irregularly awarded to 12 different companies for the supply of Mitsubishi Double Cabin Patrol Van each at a cost of N8, 900,000.00. Similar pattern of awards were replicated at all levels from the Executive Directors, General Managers, and Port Managers, etc.

Foreign currency denominated contracts:

Numerous contracts were awarded in foreign currencies at highly inflated rates for the supply of items that are easily available in Nigerian markets. Some of these items include umbrellas, ball pens, fire service equipment, etc. For instance, NPA awarded contract No. HQ/CNOP/G.2/144 to Messrs Just Gold Ventures Ltd. for the supply of Female Umbrellas at a unit price of £25.00 (Great British Pound Sterling) which is about N5, 000.00 at the then rate of N22O, 00. This practice was deliberately employed in order to siphon the foreign earnings of the Authority, as there is no justification whatsoever to award such contracts in foreign currencies, as the items are available locally.

Breach of established procedure for award of contracts:

The committee confirmed incontrovertibly, that there are manifest breaches and non-compliance with established procedure for the award of contracts in NPA during the period under investigation. These irregularities can be grouped principally as follows:

There was no evidence of competitive bidding on most contracts and where they did exist, some do not seem credible enough. Selection process would not seem to be transparent as the criteria for selection of beneficiaries of contracts were not clear.

Numerous unjustified splitting of contracts contrary to the rules.

Contract agreements were rarely prepared nor signed, thus making default attractive as the possibility for penalty was very remote. Gross over pricing of contracts significant values were thus entered into without contract agreements, ignoring the need to safeguard the integrity of contracts of substantial values from needless defaults. Contracts were awarded in considerable quantity, frequency and circumstances that put in doubt the genuine demand for these goods and raised strong possibility of contract recycling. Many contracts were paid for even though there was no incontrovertible evidence to suggest that they were executed.

Contracts under agreements and Memorandum of Understanding (MOU) with: Intels Nigeria Limited:

The NPA signed a Memorandum of Understanding with lntels Nigeria Limited on 27th April 2001, to the effect that Intels is to act as the agent of the NPA for monitoring the movement of support vessels within Nigeria’s territorial waters and for the collection of statutory charges levied by the Authority in the country’s Exclusive Economic Zone. Such charges include royalties, pilotage, dues, rents etc. Another agreement was also signed on 13th June 2003 between the two parties for each other’s mutual benefit in the oil related activities of the NPA.

Based on the records at its disposal, the Committee established that lntels was owing NPA the sum N 15,040,000.00 as excess charges on amortized projects. Furthermore, Intels owed the NPA a total of $482, 753, being 10 per cent withholding tax, which was not deducted on commission paid to Intels. The committee also, as part of its findings, established that the sum of N17, 470,107.32 is being owed to NPA by Intels, as withholding tax on rent which had not been remitted to the Authority by the Company.

With Messrs Rynwaal Shipyards SA:

The NPA entered into an agreement with Messrs Rynwaal Shipyards of Holland  on 22nd January 2003, for the refurbishing of 32 of its vessels/crafts, at a total cost of  Euro 49,150,000.00 (Forty nine million, one hundred and fifty thousand Euros) within 18  months. The Committee notes the provision of Article 10 on Liquidated Damages under

which the contractor is to pay NPA a sum of 30% of the contract sum every week for the  period the vessels/crafts shall remain not delivered”. 30 of the 32 vessels were delivered to NPA while two others; S. V. Argungun and M. T. Bajima were undergoing refurbishment abroad. Article 11 (2) (c) also provides for the 50 percent of the contract price in the sum of Euro 2,457,500 as retention fee against any defect and shall only be released to the contractor at the expiration of six months guarantee period after the delivery of the last of the 32 vessels/crafts.

Intercontinental Ports Limited:

The NPA entered into an agreement with Intercontinental Ports Limited in March 1999 for the dredging of the Aladja -Escravos Channel for the sum of US$58,880,500 out of which sum mobilization fee of $17,962,000 was paid to the contractor in May2000. The contractor mobilized to site, actual dredging work could not but commence due to community problem, mainly youth restiveness. After several unsuccessful efforts which involved intervention by the Hon. Minister of Transport and the Governor of Delta State to placate the youth so that work can go on, the Hon. Minister based on the request of the contractor and the recommendation of NPA internal committee, sought and obtained the approval of Mr. President for the termination of the contract “in order to save costs arising from “idle time.”

