Shocking Revelations about how the Federal Ministry of Power,Works and Housing transferred N37 Billion budgeted for meter supply and installation, tot he bank account of a Lagos based contractor, for job not done.
By Tobs Agbaegbu
Anthony Ayine, Auditor General of the Federation, may have lost one rare opportunity to write his name on gold as a tough anti-corruption crusader in Nigeria. When he was barely nine months old on the job,having been appointed on January 12, 2017, the fire in him was still burning. Ayine, from Cross River state,had the tough job trusted on his shoulders. It was to investigate suspicious payment of a whooping sum of N37 billion by the Power arm of the Federal Ministry of Power, Works and Housing, to the bank account of a contractor called Messrs Ziklagsis Network Ltd, for a job not yet done.
That opportunity appears to have been lost now. Babatunde Fashola, the supervising Minister of the ministry where the scandalous transaction took place left office at the end of President Buhari’s first term in May, two months ago. Up till now, the OAuGF has not issued any statement on the outcome of the investigation he started in January 2017.
Official inquiry made through letter dated January 14, 2019, from Verbatim magazine to OAuGF was treated with ignominy. Phone calls to Ayine on several occasions were also not responded to by him. But the facts on ground contain detail of what cannot be ignored or swept under the carpet. It is a lengthy story, of uncommon transaction in government, which raises questions about claims of transparency in the Buhari administration.
The full story of the matter which attracted the attention of Ayine,is quite revealing. Verbatim learnt that he was shocked with the details,so much,that he quickly assembled a crack team of experienced and tested audit investigators. The team was headed by a Director to carry out the first leg of investigation. This level of investigation, Verbatim learnt,is akin to what the military call “combing of the bush”.
It involved cross-checking of facts, figures, assembly and study of relevant laws, service rules and regulations, to determine what is applicable. Purpose is usually to determine if rules have been flouted or bent.
Upon confirmation from his team of investigators that what he was told about the N37billion was an anomaly, Ayine gave green light for full investigation to commence. Accordingly, a letter dated November 29, 2017 was sent from the OAuGF to the Permanent Secretary,Federal Ministry of Power, Works & Housing (Power), at TCN House in Maitama, Abuja,intimating him of the damning report.
The letter was titled: “Report on audit monitoring and evaluation of supply of 753,002 Single and 3 phase meters to Nigerians under the Presidential Initiative”. The period it covered was January, 2015 –September, 2017.
The preliminary investigation was damning indeed. A copy of the report was obtained exclusively by Verbatim magazine. It started with a detailed background of the issues at state, namely, contract award letters issued to seven (7) contractors in 2015, as approved at a Federal Executive Council meeting of Wednesday, May 20, 2015. That was during the presidency of Goodluck Jonathan.
The Seven contractors were listed as Messrs Ziklagsis Networks Limited, with Head office at 70 Adeniran Ogunsanya Street, Surulere,in Lagos; Mojec International Limited with office along ApapaOshodi Expressway in Lagos, and Momas Electricity Meters Manufacturing Co.Ltd, situated at Lagos-Ibadan Expressway in Ogun state. The others are: Electricity Meter Company Nigeria Plc, Plot 30-32 Light Industrial Area, Chikaji, Zaria in Kaduna state, Unistar Hitech Systems Limited and two others.
As stated in their letters of award of the contracts, the contractors are to supply and install various quantities of prepaid meters (PPMS), for sums stipulated in the award letter. Terms of payment were also stated in the award letters.
For Ziklagsis Networks Limited, the contract in question was ,among others, ‘for the supply of 753,002 single and three (3) phase meters, under the Presidential Initiative , to supply meters to Nigerians. One of the terms for payment, as stated in the award letter dated 21st May, 2015, read: ‘’15 present advance payment shall be made upon submission of APG and Performance Bank Guarantee to be spread Intermittently and prorated to progress invoices’’. The greater chunk of the payment was to come after delivery of the PPMS. Specifically, the contract letter stated that, ‘’70 per cent value of invoice payment shall be made upon delivery of PPMS to designated locations by the project team’’.
The contract was reportedly meant ‘’for the supply of 753,002 single and three (3) phase meters, under the Presidential Initiative, to supply meters to Nigerians.
