Disturbed by the alleged N1.45billion legal and consultancy fees scandal in the Bureau of Public Enterprises(BPE), Vice President Yemi Osinbajo has queried the Director-General of the agency, Benjamin Dikki, on the award of such contracts.
The controversial contracts include a curious N950million job for the liquidation of the Power Holding Company of Nigeria(PHCN) when the company had seized to exist and N500million as consultancy fees to a government department.
The DG is also expected to clarify the alleged payment of N27,188,232,208:20billion as premium for group life and group personal accident insurance for former staff of the defunct Power Holding Company of Nigeria(PHCN).
Another issue is the alleged diversion of N455,266,618;23 meant for the payment of retirement benefits to entertainment allowance for the staff.
The query followed a petition to the Office of the Vice President by a former director of the BPE, Ibrahim Muhammad Kashim.
Kashim said the N950million contract for the winding up of PHCN was unnecessary because PHCN was already a “shell” company.
Before the action of the Vice President, the Bureau of Public Procurement (BPP) had asked the Economic and Financial Crimes Commission (EFCC) to probe the contracts.
The contracts were awarded contrary to the advice of the immediate past Attorney-General of the Federation, Mr. Mohammed Bello Adoke (SAN) and the BPP, it was learnt.
The BPP requested the EFCC to investigate the payment scandal in a June 27, 2015 letter to the anti-graft agency.
But a fresh petition by the ex-BPE director to the Office of the Vice President sparked the Presidency’s interest.
A letter by the Office of the Vice President to the ex-director reads in part: “I am directed to acknowledge with thanks, the receipt of your letter dated 3rd November 2015 on the above stated subject.
“His Excellency, Prof. Yemi Osinbajo, SAN, GCON, Vice President, Federal Republic of Nigeria has further directed that the said document be forwarded to Director-General, Bureau of Public Enterprises (BPE) for his due consideration and response.
“Please accept the assurances of His Excellency, the Vice President’s warm regards.”
Earlier in his petition, Kashim said there was rot in the BPE which should be investigated by the Vice President, who is the Chairman of the National Council on Privatisation(NCP).
He said: “Your Excellency, the former DG Miss Bolanle Onagoruwa, was removed partly because she refused to accept the appointment of a prominent PDP lawyer to wind up PHCN for an amount exceeding N1.5bn. ( When the proposal was sent to her, I was one of the Directors she confided in.)
“ As lawyers, we reckoned that it was unthinkable, more so as all the assets of PHCN had been transferred through a presidential order to the Discos and Gencos while all the liabilities were to be handled by Nigeria Electricity Liability Management Company ( NEMLCO). PHCN is therefore a shell company.
“Immediately after her removal, the current DG established a committee that awarded the assignment to the preferred law firm. I publicly expressed my disagreement. The DG sent for me and solicited for my support as it was from our bosses. I maintained my position, as a result of which the matter was never tabled at, or brought to the management committee for deliberation and approval before going to NCP.
“ I still maintain that PHCN was a shell company that had no assets and or liabilities. Winding up a shell company surely cannot be done for close to a billion naira. It was fraudulent.
Regarding the payment of over N27billion for insurance premium, the ex-director said at the time, PHCN had no more staff.
He added: “The DG one day invited me to his office. He informed me of a memo that would be sent to Management Committee for its consideration and approval. He suggested that we should pass it, since I was the one that usually chaired such meetings. It was to approve for transmission to the chairman of NCP the payment of N27,188,232,208:20 billionas premium to Great Nigeria Insurance Plc for group life and group personal accident insurance for PHCN staff. I told him it cannot pass, for even a law 101 student knows the cliche ‘No premium No cover’.
“And in any case at that time PHCN had no staff. However, I learnt later that the same paper came to BPE with all the necessary approvals, and I believe the money was paid.”
On retirement benefits, Kashim alleged that the amount approved for BPE staff was converted to Entertainment Allowance.
He said: “ One of the items approved by the NCP was Terminal Benefits for exiting staff. It was to take effect from 2015. For that purpose NCP approved for inclusion into 2015 national budget the sum of N455,266,618:23. The staff due to retire in 2015 are:(1)Ibrahim Muhammad Kashim(Director), (2)Hajiya Fati Abubakar (Director);and (3) Afolabi Mathew(Deputy Director).
“ The amount approved by the NCP as terminal benefit was meant only for three of us retiring in 2015. It meant that BPE should in 2015 seek NCP’s approval for staff retiring in 2016. (As a matter of fact there will be only one retiring staff in 2016).
“The DG by these acts has wrongly converted our terminal benefits to pay management staff entertainment allowances. This he did to calm the restiveness of the management staff as he had completely spent the internally generated revenue on his weekly trips to Zuru in Kebbi State to campaign for a political party (in deed he even bought a pilot vehicle fitted with a siren to facilitate the trips).