The contractor subsequently demanded for the payment of the sum of $7,623,115, as de-mobilization cost after the contract had been declared frustrated by NPA internal committee. After some negotiations, the contractor was finally paid the sum of $6,623,115 as cost of demobilization and idle time. While the committee could concede to the first payment mobilization fee of $17,962,000, it does not see the rationale for the payment of the sum of $6,623,115 as demobilization fee/idle time.

Since the contract was declared frustrated, it is clear that neither the NPA nor the contractor was responsible for its non-execution. Therefore each party should have borne its own costs, since the Agreement implied equality of status by both parties.

Curiously, the NPA internal committee recommended the payment of demobilization and idle time costs, as if NPA was in a weaker position under the agreement.

Therefore, the committee recommends that the sum of $6,623, 115 paid to the contractor as demobilization/idle time costs, be recovered from him (the Contractor).

Continental Shipyard:

This company is owned by the NPA, and was incorporated essentially to undertake dry-dock refits and repair of vessels. The company entered into partnership agreement with Dockyard Engineering, in a manner that should be, at least in principle, beneficial to both parties. However, it appears Dockyard Engineering was benefiting more from the arrangement than the NPA.

It, therefore, is necessary that this Agreement be immediately reviewed to make it more equitable. Alternatively, the agreement should be terminated and NPA look for a more viable company with which to sign a fresh deal since the Committee believes that the Continental Shipyard is viable venture.

African Circle Limited:

The, NPA entered into an agreement with Messrs African Circle Limited on

September 2003, to build, operate and Transfer (BOT) Port reception facilities for the disposal of ship-generated waste. This agreement was informed by the NPA’s desire to comply with the requirements of the International Maritime Organization (IMO) Convention for the prevention pollution from ships. Under the agreement, African

Circle Limited is to supply, install, and operate modem Port reception facilities fur the disposal of ship- generated waste and cargo residue. The NPA is to collect all pollution

control revenue directly from vessels and remit 75 percent to African Circle Limited on monthly basis and retain 25 percent. On the other hand, the NPA is to retain 75 percent of all pollution related fines imposed on vessels and remit 25 percent to African Circle Limited. However, the profit sharing arrangement on the pollution control revenues from vessels should be reviewed in favour of the Authority to be on 70/30 basis, as against the current arrangement of 75/25 basis.

PART THREE

Superannuation Fund:

The NPA Superannuation Fund is a contributory pension scheme established under a Trust Deed, which became operational in April 1956. The rate of monthly contribution at the inception was 25 percent of the basic salary of serving employees. In November 2002, the rate of monthly contribution was increased from 25 percent to 44) percent. The Fund has very wide-ranging investment portfolios even though some of them may not command much respect in terms of yield/returns. Currently, it has an investment value of overN3.5 billion, with an estimated market value of about N 8 billion

There were problems of financial recklessness and lack of probity in the management of the Superannuation Fund. This accounts for the reason why the funds could not meet up with its responsibilities. As at 31 December 2003, there were outstanding arrears of monthly contribution of over Nl.4 billion while its actuarial deficit stood at N79.0l billion.

The committee observed with dismay that the Trustees do not keep accurate records. The committee was informed of a case reported to Economic and Financial Crimes Commission (EFCC) by Securities and Exchange Commission, against a company called HALSEC FINANCE Limited. A sum ofNl5 million was given to HALSEC in 2001 by the Management of NPA Superannuation fund (then) for investment in capital markets. The amount of money was misappropriated by HALSEC Finance Ltd.  the company, till date, neither bought the said shares nor refunded the money to NPA Superannuation Fund.

