Revelations as NASS probes breaches of Procurement Act

The Public Procurement Act (PPA) 2007 was enacted to stem leakages in the public till. But going by revelations from the National Assembly in recent times, the leakages appear endless. Group Politics Editor, TAIWO ADISA, presents the revelations at a recent public hearing of the House of Representatives’ Committee on Public Procurement which probed alleged breaches of the Act through the engagement of consultants for pre-shipment inspection and monitoring of crude and gas exports as well as the probe of the Senate into the alleged collusions at the Bureau of Public Procurement among others.

THE administration of President Muhammadu Buhari prides itself on fighting corruption. There have been signals of that war but no one can deny that to ensure an enduring battle against the scourge, the legislature must weigh in through oversights and conduct of probes to expose corruption. The endemic nature of the scourge demands nothing less.

Indeed, since the restart of democratic governance in 1999, the legislature has followed up the quest to fight corruption by establishing institutions and enacting laws. The Public Procurement Act (PPA) of 2007, is one of the laws enacted to fight the scourge of corruption.

Over the years, governments have realised that one of the easiest routes to perpetrate corruption is through the public procurement process. The PPA had, therefore, affirmed that agencies must ensure probity, accountability and transparency in the procurement process, through the application of fair, competitive and transparent standards and practices. The procedures are to be enforced by the Bureau of Public Procurement (BPP).

Contrary to expectations, reports reaching the National Assembly have indicated that the PPA is not only being violated, the BPP is, on another hand, also yielding itself as a tool to help perpetrate some infractions against the Act.

On March 1, Honourable Babatunde Kolawole, a member of the House of Representatives from Ondo State moved a motion on the floor to raise allegations that the Ministry of Finance and its Minister, Mrs Kemi Adeosun had, in taking over the pre-shipment inspection process for oil and gas exports had overseen a process that allowed the selection of non-responsive companies as well as some that fail to meet basic statutory requirements like possession of valid PENCOM certificates and the Nigerian Social Insurance Trust Fund (NSITF), in line with the requirements of the Procurement Act.

The lawmaker had noted that though the Ministry had relied on a memo by President Buhari, dated June 2015, which approved its power to engage pre-shipment inspectors for oil and gas products, the directive also indicated that only experienced companies are engaged.

He noted that whereas 65 companies were selected to bid in line with the directive, the process soon landed in some back and forth, leading to the minister’s cancelation of the process in December 2015.

This development was apparently responsible for the news that broke out in the Senate and the House of Representatives in March that Nigeria has been unable to measure its oil and gas exports since June 2015, leading to a loss of about N23.6 billion, while some $850 billion was said to have been lost to violations of the pre-shipment inspection laws between 1996 and 2014.

Kolawole, in his motion, had said that as a result of the back and forth between the Ministry and the BPP, the pre-shipment process is being undermined, leading to huge revenue losses.

On May 10, another motion on the floor of the Senate by Senator Dino Melee indicated that BPP has failed in the implementation of the PPA by allegedly encouraging massive frauds in contracts award and execution and violation of procurement process.

According to him, BPP, in allowing such frauds to take place, has been consistently engaging in under hand dealings with respect to the issuance of certificate of no objection and invariably abusing its powers to make pecuniary gains.

He specifically cited example of a contract of about N20million which he said was fraudulently inflated to N200million and yet granted a certificate of no objection by the BPP and approved by the Federal Executive Council (FEC).

He said: “In line with section 5 (2) Public Procurement Act 2007, the Bureau for Public Procurement (BPP) is mandated to perform procurement audits and submits such audits to the National Assembly biannually.

“But  BPP has repeatedly failed and neglected to perform this crucial public and statutory duty particularly for conduct of post procurement audit and submission of reports to the National Assembly biannually,” Melaye said.

Last week, the Public Procurement Committee of the House, having been mandated through the approval of Kolawole’s motion took up the series of infractions at a public hearing.