“Let the DG BPE Mr. Benjamin Ezra Dikki tell Nigerians by publicising the minutes of meetings where in those matters were presented to the management committee of the BPE and that it deliberated and recommended to the NCP for approval in line with the extant law. The BPE is the secretariat of the NCP. Matters going to NCP have to be discussed and approved by the management committee. Why none of the payments in question came before the committee was because I objected to it, so the DG went elsewhere and got the memos approved after which he disbursed the money. And it was my stance that made the DG in an attempt to pay me back, to circumvent NCPs approval that amended the BPE Staff Condition of Service, just to ensure that I don’t get my terminal benefits.
“Not only that, he equally converted the approved sum for retiring staff in 2015 to be converted into recurrent management staff entertainment allowance.”
In its defence, the BPE said its ex-director lied and misled the public in his petition to the Vice President.
The BPE, in a statement by its Head, Public Communications, Alex E. Okoh, said: “Kashim lied when he stated, “….. The former DG Ms Bolanle Onagoruwa was removed partly because she has refused to accept the appointment of a prominent PDP lawyer to wind up PHCN for an amount exceeding N1.5billion… immediately after her removal the current DG established a committee that awarded the assignment to the preferred law firm.”
“The fact is that the National Council on Privatisation at its 3rd Meeting of 2013 held on Thursday May 9, 2013 had approved the engagement of Messrs J K Gadzama as the consultant for winding up of PHCN. Benjamin Ezra Dikki was appointed acting DG on 27th November, 2013, over six months later.”
On insurance premium, the BPE added: “The provision of Group Life Insurance Policy for employees is mandatory and compulsory under Section 4(1) (5&6) of the Pension Reform Act 2004. The maxim of no premium no cover does not apply here where the law explicitly provides, ‘Every employer shall maintain Group Life Insurance Policy in favour of each employee for a minimum of three times the total annual emoluments of the employee and premium shall be paid not later than the date of commencement of the cover’.
“Thus, PHCN Successor Companies as employers of labour before privatisation were mandated by law to provide these classes of insurance to its employee in compliance with the Pension Act.
“It was established that there was an Insurance Policy between GNIP and PHCN. Premiums were outstanding for year 2011/2012 amounting to N13,607,151,141.10 and renewable for the year 2012/2013 at the sums of N13,581,080,774.10, totalling N27,188,232,208.20 for which payment was outstanding. PHCN had already filed claims with GNIP for 267 staff that died in active service for compensation to the relations/widows of the deceased.
“GNIP did not pay the claim because PHCN did not pay premiums due for 2011/2012 and 2012/2013. PHCN submitted these claims to the Implementation Committee set up by the National Council on Privatisation for the processing of entitlements to PHCN Staff that then made representations to the then Minister of Power.
“The Minister of Power presented the matter to the Vice President in a memo dated 23/12/2013. It was subsequently presented to and approved by the National Council on Privatisation at its 3rd meeting held on August 4th, 2014, for payment. BPE transferred the sum to the Office of the Accountant General of the Federation for further action.
“As mentioned earlier, at a special meeting held, on January 12, 2013 the NCP set up an Implementation Committee, chaired by the Minister of State for Power to handle the processing and payment of entitlements of PHCN Staff based on the approvals given at the same meeting.
“This Implementation Committee chaired by a Minister comprised of representatives of various Ministries and Agencies, was superior to BPE management. Thus no single one of the forty tranches of payments to PHCN Staff ever came to the BPE management for consideration.
“It is in compliance to the same process that the Insurance premium payment did not have to come to BPE management as insinuated by Ibrahim Kashim.
“Once the implementation Committee processed and verified PHCN Staff entitlements, it advised BPE and BPE remitted the relevant sums to the office of Accountant General of the Federation that effected payments as appropriate.”
The BPE denied allegation of diversion of retirement benefits of BPE staff including the entitlements of Kashim.
It said: “The Bureau in its desire to ameliorate the plight of its former staff who retired and the financial dislocation they went through before they could access payments from their RSA, decided to explore the provision of Section 4(4) (a) on the Pension Act which gives employers the discretion to make additional payments of benefits to its retiring employees.
“It was intended to provide a cushion of funding for retiring staff pending when they were able to process and access their RSA’s. Consequently, the National Council on Privatisation approval was sought to create terminal benefits for the Bureau’s staff who are retiring.
“This was, however, subject to the approval of the Salaries and Wages Commission, the body that has the statutory powers to approve Salaries and Allowance of Public Servants. The Salaries and Wages Commission declined approval of the Terminal Benefits on the grounds that the Bureau cannot be singled out of the entire Public Service for such special treatment. Once the Salaries and Wages Commission does not approve the benefits, such cannot be included in the budget template and be funded.
“By the provisions of the Pension Act and the determination of the Salaries and Wages Commission, there is no terminal benefit payable to Mallam Ibrahim M Kashim or any staff.
“We wish to emphasise that all retirement benefits are paid by PENCOM in line with the Pension Act and all the ex-director’s records have been forwarded to PENCOM for payment. He has been advised to follow up with PENCOM for payment.”