Cesspool Of Corruption

Senate probe of how funds pumped into the transportation sector in the past nine years were spent reveals numerous instances of corruption and lack of adherence to due process

By Oluokun Ayorinde /Abuja

Over the past nine years, more than N1trillion has been allocated to Nigeria’s transportation sector, but with practically nothing to show for it. If there is anything that stands out in the sector, it is bad roads nationwide, a decrepit ports infrastructure and a railway system that has been comatose for many years. This was why the Senate’s decision last April to set up an ad-hoc committee to investigate how the huge funds pumped into the sector from 1999 to 2007 were spent was generally hailed by those who have come to see the sector as a cesspool of corruption. The 12-man committee, led by Senator Heineken Lokpobori, swung into action last June with a public hearing on land transport but had to suspend sitting when the Upper Chamber embarked on a recess.

Disclosures before the committee, which resumed sitting two weeks ago, have been revealing why Nigeria never seems to be successful in establishing a top-notch transport infrastructure. Top among the revelations was the assertion by the Minister of State for Water Transport, John Ekechukwu Emeka that the Nigerian Ports Authority, NPA, has been irresponsible in handling its finances over the years. The Minister disclosed that though NPA had generated N548billion as internally generated revenue in the past nine years, it had remitted only N11billion to the Federation Account. NPA, its Managing Director, Abdulsalam Mohammed, declared, has been spending the balance the way it deems fit. On behalf of the Authority, Muhammed pleaded guilty when he appeared before the committee last Monday : “We have been irresponsible in that aspect and I think that we should have done more.”

The NPA boss wasn’t without a line of defence though. Muhammed told the committee that section 80 of the Constitution permitted the agency to spend its internally generated funds according to its whims. But the committee wasn’t impressed by that claim and, indeed, Lokpobiri pointedly told Muhammed that NPA was not among the frontline agencies covered by the provision. “If you say that you are covered by that provision, then under what law did you remit the meagre amount of N11billion, representing only 2 per cent of the internally generated revenue?” queried the Senator.

The committee particularly took up the NPA boss on the Authority’s unilateral award of a contract of $10million for the Haskolling capital project. Members noted that the contract was awarded without approval from the National Assembly, the Minister of Transport or the Federal Executive Council. “It is disheartening that you went ahead to award  a contract for such a project unilaterally and you are now asking for the release of the money,” noted Senator Sylvester Anyanwu.

Also during the same period, the Inland Waterways Authority generated N2.36billion but remitted only N18million to the treasury. The case of the Nigerian Shippers’ Council is not different. While it generated a total revenue of N13.72billion, it remitted only N300million to the federal purse.

The new drive by government to diversify its sources of income means it has to shift attention to tariffs through the ports, agriculture and taxation among other revenue streams. The position of government is that maritime is a cash cow which if well managed will consistently earn the country good money.

The argument of the investigators is that when there are less corrupt people in the place so much money will be generated. From the account of what happened between NIMASA and the committee, it is a story of waste, mismanagement and corruption.

Recently, it was in the news that the Nigerian Shippers’ Council management was summoned by the Economic and Financial Crimes Commission on account of misappropriation of fund and corruption. Investigations by TheNEWS revealed that since last year, the staff of the council had been writing petitions over brazen mismanagement of funds, high-handedness and corruption by the management of the council. Staff suspected to be behind the petitions were allegedly posted outside the headquarters to scare other staff  who may want to tread the same path.

But the staff continue to write. At the last count almost five petitions  had been written to the Ministry of Transport, Independent Corrupt Practices and related offences  Commission, EFCC, office of the Secretary to the Government of the Federation and to the Presidency. Some of the staff spoken to revealed that the most monumental corruption in the system was perpetrated using the board of directors as cover. Investigation on the vouchers on expenses relating to the board revealed facts on the issue. The staff are saying that the management is capitalising on the slow approach to the investigation to destroy records. In some cases, memos are written and backdated and taken to members of the board of directors dissolved last year to sign.

In one of the petitions, the quality of staff brought to serve on the management was questioned. Some of them, it was stressed, lost their jobs somewhere else only to be brought to the council to assume new responsibilities. An example is the Deputy Director  who lost her job in one of the insurance firms and was then engaged at Shippers’ Council. It was also alleged that the Director of Finance and Administration served in Adamawa State as permanent secretary and was taken on board as a regular staff when based on his age he should only have been engaged as a contract staff.