Speaker of the House, Yakubu Dogara, who was represented by the Deputy Minority Leader, Chukwuma Onyema, while declaring open the public hearing said that pre-shipment inspection is necessary to determine actual value of export goods, adding that engagement of contractors for the process must be in tune the requirements of the PPA.

He said: “The House of Representatives has always been worried about transparency and accountability in the lifting of crude oil in Nigeria. The World Bank also estimated that $300 billion of government funds generated from crude oil cannot be accounted for, as it may have found its way into the pockets of some individuals.”

Chairman of the House Committee on Public Procurement, Oluwole Oke, told the gathering that it was lamentable that government officials who had a duty to uphold the PPA were the ones undermining it.

He said: “It would be impossible to fight corruption if our procurement processes are not fool proof. If we are not ready to adhere to the Act, we could as well jettison the anti-corruption fight.

“We have cases where some of these companies did not even pay tax, which is a duty even private citizens owe the country, talk less of these firms that are making millions from the country. We have conducted investigations and found that some companies did not even meet the most basic requirement of being registered, yet they were awarded contracts. These should be unheard of.”

He assured that the committee would dig deep to get to the roots of the issues, adding that the committee would work in line with the legislative agenda of the Eight House.

“We must ensure thorough oversight of Ministries, Departments and Agencies of government. This is necessary as a way to strengthen the institutions, subsequently deepening our democracy,” he stated.

Discoveries galore

At the hearing last Monday, some revelations were made, lending credence to the fact that the Pre Shipment procedures in the oil and gas sector among other sectors were being violated.

It was revealed that many of the pre-shipment inspection agents (PIAs) qualified in the processes of the Ministry of Finance and the BPP lacked basic requirement including tax clearance certificates, PENCOM certificates and NSITF documentations.

For instance, the committee was presented some documents by the Office of the Accountant General of the Federation which showed the payments to PIAs between January 2011 and April 2017.

The details showed that Trobell International Limited was paid N2.53billion while JBIS Intergrated Resources Limited got N15.2 billion, just as it was revealed that both firms did not show evidence of tax remittance, and did not have PENCOM certificates.

Another company Cobalt International Services, which was said to have collected N11.3 billion and Swede Control Intertek, which received N5.62 billion, were also said to have issues. It was said that both companies failed to register with the NSITF, the same as other including Stera Maritime Agency, Opsmoserve Global Limited, Q & Q Control Services Ltd and Ghengis Development International Ltd.

The Public Hearing was told the over $163.7 million has been spent on engagement of pre-shipment agents to monitor crude oil and gas export between 2009 and 2016 without National Assembly appropriation, a development which was said to violate Sections 80 and 81 of the 1999 Constitution, as amended.

The hearing was also given a breakdown which shows annual expenses on the same subject thus: $46 million (2009), $17 million (2010), $20 million (2011), $20 million (2012), $20 million (2013) and $20 million (2014).

The public hearing was unimpressed at the revelations that the NNPC failed to remit its contribution of N25 billion to the government aside the non-remittance of another $20 million said to be unspent funds in the 2016 financial year.

Part of the revelation was also that despite their appointment, most of the pre-inspection agents failed to carry out inspection of export terminals, thus allowing the NNPC a field day, a development the Senate had alleged led to the loss of N23.6 billion.

Another mix-up was discovered at the hearing to the effect that the task of inspection of crude oil and gas shipments is part of the mandate of the Department of Petroleum Resources (DPR) and not that of the Ministry of Finance.

The DPR was able to convince the lawmakers that it indeed has employed a digital platform set to go real time in a short while and meant to monitor crude oil production and export in Nigeria. It named the platform National Production Monitoring System.

Accordingly, the hearing noted that the DPR is in fact “better positioned with the NPMS to sustain the capacity to effectively monitor crude oil export that the Pre-Shipment Inspection Agencies (PIAs),” and that the engagement of contractors by the Ministry of Finance was rather constituting huge wastes.