Payments on unexecuted contract

The Federal Ministry of Transport based on an alarm raised by the Central Bank of Nigeria on Foreign Exchange transactions of the NPA, commissioned two firms of Consultants Messrs Amin Ibrahim & Co and Messrs Gboye Ayoade Co on 23rd May 2002 to carry or Investigation into the Management of the Foreign Exchange earnings of the Nigeria Ports Authority (NPA). The letter of offer, Ref M FMT/IAUD/145/lJVo 1.1/51 dated 23 May, 2002 and another letter on the same issue Ref. NFMT/INAUDJ/145/:

1/69 dated 17th June 2002, stated that ft every frau discovered, I percent would be paid to the consultant The consultant submitted a report the Federal Minister of Transport claiming that various fraud were discovered, an requested that NP4 should pay them 15 percent of the amour of frauds discovered. The Federal Minister of Transport vide its letter Ref. N FMT/IAUD/l45/l/103 of 7th February 2003 directed NPA to pay the Consultant However, NPA vide its letter MD/l0/FMT/Vol.XXI/97 of 20h Marc 2003 objected to the payments of the sum $1,050.000 and $2595202, claiming the no fraud was discovered in those areas warrant payment of such amounts a commission. The Federal Ministry Transport, in its letter over ruled NPA an’ directed N PA to pay the consultants and the consultants were paid accordingly.

Investigation revealed that the approval for the payment from the Federal Ministry of Transport was fraudulently obtained. The committee also confirmed that the consultants claims which were disputed by NPA were actually false. Therefore: the committee recommends that the consultants should refund the sum of $3,645,202. Again, on January 23, 2003 the same consultants, Messrs Aminu Ibrahim & Co and Messrs Gboye Ayoade & Co were curiously commissioned by NPA to carry out reconciliation of transaction between NPA and INTELS and between NPA and NLNG/Mobil Producing Nigeria Unlimited.

The contract was awarded on a “no cure, no pay” basis which means that unless a definite sum of money is recovered into the coffers of NPA, no payment would be due to the consultants out of the exercise. Our investigation confirmed that the assignment was inconclusive as neither of the parties (INTELS, Mobil or NLNG) agreed with what the consultants submitted.

The Internal Audit of NPA objected to the payment on the ground that the job has not been certified as satisfactorily done. Unfortunately, the then Hon. Minister of Transport Dr. Abiye Sekibo, in response to a letter written to him by the consultants demanding payment for the job, directed  NPA to process and pay the consultants the sum of  $9,186,701.00 (over N2 billion) as claimed by the consultants. The NPA management ought to have advised the Hon. Minister that the job has not been duly executed in accordance with the terms and conditions as contained in the letter of appointment but went ahead to process the payment.

The NPA had gone ahead and even prepared two payment vouchers in the sum of $8962. 148.00 and $224,554 at a time when all such contract payments had been suspended to enable this committee carry out its assignment. The payment vouchers were intercepted by the officials of EFCC and payment stopped. Subsequent investigation of NPA officials who were involved in processing the payment revealed gross negligence and a deep seated attempt to defraud the NPA and by extension, the Federal Government of Nigeria of such a colossal amount of money. It is regrettable to note the hasty manner in which the payment process was carried out by the NPA management without even confirming whether the job had been done at all.

The entire payment process appeared to have been carried out inappropriately as there was no evidence whatsoever to show that it passed through the normal channel. All the NPA officials involved in the payment process including the Managing Director, Executive Director (Finance), General Manager (Finance) should be held responsible for this fraudulent action. The contract should also be revoked.

Thalia Solutions

Messrs Thalia Solutions entered into a contractual agreement with NPA in 2000 to provide consultancy services on its computerization projects and train its officials under which they are to be paid Nl.8 million and $81,000.00 monthly as service charge. The monthly payment of service charge was subject to the provision of Certificate of Satisfactory Job Performance to be issued by AGM, Data Processing.

However, the certificate was not found in all the payment vouchers examined, which implies that the contractor was being paid without doing the job. The contract was terminated in July, 2002 for lack of performance. So far NPA had paid the contractor N36.0 million and $1.62 million for twenty months from November, 2000 to June, 2002. Memo from GM (MIS &CP) to FD (CS) dated 12th August, 2002 confirmed that the contractor was unable to perform in accordance with the terms and condition of the contract agreement yet the contractor was being paid & Ironically, this same consultant whose contract was terminated by the authority for lack of performance was re-awarded the same contract at the rate much higher than the first contract.