The Chief Executive, Captain Adamu Audu Biu, the petitioners alleged, was part of the rot at the Nigerian National Shipping Line that went under as a result of corruption. This the staff believe is the reason why the NSC has lost focus, and the national economy is the worse for it. The petitioners charged investigators to check vouchers that have to do with the board secretariat painstakingly, vowing that scandals will be yielded.

The staff claim the management uses different tactics to raise funds which they siphon, while neglecting some of the company’s obligations, including tax. For example, the Lagos State government this year shut the organisation as a result of non-payment of tax. The Federal Inland Revenue also reported the organisation to the Senate, accusing it of not remitting appropriate revenue to government coffers.

The federal government recently set up a committee under the Minister of Finance on 48-hour clearance at the ports as shippers continue to divert their cargo elsewhere, leading to loss of revenue. That problem has persisted but the Shippers’ Council has proved incapable of doing anything about it.

Minister of State for Aviation, Felix Hyat also admitted when he appeared before the committee last Tuesday that the Ministry has offered little or no value to the aviation sector to justify the over N179billion that was pumped into the sector from 1999 to 2007. Eighty-nine per cent of the money came from the IGR of the agencies and parastatals in the industry.

The Minister confessed that the process of approval of Virgin Nigeria as the country’s national carrier was not transparent. He also added that the mishandling of the Bilateral Air Service Account, BASA, funds is indicative of the mismanagement of resources that has characterised the sector over the years. His claims, however, did not go unchallenged. Managing Director, Federal Airports Authority of Nigeria, FAAN, Frank Aiseobogun argued that when the amount spent by Nigeria is compared to that spent by other countries within a similar period, the country has not fared badly.“With my 16 years experience in the industry, I think we have value for money,” he insisted. The problem, Aiseobogun said, is that Nigeria has not been able to maintain the aviation infrastructure it has.

He got support from Harold Demuren, Director-General, Nigeria Civil Aviation Authority, NCAA, who posited that Nigeria has not even been sinking enough money into the sector. “We have not put in enough money. The N179billion is just about $1billion and something. Other countries have put in more money. Trinidad and Tobago has spent $10billion while Turkey has spent $40billion, so we need to spend more money. I agree that we have not judiciously used what we have, but we still need to spend more money,” Demuren declared.

The committee has mandated Hyat to come up with a write-up of how money budgeted for the sector in the past eight years was spent. This is necessary, Lokpobiri explained, to justify the annual appropriations to the sector in the national budget.

At its earlier sittings, Ibrahim Hassan Dankwambo, Accountant-General of the Federation had told the committee that a total of N967billion has been pumped into transportation since 1999. Dankwanbo’s break-down of expenditure for the ministry shows that N8.488billion was released in 1999, N32.127billion (2000), N58.989billion (2001), N41.634billion (2002), N22.218billion (2003), N45.285billion (2004), N68.950billion (2005), N67.980billion (2006), N109.448billion (2007) and N68.883billion (2008).

He, however, refused to comment when asked if the money was properly utilised. To him, that responsibility is beyond his brief. “Ours is only to approve the release of the money from the Central Capital Account. We are professional accountants not engineers,” he declared.

But the figures given by Dankwambo were disputed immediately after he left the witness seat, by Bright Okonkwo, the Director-General of the Federal Budget Office, an indication of financial untidiness that has come to characterise government operations. Okonkwo told the committee that the total capital expenditure in the transport sector in the eight years of the former administration was N688.9billion, about N300billion less than the figure given by the Accountant-General. Lokpobiri immediately pointed out the difference: “Your figure is at variance with what the Accountant-General, the Ministry of Finance and the Central Bank of Nigeria presented.”

There was further confusion on the actual amount released into the sector during the period as the CBN Governor, Chukwuma Soludo affirmed that the apex bank released N946.8billion to the transport sector from 1999 till date. He, however, quickly added that some other sums of money may have been released to the sector through other sources such as commercial banks. Dankwambo said that was not impossible, and the differences in figures arose because his office has not been able to reconcile funds released to the sector during the last administration.

Robert Ejenavi, the Auditor-General of the Federation opened another can of worms when he testified before the committee. He told the panel that most of the contracts awarded for construction of roads during the President Olusegun Obasanjo administration failed because contrary to the repeated avowal of the administration, due process was not followed. He cited the example of a contractor who, after collecting 50 per cent mobilisation fee for a 300-kilometre road, did mere surface dressing for 100 metres and disappeared with the money.

