From The Archives: Obasanjo’s Last Minute Deals

From The Archives: Obasanjo’s Last Minute Deals

Sunday, April 14, 2019 8:00 am

Olusegun Obasanjo

As swearing in ceremonies will be done at the federal and state levels on 29 May 2019, TheNEWS hereby presents a blast from the past to show how outgoing political office holders make last-minute financial approvals. In this case, it was a story TheNEWS did on former President Olusegun Obasabjo as he prepared to leave office. It was published in our 18 June 2007 edition, entitled, OBJ’s Last Minute Deals

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At the Federal Executive Council (FEC) meeting on 16 May, presided over by Chief Olusegun Obasanjo, then President, there was an announcement of the award of contracts worth N176 billion. Obasanjo, who announced the contracts, was then 13 days away from quitting office, after spending two terms of four years each. Obasanjo told the council that the contracts became necessary to provide infrastructure across the nation’s six geo-political zones. The former President, this magazine gathered, simply presented the proposal and it was approved without a dissenting voice. Briefing newsmen after the meeting, Frank Nweke, then Minister of Information, said N70 billion was earmarked for the revival of textile industries across the nation. The sum of N58.6 billion was approved for the construction of the second Niger Bridge, while N42 billion was earmarked for the maintenance of the projects after completion. Curiously, Nweke refused to name the firms to handle the contracts.

Earlier, on 9 May, FEC had approved N16.53 billion for the reconstruction of port harbours in Lagos. Obasanjo also approved the expansion of the airport at the cost of N20 billion. The Abeokuta-Otta road also received presidential attention. Though TheNEWS could not ascertain the worth of the contract, Julius Berger, the firm handling the project, has since started work. Another N4.8 billion was earmarked for the building of the Securities and Exchange Commission (SEC) permanent accommodation; and N1.39 billion for the Ministry of Defence to construct a permanent residence for participants of War College Training Course in Abuja. FEC also allocated N1.4 billion for the conversion of steam and head for the various power plants, while N233 million was set aside for the rehabilitation of the Agege-Lagos Road.

Aside this, N47.4 billion was approved for the conversion of the Alaoji Power Plant to double circuit; and N3.5 billion for the purchase and maintenance of two boilers at the Egbin Power Station in Lagos. Obasanjo’s decision to delay the award of these contracts till the dying days of his administration has spawned a series of questions and suspicions. Many have questioned his motives for awarding such meaty contracts when he was on his last lap. The Lagos-Otta Road contract is widely seen as a self-serving exercise since the highway leads to his farm in Otta, Ogun State.

The failure of the government to announce the names of companies to handle the contracts has also fuelled speculations that some powerful individuals in the Obasanjo administration might have used some fronts to corner the contracts. There were also allegations that the former president might have dipped his hand into the Federation Account to execute these projects, even when it is clear that the account belongs not only to the federal government, but also to state and local governments. Besides, the projects were said not to have been appropriated for in the annual budget. Obasanjo’s actions drew the ire of the last Senate. Professor Daniel Saror, former Minority Leader of the Senate, accused the former President of infidelity in the award of the contracts. “Obasanjo was dipping his hand into the Federation Account to execute many projects, including the power stations in the Niger Delta. Billions of dollars are being spent on those projects without the approval of the relevant agencies. No senator can exercise oversight function over them because nobody at the National Assembly knows about the contracts and the companies handling them. Senator Farouk Bello Bunza had tried to draw the attention of the Senate to this anomaly, but the PDP senators shot his motion down,” Saror said.

As Senators struggled to unravel the exact number of contracts awarded from the Federation Account, the federal government stung them again. This time, Malam Muhammad Habibu Aliyu, then Minister of State for Water Transportation, without recourse to the FEC, announced the award of $140 million worth of contracts for the protection of the Lagos coastline. Aliyu, apparently speaking on behalf of the Federal Government, added that Obasanjo approved N2.3 billion for the construction of a river port in Lokoja. But the minister neither named the contractor nor the source of the money.

The Niger Delta also received Obasanjo’s parting gift, worth N220 billion, for the dualisation of the East/West Road. Four construction giants were hurriedly mobilised in March. TheNEWS checks showed that the contracts were awarded without undergoing tender process. The firms include Messrs. Gitto Construzioni, an Italian firm; Reynolds Construction Company (RCC), Julius Berger and Setraco. Gitto was awarded the Oron-Eket Road at the cost of N26.6 billion, while RCC nicked the Eket-Onne section at N29.4 billion. Julius Berger was handed the Onne-Kaiama section at the cost of N86 billion, while Setraco is handling Kaiama-Warri Road at the sum of N78 billion.

