SPEECH BY THE CHAIRMAN ADMINISTRATIVE COMMISSION OF INQUIRY INTO THE SALE/LEASE OF GOVERNMENT ASSETS FROM JUNE 2007—MAY 2015, BARR. MOSES ATAGHER ON THE OCCASION OF SUBMISSION OF THE COMMISSION REPORT ON 7TH MARCH, 2016.
On the 11th August, 2015, Your Excellency inaugurated this Commission with six terms of reference and charged us to complete the assignment within six months from the date of first public hearing. (This literally meant that each terms of reference had one month allocated to it).
The Commission held its first public hearing on 6th October, 2015, and after several public hearings and executive sessions, we are pleased to submit the report of the Commission to you today. The report is in 4 volumes: Volume I contains a summary the Commission’s findings on terms of reference A-E while Volume II is dedicated solely to term of reference ‘F’ which requires the
Commission to evaluate each transaction and make appropriate recommendations. The two volumes (Volumes I and II are therefore intrinsically intertwined and must be read together. Volume Ill is the Record of Proceedings while Volume 4 is the bound volume of witness invitations.
At this juncture, your Excellency, permit me to highlight some of the salient findings of the Commission;
The Commission found that the policy behind the lease/sale of Government enterprises to private sector operators was to ensure that these enterprises operate efficiently and profitably, stimulate economic growth, enhance the GDP of the State, creating jobs and generating revenue for the State. This policy is undoubtedly good and should be sustained with necessary modifications to achieve better results. However, the manner some of the transactions were structured left much to be desired.
Two enterprises, Agro Millers Ltd and Yuteco Foods Nig. Ltd. were auctioned pursuant to court orders obtained by Receiver Managers.
(i) It will be recalled that Government had in November, 2007, acquired Yuteco Foods Nig. Ltd for the sum of N391m. In 2012, Yuteco Foods Nig. Ltd was auctioned for its inability to pay a bank debt of N125m. Government watched the sale helplessly. After the court sale however, Government went into a private agreement whereby the purchaser agreed to pay to the Government in cash and kind NI70m cash and l5% equity in a new company to be incorporated.
The purchaser paid N50m cash but is yet to pay the balance of N20m and is yet to incorporate the new company. It is now doubtful if they ever will.
(ii) Agro Millers Ltd was sold for its inability to pay bank loan and interest totaling N110m. After the sale, Government entered into a private arrangement with the purchaser who agreed to pay N170m in cash and kind (N100m cash and N70m in supply of vehicles).
The rational question is; why was government always coming from behind the auction sales to negotiate separate cash payments with the purchasers outside such sales?
The Commission believes that these transactions could have been better handled if the Government of the day had the interest of the enterprises at heart. Rather than save the enterprises from the judgment debts, government opted for private transactions with the purchasers for immediate cash to spend and vehicles to ride. This was certainly not in the interest of the State.
75,000,000 Benue State shares in Benue Brewery Ltd representing 15% equity holding were sold away by government. No procedure was adopted. It was simply reported to the Exco for ratification that the former Governor himself had personally negotiated and sold the shares.
Out of the 10 major equity enterprises leased by Government during the period, four of them namely Benfruit Nig. Ltd, Benkims Nig. Ltd., Lobi Cassava Flour Ltd and Benue Hotels Ltd are achieving the desired results. Out of these four, three of them substantially complied with due process in their transactions, while one (Lobi Cassava Flour Ltd) though differently structured with a lot of initial challenges, nevertheless overcame the challenges and leaped into production. The remaining six enterprises are facing critical challenges resulting from non-compliance with due process and non-observance of due diligence by both parties to the transactions. These leases may not see the light of day unless bailed out by the present administration. In appropriate cases, the commission has recommended re-negotiation/review of the leases in the interest of the State to save the enterprises, while in others, outright termination, also in the interest of the State. In making these recommendations, the Commission considers that government is a continuous process, (in perpetual succession) which can periodically review it’s transactions to ensure that all is well with the enterprises at all times.