Ejenavi also revealed that not less than N124billion has been pumped into the railway between 1999 and 2007 with appalling results. He particularly described the Federal Roads Maintenance Agency, FERMA, as one organisation with a record of non-performance despite the fact that billions of naira has been allocated to it over the years. Rather than use the allocation for building and repair of roads, FERMA staff, according to the Accountant-General, have been feeding fat on the funds. Giving one insight into the alleged frivolities of the agency’s staff, he cited an example of payment of N251million which FERMA gave as cash advance to its staff without clear-cut terms of re-payment within one year.

He added that the agency also allowed one Mr. Mamman to withdraw N67million from a bank account on 6 and 19 December 2007 for his personal use. Another instance of financial perfidy in FERMA was its generous donation of N9million to one of its staff, Lawrence Ojabo, for publishing a book. Managing Director, FERMA, Mr O.O. Peter had also recently admitted that more than N500million was wasted by the agency on roads without any good result.

But just like in other cases, there was no agreement on how much has been allocated to FERMA in the past nine years. While the Accountant-General said capital release to the road repair agency was about N83.7 billion in the past nine years, the Auditor-General put the figure at N106 billion.

Chief Tony Anenih, former Minister of Works, is one person who featured prominently in the failure of the Obasanjo administration to tackle the problem of bad roads. The former Chairman, Board of Trustees of the Peoples Democratic Party, was Minister of Works from 1999 to 2002, during which about N300billion was reportedly pumped into the Ministry. It was, therefore, not a surprise that his well-publicised appearance before the committee attracted a lot of interest. Indeed, there has been speculation that he was the focus of the Senate probe. But Anenih told the committee that contrary to the allegation that he “squandered” N300billion as Minister of Works between 1999 and 2002, the actual release to him was N125.8billion. The former Minister, however, said he awarded contracts worth N352billion during his tenure but they were never executed.  He told the committee that Obasanjo rejected his proposal on road construction and maintenance and even went ahead to demolish toll gates, in disagreement with his (Anenih’s) opposition to it. Anenih accused the former president of stifling the transport sector through non-release of funds to carry out major projects.

The former minister also disputed the claim that the cost of road construction in Nigeria is higher than those of other countries. He cited the example of Ghana which, according to him, pays more to construct a kilometre of road than Nigeria. “The cost of a 50-mm asphalt overlay by the Federal Ministry of Works and Housing is $70,000 per kilometre while in Ghana, it is $170,000,” Anenih said. He advised that emphasis be laid more on the maintenance of roads by ensuring adequate funding, as well as allowing more of private sector participation and institutional reforms in the road sector.

Another scandalous revelation during the public hearing was that the incumbent Minister of Transportation, Diezani Alison-Maduekwe authorised the withdrawal of N30.9billion from the CBN within the last four days of 2007. Dankwambo, however, told the committee that the withdrawal was in order. “Once a due process certificate was issued for projects already completed, money for the projects is immediately moved from the Consolidated Revenue Fund in the CBN to the Central Capital Account. And from that moment, the money can be paid out anytime. It is deemed to have been spent already,” the AGF explained.

But members of the committee were quick to point out to him that his assertion was a violation of the provision of the 2007 Appropriation Act. Lokpobiri told the Accountant-General that the withdrawal contravened Section 81 of the 1999 Constitution which stipulates that appropriation will last from January to December.

Deziani revealed that the $8.3 billion Railway Modernisation Project awarded to the CCECC of China by the previous administration was done without engineering design. Nigeria has so far paid $250 million on the project which has since been abandoned.

Minister of Finance, Dr. Shamsudeen Usman, had earlier told the committee that the bane of the transportation sector in the past nine years is the award of contracts for projects without regard for financial regulation and the rule of law. Lokpobiri could not agree less: “The public hearing was an eye-opener on the myriad of systemic variables which are the bane of efficient and effective transportation system in Nigeria over the years,” he said.

The committee has also summoned some former ministers who held relevant portfolios in the sector during the period in question to appear before it. Those summoned include Mrs. Kema Chikwe, Chief Femi Fani-Kayode and Chief Babalola Borisade. Also, Chief Bode George, the former NPA chairman who is undergoing trial for multi-billion Naira  fraudulent practices while he presided over the NPA board, has also been invited by the Committee. TheNEWS had, three years ago, detailed how the George-led board had shamelessly plundered the Authority.

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