Of all the beneficiaries of the last-minute contracts, Abuja came tops. On 19 April, the federal government earmarked a sum of N30.3 billion for the development of a dam at Karhia, a suburb of the Federal Capital Territory (FCT). A contract worth about N7 billion was awarded for the dualisation of Jikwoyi-Karshi Road, while N1.5 billion was committed to the redevelopment of the popular A.Y.A. area, also in the FCT.

An additional N162.8 million was shelled out for surveying and mapping of the FCT. And true to his promise, Obasanjo flagged off the commencement of the multi-billion dollar Abuja Railway project. The project which got priority attention two weeks to the expiration of Obasanjo’s administration, is expected to be completed in three years.

Similarly, N130 million was released for the construction of Abuja Children Resort Library in May. Before this, government had, in March, allocated the sum of N55 billion for the construction of comprehensive health centres in the 774 local government areas across the country.

The same month, government also approved N15 billion as Millennium Development Goals (MDGs) fund for the development of the agricultural sector. The largest single financial commitment of the Obasanjo government went to the education sector. Tagged “The New Deal,” the federal government, in April, set aside N600 billion to, among other things, replace the dilapidated infrastructure in that sector. Briefing newsmen after a workshop on tertiary education financing in Lagos, Dr. Oby Ezekwesili, then Minister of Education, described the outlay as an intervention fund for the sector over the next three years.

The North-West geo-political zone also benefited from the contract splash. A few days to the commencement of the 2007 governorship polls, the federal government sealed a N21.2 billion deal for the development of the Middle Rima Valley Irrigation Project II in Sokoto. In January, the government awarded a contract for the rehabilitation of Sokoto-Talata Mafara-Gusau Road. The contract was reviewed upward in March to N4 billion. Though Nweke said the contractors handling the projects had been mobilised to site, work has not started on the road three months after the review.

The government also approved N156 million for the renovation of the Jigawa Polytechnic last April. In the same month, N800 million was set aside for the provision of amenities in border communities around the Nigeria/Niger Republic border in Katsina State.

In the North-East, Gombe, Bauchi and Taraba states were the biggest beneficiaries of Obasanjo’s last-minute benevolence. In March, government approved N4.46 billion for the completion of the Dadin Kowa Hydro Power Project in Gombe State as well as a multi-billion naira contract for the construction of the 2,600-megawatt Mambilla Hydro Power Station in Taraba State which was awarded to China Gezhouha Group Corporation (CGGC).

In what many observers described as a parting gift, Obasanjo generously approved the refund of N25 billion to the Bauchi State government, being the cost of federal roads executed by the Governor Adamu Mu’azu administration since inception in 1999.

In the South-East, contracts worth over N20 billion were awarded for road construction, power generation and erosion control.

Power distribution also received attention of the federal government in some states, especially those in the North-Central geo-political zone. Information obtained from the Federal Ministry of Finance said the ex-president approved the execution of 287 power
distribution projects at the cost of N87 billion. The firm to handle the mega project was not mentioned. The thinking in government circles, according to an insider, was to withhold the identity of the company until the money is released.

Besides the rush to award contracts, the federal government indiscriminately issued mining licences and sold off some lucrative public enterprises. On 9 May, for example, government issued hundreds of mining licences to companies that are believed to have links with Obasanjo. This was followed by the sale of the Kaduna and Port Harcourt refineries to Alhaji Aliko Dangote, President of Dangote Group; and Femi Otedola of Zenon Oil, without subjecting the sale to competitive bidding. Both men are friends to Obasanjo and were known to have been big contributors to the funds used for his election.

Aside the indifference to due process in the sale of the refineries, some staff of the refineries told TheNEWS that the sale was in breach of an agreement the union leaders reached with government. “What we agreed was that government should sell 51 per cent of the refineries to private investors that are screened by the union, while government retains 49 per cent. But government reneged. As it is, there will be crisis because the sale is shrouded in secrecy, as no union leader was allowed to peruse the document containing the agreement,” a union leader in the Kaduna Refinery said.

Another aspect of the agreement reached with the Obasanjo administration, according to a unionist in the Port Harcourt Refinery, was that government would delay the sale for three weeks to enable the union leaders sensitise their colleagues on the privatisation process. But government hastened the sale for reasons unclear to industrial analysts.