The report continued and stated as follows:
“further inquiries into the execution of this project revealed an avalanche of unresolved logjams as it was observed that the contract for supply of meters dated back to the NEPA days when in 2003(according to the sources at the Ministry) a certain Messrs Ziklagsis Network Ltd. (ZNL) … one of the seven (7) contractors had earlier on 6th of December, 2003 executed a tripartite contract agreement with Unistar Hi-Tech Ltd and NEPA that metamorphosed to Power Holding of Nigeria (PHCN) for the design, manufacture, supply and installation and operation of pre-paid meters (PPM) for five (5) years, subject, however, to the parties’ right of renewal. The agreement had Ikeja and Eko distribution zones of Lagos in mind with plans to extend to South-South,East and West, then North Central Zones, comprising a total of 23 states and the FCT. Ziglasis was contracted to install 3 million meters.
“However, in August, 2006, PHCN terminated the contract alleging that ZNL did not exhibit the requisite professionalism in fulfilling its obligations in the contract and that appeared to be the beginning of the quagmire that has culminated in the non-supply of meters to Nigerians and the movement of a whopping sum of (N37 billion)Thirty Seven Billion Naira to ZNL account for job not done.”
The four page report also highlighted other key areas of concern. It highlighted the issues in three lengthy paragraphs. One of the paragraphs,it reported thus:
“Further observations from the committee report set up to resolve the logjam indicated that before the Federal Executive Council intervention in 2005, the sum of N714,000,000.00 (Seven Hundred and Fourteen Million Naira) had been paid for meters supplied in 2009,the report did not indicate the number supplied but stated that were installations as well as stating that 133,002 single and three phase meters were still warehoused in Lagos and 232, 483 single and three phase meters were still with the manufacturers in China. On the 6th of February,2014,the Ministry through the Pre-paid Meter Intervention Committee agreed with ZNL to be allowed to continue the supply of the balance of the three million meters pursuant to the signed agreement of 5th December, 2003 and the addendum No 1 of 6th June, 2005. ZNL canvassed the above position in order to resolve issues and move forward.
“However, audit is at a loss concerning the circumstances surrounding ZNL laying claims as the sole contractor for the enhanced and improved contract arising from the FEC approval.Series of interaction with different members of staff of the Ministry in the course of audit cannot suffice as they are not documented.The FEC approval was for the contract to be split and awarded to seven (7) contractors which was promptly done, going by the letters of award available to the audit team.
“Further audit enquiries revealed that the sum of N37,276,049,158.02 (Thirty Seven Billion, Two Hundred and Seventy Six Million, Forty-Nine Thousand, 0ne Hundred and Fifty-Eight Naira, TwoKobo) belonging to the Ministry’s account No. 1771663338 with Skye Bank was credited on the 4th March,2016 for the supply of meter to Nigerians necessitating the FEC approval of 20th May, 2015. However, a copy of the bank statement of skye bank obtained, indicated that …the sum of N37, 672,451,729.41 (Thirty Seven Billion, Six hundred and Seventy two Million, Four Hundred and Fifty One thousand, Seven Hundred and Twenty Nine Naira, Forty One Kobo) had been transferred to the account of one of the seven contractors (ZNL) based on a spurious court judgement obtained by the company. This amount obviously comprised of accrued interest. Audit was at a loss as to how and why a learned Judge, public Servant, schooled in procurement process or even against the dictates of reason, would make such pronouncement that translates to payment for job not done in a procurement contract. In a session with the legal department of Power Ministry,Audit was told that the Ministry appealed the judgement but evidence of this was not obliged even on demand. In other words, efforts of Government to do one good for its citizens is being sabotaged and truncated by some powerful individuals seemingly stronger than the state.
“This report therefore serves to intimate the immediate and direct representatives of the people(National Assembly) with the logjam that has prevented the people from benefiting from the proposal as well as ascertaining the whereabouts and safety of the funds earmarked for this that now rests in the bosom of the accounts of private company through circumstances obviously contrived.”
In conclusion, the audit team made some requests from the Ministry. Among others, the team requested for statement, with documented evidence, stating, “circumstances surrounding the claims of ZNL, as the sole contractor for the supply of meters that led to court case’’. The Ministry was further asked to provide documented evidence of the Ministry’s appeal of the judgement that enabled the bank to move the funds amounting to N37 billion to ZNL bank accounts.
Also, the Ministry was asked to state and show “documented evidence of concrete steps taken by the Ministry to ensure that anomaly of paying for unexecuted contract contrary to procurement procedure is rectified’’. Finally, audit demanded for proof of the safety of the funds in ZNL accounts with the bank.
Verbatim learnt that the information requested for, by the OAuGF were not supplied,up till the end of the tenure of President Buhari’s first term,May 29, 2019. But the Ministry, in an effort to explain why it did what incurred the audit enquiry introduced new angles to the apparent messy transaction.
