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REVEALED: How Non-Existent Company Was Awarded Multi-Billion Naira Railway Contract – Investigation

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Eser Contracting and industry Company Incorporated was unregistered but was awarded a N19.2 billion railway rehabilitation contract in violation of public procurement regulations.

A multi-billion-naira contract to rehabilitate a section of Nigeria’s Eastern Railway Line was awarded to an unregistered entity in a process that reeked of corruption, regulatory failure, collusion, and defiance of Nigeria’s public procurement rules, an investigation by PREMIUM TIMES has shown.

That malfeasance was committed during the administration of Goodluck Jonathan, Nigeria’s immediate past president, who lost his re-election bid in 2015 in part due to charges that his government did not confront corruption frontally.

But officials under the current Muhammadu Buhari administration have also not proven to be better. They have helped to sustain a web of subterfuge devised to cover the fraud that started under Mr. Jonathan.

A setup named Eser Contracting and Industry Company Incorporated, promoted by Turkish firm Eser, was awarded the contract to rehabilitate the 463 KM Port Harcourt-Makurdi section of the Eastern Railway line for N19.2 billion in March 2011. But it has no legal capacity for the work as it has no required certificate of incorporation, a CAC search revealed.

Our investigation showed the setup has possible connections with persons – Adekemi Alokolaro, nee Sijuwade, and her husband, Ola Alokolaro – who share family ties with Adeseyi Sijwuade, then Managing Director of the Nigerian Railway Corporation. For several years Mr Sijuwade has been a subject of contract fraud and corruption probes by the National Assembly and security and anti-graft operatives.

The couple, Mr and Mrs Alokolaro, did not respond to an emailed request for comment. So did Mr Sijuwade, who was contacted by phone call, WhatsApp message and SMS.

The railway rehabilitation work was divided into three sections: 463 KM Port Harcourt-Makurdi; 1016 KM Makurdi-Kuru; and 640 KM Kuru to Maiduguri, all at once awarded to three different contractors in March 2011.

This article extends PREMIUM TIMES’ investigative reporting on Nigeria’s Eastern railway fraud, after an earlier story of how a company, Lingo Nigeria Limited, took public money for work not done and had Nigerian taxpayers and two foreign firms, from Czech and China, as victims.

Lingo was awarded the Kuru-Maiduguri section for N23.7 billion. CGGC Global Projects Nigeria Limited was charged with rehabilitating the segment that runs from Makurdi to Kuru for N24.5 billion.

Nine years after the contracts were awarded, the rehabilitation work has failed despite huge funds already sunk, dashing the hopes of people, especially traders, who had in the past several years relied on train service. The government has now decided to wrest the contracts from the companies, who have submitted their exit plans on the government’s request.

Of the three contracts, two – the Port-Harcourt-Makurdi section and Kuru-Maiduguri section – given to Lingo and Eser respectively were associated with procurement fraud, our investigations showed. And while our earlier article described the contract awarded to Lingo as the most problematic, the procurement process involving Eser pushes the limits of impunity.

We did not find the third contract given to CGGC to have been associated with any procurement fraud. However, as our field investigation involving travel across several states showed, CGGC also did jobs, which on-the-ground railway staff complained was perfunctory – a similar complaint as that made by the staff at the section handled by Eser.

The staff said it was the shoddy job that made the Eastern line now virtually unusable and not different from its state before the rehabilitation contract, if not worse.

In the invitation-to-bid advert for the contracts placed in the November-December 2010 edition of Federal Tenders Journal, the railway corporation required prospective contractors to submit a valid certificate of incorporation — a statutory requirement.

However, this requirement was brushed aside in the consideration of the bid submitted by Eser Contracting and Industry Company Incorporated even as the process moved from the railway corporation to the Bureau of Procurement Procurement (BPP), and the ministry of transport and the presidency before the contract was awarded.

The Public Procurement Act charges the BPP with the responsibility of preventing “fraudulent and unfair procurement” and applying administrative sanctions “where necessary”.

But the BPP failed in this responsibility as it issued a “Certificate of No Objection” to clear the way for the railway corporation to award the legally non-existent company the contract. Also, it was the certificate issued by the BPP that the then Transport Minister, Yusuf Suleiman, cited in requesting anticipatory approval for the award of the contract from Mr Jonathan.

The ministerial request was made on March 25, 2011, a day after the BPP’s certificate was issued, and was approved on March 28, 2011, by Mr Jonathan, official records obtained by PREMIUM TIMES show. It was in November of the following year that the Federal Executive Council endorsed the Eser contract alongside the two other sections as the president had in March 2011 hurriedly given anticipatory approval.

BPP did not comment after repeated requests via email and a Freedom of Information Act letter.

Legal expert, Jiti Ogunye, said a foreign firm participating in the procurement process in Nigeria will still have to incorporate an entity in the country to satisfy the “legal capacity” requirement stipulated in the Public Procurement Act.

After the non-existent Eser Contracting and Industry Company Incorporated was given the contract in March 2011, the promoters devised a way to smoothen the irregularities. The plan was to register a new company, thus birthing Eser West Africa Limited.

Eser West Africa Limited was registered in June 2011, three months after the contract was awarded, and that entity has since carried on with the contract, engaging with officials, including those of Mr Buhari. The name “Eser West Africa” appears on boards at the construction site at the railway station in Port Harcourt.

But Eser West Africa had not been registered at the time the contract was awarded and it was not the entity that was formally awarded the contract, according to records from BPP, NRC, transport ministry, State House, and FEC.

Yet, till date, despite its not being the original contract beneficiary and being without a certificate of incorporation at the time the contract was awarded, officials have continued to engage with Eser West Africa and use that name in official communications relating to the Eastern railway line rehabilitation contract.

While our investigation established that Eser Contracting and Industry Company Incorporated has no certificate of incorporation in Nigeria, it remains uncertain if it satisfied other requirements, such as tax clearance and audited accounts for the preceding three years, in the advert for the contracts.

The Federal Inland Revenue Service (FIRS) replied an FOI request for the entity’s tax status as well as that of the later-registered Eser West Africa created to smoothen the procurement fraud. The tax agency, however, declined any disclosure.

“The information you have requested concerning the companies cannot be disclosed by virtue of the provision,” the FIRS wrote, referring to Section 14(1) (b) of the Freedom of Information Act 2011, which requires public institutions to deny applications for information regarding taxpayers and the assessment or collection of their tax.

About the author

Mc Ebisco

Welcome to Mc Ebisco, I am a blogger and a comedian in Nigeria, My aims and objectives are to share knowledge and varieties of news and information across the globe.

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