The question being asked by Nigerians is: why would a government that should be taking stock and compiling its handover notes award mega-contracts?

Dr. Joseph Wayas, Second Republic Senate President, told a weekly newspaper that the last-minute rush of contracts is suspect. By awarding such contracts, Wayas reasoned, Obasanjo was usurping the powers of his successor, Umar Yar’Adua. “It was wrong of Obasanjo to award contracts at a stage when he should be preparing his handover notes. Why should you sit for eight years only to start awarding contracts for somebody else to supervise? What is your interest in those contracts? Who do Nigerians hold accountable for the success or failure of those contracts?” queried Wayas. He also called on Yar’Adua to check the fidelity of the contract awards. The former Senate President said Obasanjo should have allowed his successor to do things his own way because that would have prevented Yar’Adua from exonerating himself when “things fail.”

Alhaji Mohammed Abdulaham, a leader of the All Nigeria Peoples Party (ANPP), said Obasanjo awarded the contracts to loot the nation’s treasury. While branding the ex-president a “super failure,” Abdulaham questioned his anti-corruption credentials.

Senator Saror is not only pained that due process was not followed in the contract awards, he is also worried that public enterprises were sold to Obasanjo and his friends in the name of privatisation. “Nigerians have watched the privatisation programme of the government and they know how Obasanjo and his friends bought Nigeria. Nigerians know how NITEL, the refineries and others were bought by a cabal who held the nation by the jugular for the past eight years. Anybody who claims that the common man on the street does not know this is playing the ostrich,” Saror thundered.

Nweke, however, saw nothing wrong with Obasanjo’s decision to award the contracts at the time he did. He said government is a continuous process and expressed optimism that the Yar’Adua administration will not revoke the contracts. “It is unfortunate that people still feel that an outgoing government should stop work simply because it is going out. There is nothing in any law in our country that states that an outgoing administration should stop work. Government is a continuum and I know the amount of time and effort it takes to process projects.”

Nweke also dismissed criticism that the contracts were not subjected to competitive bidding, insisting that they were advertised. “The fact that certain projects are coming to [Federal Executive] Council now (23 May 2007) does not mean that they were conceived today. Most of these projects, you have to advertise them, go through due process before due process certificates are issued and the memos taken to the council secretariat before getting to council,” Nweke explained.

Plausible as Nweke’s argument may sound, some cost analysts who spoke with TheNEWS want Yar’Adua to revoke the contracts. They also want the President to give Obasanjo a dose of his medicine by setting up a probe panel to investigate all the hurriedly awarded contracts. On assumption of office in 1999, the Obasanjo government set up the Christopher Kolade Panel to probe all transactions of the General Abdusalami Abubakar military junta. Though the findings of the panel were jettisoned by the Obasanjo government, it no doubt revealed that many of the last-minute contracts awarded by the Abubakar regime were over-invoiced. The panel also discovered that some of the contracts were given to Abubakar’s cronies and some top government functionaries. Again, the panel’s report showed outright diversion of contract sums.

Some of the questionable contracts included the construction of the multi-billion dollar Defence Headquarters, construction of Central Bank of Nigeria Headquarters, construction of Nigerian Institute of International Affairs, all in Abuja. Others were the Lagos-Abuja rail project and the expansion of the domestic terminal of Murtala Muhammed International Airport.

Consequently, the panel recommended the cancellation of N106 billion worth of contracts. In addition, the panel indicted Abubakar for “flagrant award of contracts and indiscriminate allocation of foreign exchange” at the official rate of N22 to a dollar between 1 January and 29 May 1999.

Others indicted along with Abubakar included former Minister of the FCT, Major General Mamman Kontagora; former Chief of Defence Staff (CDS), Air Marshal Al-Amin Daggash; former Chief of Army Staff (COAS), Lieutenant-General Ishaya Bamaiyi; former Chief of Naval Staff (CNS), Vice-Admiral Jubril Ayinla and former Chief of Air Staff (CAS), Air Marshal Nsikak Eduok.

The thinking among critics of the Obasanjo government is that if the Yar’Adua government must establish the degree of extra-budgetary spending by the immediate past government, it must constitute a probe panel to investigate all the contracts Obasanjo awarded at the twilight of his administration. But can Yar’ Adua probe his godfather? The answer is in the womb of time.

• This story was published in TheNEWS, 18 June 2007 edition.

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