In response to a letter of enquiry from Verbatim magazine, the Ministry acknowledged, through a letter dated January 28, 2019 and signed by Louis O.N.Edozien, Permanent Secretary (Power)that there was a serially failed contract that led to the institution of a court action against the Federal Government,Attorney General of the Federation and Federal Ministry of Power, Works and Housing by Ziklagsis Network Limited in 2015. He confirmed that ZNL obtained judgement in its favour against the Federal Government and the other defendants “which judgement led to the blocking of the sum of N37 billion, of Government money in an account with Skye bank, which is now Polaris bank’’. He also claimed that the N37 billion inquestion “is an amount below the initial N119 Billion of the contract for the procurement of meters from Ziklagsis.’’
The Ministry explained that the unfavourable court judgement was appealed against, but that a “compromise agreement” was later reached and entered as consent judgement of the parties by the court. As a result of the amicable resolution of the matter, he revealed that the Federal Executive Council gave “approval that the said amount which pursuant to the judgement and order of court was transferred to Messrs Ziklagsis’ account should be made as loan to Messrs Ziklagsis’’. He assured that the money “is intact in the bank’’. He explained that one condition of withdrawal from the account is that ‘’Ziklagsis should provide arepayment payment Bank Guarantee from a reputable bank’’.
The response from Edozien, Permanent Secretary (Power), is not convincing in any way, and cannot, indeed, be justified with any known rules of doing government procurement business. He did respond appropriately, to the issues raised by Verbatim magazine,in their letter of enquiry. He ignored Verbatim magazine’s request for a face-to-face interface which could have offered ample opportunity for cross checking of facts and figure, and for cross examination purposes. Edozie provided only a five paragraph reply, couched in the language of bureaucracy. The strategy,ostensibly, was to confuse and hide real reasons why his ministry expended such a huge sum of public fund, in a most suspicious and scandalous manner.
The Ministry’s response is unconvincing and suspicious in many ways. First, payment for job not done is a flagrant contravention of procurement rules.The rules of engagement of the contractors were expressly stated in their letter of contract award.One of the terms for payment, as stated in the award letter dated 21st May, 2015, read: ‘’15 present advance payment shall be made upon submission of APG and Performance Bank Guarantee to be spread Intermittently and prorated to progress invoices’’.
The greater chunk of the payment was to be made after delivery of the PPMS. Specifically, the contract letter stated that, ‘’70 per cent value of invoice payment shall be made upon delivery of PPMS to designated locations by the project team’’. There was no explanation from the ministry about how payment of N73 billion fitted into this contractual agreement.
But the Ministry raised the issue of judicial pronouncement which they said went into appeal by them. But no evidence of the appeal was provided, even on request by the auditors. What is also doubtful, in this circumstance, is the assertion, that there was a Federal Executive Council’s authorization that the N73 billion be treated as loan to a contractor who is yet to perform his contractual obligation. What would have made matters clearer would have been a supply or display of raw evidence, by the ministry, of details of the FEC approval, stating when the meeting was held, who presided, who attended, core issues discussed, and how conclusions leading to approval ,were arrived at.
The issue of safety of the money in Ziglagsis account was also not convincingly addressed by the Ministry. One came off from their reply to Verbatim magazine’s letter was a mere assurance that the money “is intact in the bank’’. Edozien, the Permanent Secretary added in the letter he signed, that one condition of withdrawal from the account is that ‘’Ziklagsis should provide a repayment payment Bank Guarantee from a reputable bank’’.
How this assurance will assuage fears by many Nigerians who have expressed fears, during conversations with Verbatim, that the Ministry’s response may be a mere smokescreen to cover up a fraudulent transaction, is yet to be seen.Perhaps what could fully assuage the fears of Nigerians about this contentious and suspicious transaction by the Federal Ministry of Power, Works and Housing, will be the provision of answers, as requested by the OAuGF . In their query to the Ministry, the OAuGF demanded for the following : “documented evidence of concrete steps taken by the Ministry to ensure that anomaly of paying for unexecuted contract contrary to procurement procedure is rectified’’, and ‘’proof of the safety of the funds deposited in ZNL accounts with the bank’’.
What may finally clear all doubts on this matter could be the involvement of a core financial crime investigation agency like the Economic and Financial Crimes Commission, EFCC, to carry out a thorough investigation on the N37 billion prepaid meter supply and installation contract deal with Ziklagsis.
culled from Verbatim Magazine
98 total views, 1 views today