Under the new contract, the consultant is to be paid £70.000.00 (N 17,710,000.00) and N2,250,000.00 monthly totaling about Nl9,960,000.00 which is more than the monthly salary bill of the entire staff of the MJS Department. Despite this outrageous monthly bill, the consultant was also enjoying some perks, which they are not entitled to.

An example of the underserved perks is their attending meetings at various places in Nigeria at the expense of NPA. Analysis of documents obtained on this contract and information obtained through our interactions/discussions with some officials/staff of NPA, confirmed that the consultant was just being paid without any justifiable service to the authority.

The company is owned and managed by Nigerians but they use different addresses in Nigeria and London to get contracts.

The committee invited the MD/CEO of the company. Mr. Mike Odumosu for an interview during which he admitted that his company was unable to perform some of the functions specified in the contract agreement. His statement was taken under caution and he was released on bail. He was supposed to report the next day but he failed to do so. All efforts so far, made to trace him were fruitless .He should be declared wanted and if found, he should refund the contract amount already paid. The contract should also be terminated.

ROBERT Ade-Odlachi & Co Messrs ROBERT Ade Odiachi & CO was awarded the contract for the computerization of the NPA accounting system at the cost of N38, 312,870,40. The contractor was given 70 percent down payment. 25 percent is to be paid upon satisfactory performance. The 25 percent payment, which is subject to presentation of Certificate of Satisfactory Job Performance, be issued by AGM Data Processing as spelt out in the contract agreement, was not complied with, yet payment was made.

NPA has been and is still paying the contractor annual license renewal fee which was not part of the contract Agreement. The license payment of yearly renewal fee started in 2001 when NPA paid N5, 269,927. II to the contractor so far, a total ofN2l, 079,708.44 has been paid to the contractor as annual license renewal fee. The NPA management should renegotiate the contract and formalize the payment of the annual renewal fees by reflecting it in the contract agreement. Award of contracts for Items that are not needed:

The committee observed that the due process for the award of contracts was not followed

at NPA. Most of the contracts reviewed were not awarded on the basis of need but just to create an avenue to siphon money from the system. In most cases the contracts were awarded based on request by the MD/CEO to departmental heads to put up a request. The usual communication language then was for the MD/CEO to write to a departmental/sectional head: “Please, raise something within the MD’s limit”. The items may be relevant but they may not be in need at that time.

Atypical example of such contracts is the contract for the supply and installation of six computer sets at the Headquarters’ Legal Department and in each of the Legal Departments located at the seven ports. Our investigation revealed that the user department (Legal Department) did not request for the computers and they did not even need such number of computers in the Legal Department in view of the fact that the actual number of legal officers in each of the ports was not more than two as at the time the contract was awarded.

Observations: Having thoroughly examined and carefully analyzed the relevant documents and information at its disposal, the committee observed the following:

The NPA, during the period under review, operated a contract awarding system which flagrantly violated the extant rules and regulations guiding the award of contracts, as explicitly specified in Federal Treasury Circulars Ref. F15775 of 27th June 2001 and Ref NO TRYA4 & B4 2002 of 5th July 2002 issued by the Federal Ministry of Finance and the office of the Accountant General of the Federation, respectively.

The Board and Management of the Authority, instead of being guided by the above cited treasury circulars in the there were no incontrovertible evidence

contract award process, conveniently relied on a letter Ref. T.0160/S103/T dated 4th May, 1999, signed by Mrs. B. 0. Williams, the then Director of Maritime Services Department of the Federal Ministry of Transport, conferred upon themselves approval limits far in excess of those approved by government, and awarded contracts, the magnitude of which only the Federal Executive Council had the powers to so do.

The committee has enough evidence to believe that the ministerial representatives on the Board of the NPA at various times, Alhaji W. M. Kurawa and Mrs. J. C. Okonkwo had consistently drawn the attention of the Board to the need to comply strictly with laid down rules and regulations in the contract award process. But the Board headed by Chief Bode George continued to rely on the letter signed by Mrs. B. 0. Williams.

