SERAP asks Buhari to probe privatisation of public enterprises since 1999

The Socio-Economic Rights and Accountability Project (SERAP) has asked President Muhammadu Buhari to review the alleged corruption and abuse of power in the privatisation of public enterprises in Nigeria between 1999 and 2011.

In the letter dated December 1, SERAP urged Buhari to refer the cases to the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) for further investigation.

“If there is relevant and sufficient admissible evidence, for anyone suspected to be involved to face prosecution,” it said.

Vice President Yemi Osinbajo, who is the chairman of the National Council on Privatization (NCP), was copied in the letter signed by Adetokunbo Mumuni, SERAP executive director.

The said period covers the administrations of former Presidents Olusegun Obasanjo, Musa Yar’Adua and Goodluck Jonathan.

“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,” the letter read.

“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.

“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.”

“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 thePublic 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 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.”

“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).”

“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.

“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.

The group also 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.”