Indeed, the previous administration within one year after entering into lease agreements, reviewed and entered into supplementary/addendum agreements in respect of most of them.
Due Process and Good Governance
(i) There was complete breakdown of good governance during the period under review. Laws and guidelines guiding due process were discarded in favour of arbitrariness. The result was that different yardsticks were being administered to similar transactions. Career civil servants were not carried along in some of the transactions and where they were, their inputs and advice were often ignored. Transactions were shrouded in secrecy at the highest levels and concluded without proper documentation. This has substantially accounted for the difficulties being encountered in the implementation of these transactions.
Non-valuation of Assets before Sale/Lease
(ii) Apart from the residential quarters sold under the monetisation policy which had been valued for that purpose before 29th May, 2007, most of the Government assets sold/leased by Government during the period under review were not valued by Government before the transactions.
Valuation of assets is an important guide in the determination of their capital/rental prices. Similarly, most of the assets leased by Government during the period were not valued before the transactions. The resultant transactions were done at discretionary, sometimes arbitrary prices by the political officers of the day who were eager for instant cash payments. In some cases, the lease fees were paid for in cash directly to the political ofﬁce holders who spent the money instantly without admitting such monies into Government coffers. The Commission has recommended refunds and recovery in such cases.
The non-valuation of assets by Government also left the assets precariously in the hands of the Lessees who freely took over and worked out exorbitant values of their improvements unchecked. Some of the Leases were structured as if they were economic souvenirs to the Lessees, with juicy clauses;
(a). giving them hope in the lease agreements that they would be given the first right to buy the asset in the event of privatisation or any form of divestment of Government interest.
(b). authorizing them to use the assets to secure loans from the banks without prescribing any limits.
If Government does not act fast now, these transactions may become indirect sale of the assets by Liquidators/Receiver Managers in the nearest foreseeable future, as had happened to Agro Millers Ltd and Yuteco Foods Nig. Ltd under the helpless watchful eyes of Government during the period under review.
Government having been beaten twice before, should not allow itself to be thrice beaten, hence this alert.
Property Laundering — GP 33 OLD GRA MAKURDI
iii). In the course of implementing the sale of Government assets under the monetisation policy, cases of property laundering featured. Some highly placed political office holders used dummy names to buy more residential quarters than they were entitled. In one of such cases, (GP 33 Old GRA Makurdi), the transaction failed as the civil servant Ukpen David (Dave Ukpen) whose name was used, openly admitted before the Commission and disowned the transaction. He also disowned the purported attempt to transfer the property to one Terna Suswam in the documents submitted to the Ministry of Lands and Survey by one Joseph Tsavsar on his behalf.
iv). The Commission also discovered cases of money and property laundering transactions amounting to hundreds of millions of naira under beautifully crafted agreements from which the State Government was defrauded. Because of their primal facie criminal nature, the Commission has recommended that these transactions be referred to the appropriate agencies for proper investigation and recovery.
Non-protection of Government Assets Government also lost control of its primary responsibility of protecting its own property. Cases of successful encroachment and take-over of Government land prevailed unchecked.
The question is, if Government cannot protect its own assets/property, how can such Government be trusted with the capacity to protect the lives and property of its citizens? The Ministry of Agriculture 81, Natural Resources is the worst casualty of this encroachment as it has lost almost all its Agro-Service Centres; part of its Divisional Offices; its International Cattle Market as well as the Veterinary Centre, North Bank.
Finally, the sale of school quarters at Government College Katsina-Ala was a great harm to the development of education generally and a big blow to the college in particular. It was certainly not in the public interest and will so remain until redressed.
The Commission has made copious general recommendations which it hopes will assist Your Excellency in good governance generally and implementation of due process in particular.
We thank Your Excellency for the confidence reposed in each and every member of this Commission. We value this confidence profoundly and it is our hope that Government will find the report of the Commission useful.
Your Excellency, on behalf of the members of the Commission, it is now my singular honour and privilege to submit this report. Our confidence is that your Excellency knows exactly what to do with it.