Outstanding matters:

Due to logistic and resource constraints, the committee was unable to carry out investigation on some advance payments made to some contractors at the London Office of NPA. Its preliminary investigations revealed that 100 percent advance payments were made at the NPA London Office in contravention of the provision of the government circular No. F 15775 of 27th June 2001, which stipulates a maximum of25 percent for all up front payments. Between August, 2002 and August, 2003, NPA made 100% advance payments to 23 contractors at their London office, which amounted to US$625,647.00, Euros 1,822,356.49 and £1,008,010.00. Some of these contracts are yet to be executed years after the monies have been released. NPA

could not provide any document to confirm the execution of these contracts. Further investigations should be conducted on this mailer. Other outstanding matters include the following.

Site visits to locations outside Lagos to confirm the execution or otherwise of some contracts: review and investigation of some foreign exchange transactions especially in the London Office which the committee could not undertake due to financial constraints.

The committee could not obtain outstanding contract bills for contracts awarded by the General Managers Western and Eastern Operations and Port Managers for the seven ports as well as that of Abuja Liaison Office.

Recommendations:

Based on the committee’s findings and observations and the need to sanitize the system in line with current government determination to ensure transparency and prudent management of ‘‘Contracts were awarded in considerable quantity, frequency and circumstances that put in doubt the genuine demand for these goods and raised strong possibility of contract recycling. Many contracts were paid for even though to suggest that they were executed resources, the committee marked among others, the following recommendations:

All contract approving authorities in NPA, including the Board headed by Chief Bode George and Management of the NPA, Managing Directors, Executive Directors, General and Ports Managers, other categories of approving authorities, as well as the appraising officers who served during the period under review should be held responsible for deliberate and flagrant violations of extant government rules and regulations, governing the award of contracts.

The Board and Management of the NPA and the entire contract approving authorities in the Authority, as well as appraisal officers, during the period under-review should be appropriately sanctioned for contract splitting and inflation of contract price in utter disregard to laid-down government rules and regulations.

The NPA Board and Management should immediately revert to the contract approval limits clearly stated in the Federal Treasury Circulars Ref. No. F15775 dated 27th June 2001 and Ref No. TRYAS&B4I’2002 dated th July, 2002, issued by ‘the Federal Ministry Finance and Office, of the Accountant General of the Federation, respectively. However, should there be need for the enhancement of the approval limits, a request for approval of enhanced limits should be made to the Hon. Minister ofFinance.

The FFCC should recover the sum of $3,645,200.00  (Three million, six hundred and forty-five thousand two hundred and two dollars) from Messrs Aminu Ibrahini and Co and Messrs Gboye Ayoade (Consultants) for false claims of fraud discovery in the foreign exchange earnings of the NPA.

All the officials involved in the approval and payment process of the total sum of $9, 186,702,00 to the same consultants – Messrs Aminu Ibrahim & Co and Messer  Gboye Ayoade & Co. as mentioned in paragraph 5.26 of this report should be sanctioned accordingly and the contract be revoked.

The EFCC should recover the sum of $6,623, 150,000 (Six million, six hundred and twenty three thousand one hundred and fifteen thousand dollars) from Intercontinental Ports Limited being additional sum, illegally paid to the company.

The EFCC should recover the following  sums of money from Inte is Nigeria  Limited: N15,040,000.00 (Fifteen million forty thousand naira) being excess changes on amortized projects, $482,753,00 (Four hundred and eighty twp thousand seven hundred  fifty three dollar) being 100 percent withholding tax not deducted on commission paid to Intels. N17,470,107.32 (Seventeen million, four hundred and seventy thousand, one hundred and seven naira, thirty two kobo) being withholding tax on rent not remitted to NPA by Intels Ltd. NPA should exhibit a m 0 r e reasonable

degree of commitment and its contractual seriousness in agreement with INTEL S  Nigeria Limited, as well as all similar agreements with other companies and also ensure strict enforcement of the provisions of the contract agreements to the letter.

The contractual agreement between N PA and African Circle Limited in respect of port reception facilities for the disposal of ship generated waste should be reviewed particularly tfte area df ‘the profit sharing arrangement to be ‘70)30 in favour of the NPA,

The contractual agreement between NPA and Continental Shipyard, on one hand, and Dockyard Engineering Limited, on the other hand should be revoked immediately, while the NPA should source for a more reliable and competent company to partner with t)e Continental Shipyard to• develop the high level shipyard industry.

NPA should terminate immediately all maintenance service contracts and NPA should take over the maintenance of its plants and equipment.

*Courtesy EFCC

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