NITEL's N4bn Contract Scam: Facts Behind the Figures
Recently, the Budget Monitoring and Price Intelligence Unit (BMPIU) of the Presidency indicted NITEL for inflating a contract. Tayo Ajakaye and Kunle Aderinokun in this report examine the details beyond the headlines
NITEL had always been in the news, positively and negatively, more of the latter though than the former. But for sometime now, it has been off headlines. It has stepped aside for newer and younger operators, both for positive and negative news.
However recently, the office of the Senior Special Assistant to President Olusegun Obasanjo and Head of Budget Monitoring and Price Intelligence Unit (BMPIU), Dr. Oby Ezekwesili disclosed that NITEL had been over-inflating contracts. The office said that from just a single contract, about N4 Billion were saved. NITEL would not take that allegation lying low. Its Deputy General Manager, Public Relations, Mr. Tayo Ekundayo said the facts as presented by the BMPIU may not be correct.
Following as a result of this, Ezekwesili's office was forced to release more details to the public.
When NITEL won a DML licence in January 2001, it needed to roll out serve by August of that year according to the NCC's guidelines. It invited contractors to bid. They did: Motorola which submitted the lowest bid, LM Ericsson, Alcatel, Siemens Huawaii Technologies and others. Motorola seemed to be the natural winner. However in a twist of fate, LM Ericsson was awarded the contract because as it later came out, Motorola was given privileged inside information by the contract awarding committee, which to the others and the Presidency was an unfair advantage.
The 118,000 lines were rolled out effectively in October, 2001. By the first quarter of 2002, it was evident that NITEL needed more lines. Its competitors, MTN and Econet (as it was then) were speaking in terms of half a million lines already while NITEL was just sitting on 118,000 lines. The idea to roll out an additional 1.2 million was born.
In giving details on how the deal went, Ezekwesili said the contract was aimed at increasing NITEL's operations from its initial 118,000 lines capacity to a total of 1.2 million lines in three phases at 400,000 lines per phase. She noted that, at the close of bidding on September 16, 2002, six international companies were short-listed for the contract including: Messrs. Huawei Technologies Limited; Siemens Nigeria Limited; Alcatel Nigeria Limited; L.M. Ericsson; Motorola Nigeria Limited; and ZTE Nigeria Limited.
She explained that the management of NITEL then set up a seven-man evaluation committee on the submissions of each of the companies through a memo ref: GMLS/T.S.XI/2270/134 of 19/9/2002 by the Secretary to the NITEL Board, which assessed all the proposals with the consideration to technical management, financial and commercial competence.
The NITEL board, with the collaboration of the Ministry of Communications officials, hurriedly sent a "Technical Committee's" report to the Federal Executive Council (FEC), which then gave an "only granted subject to Due Process approval".
The NITEL's management action was done, according to her, to avoid the eagle eyes of the BMPIU, which had not really settle down then.
"During this critical review stage, several anomalies were discovered. Following this discovery, the final recommendation was to cancel the NITEL award and initiate a quick, open and transparent competition among the six companies. What actually happened was to allow all the six firms at the same venue with officials of NITEL, Ministry of Communications and the Due Process Unit, open and announce the prices offered by the companies", she revealed.
The senior Special Assistant also added: "At the end of the bid process, the contract was awarded to three companies for $155,038,110.00 down from the initial $189,337,836.00 initially approved by NITEL.
"The difference between NITEL's approval and what the Due Process certified is $34,299,726.00 and after converting this large sum into local currency at the prevailing exchange rate at the time, it will be clear that no one can fault Ezekwesili on the veracity of her assertion that N4 billion was saved in that single transaction", she said.
All these happened in 2002.
In matters like this, NITEL has a reputation. One it has built over the years. No one would stick out his neck for NITEL when issues bothering on transparency, or rather, lack of it, is at stake. However, industry operators have been asking about the motive behind revealing these details at this point in time. This is mid-2004. The act being spoken of took place in 2002. Where was the BMPIU all this while? How diligent is a Due Process Unit that remembered a wrongdoing two years after?
Since that time, Pentascope International had taken over the affairs of NITEL and is reportedly doing very well. A headline reader of the news in question would think that it was the Pentascope management that was being indicted. Does it mean then that any anomaly being perpetrated by the present management would be kept in the BMPIU's safe until the contract elapse and the Pentascope's gentlemen are back home and dry in their country? Then the government would then seek to extradite them to come and answer for their crimes?
What happened to those who perpetrated this fraud in terms of sanctions? What action did the government take against them? Or is attempted corruption not really material until it is carried out?
The BMPIU report did not say anything about the Bureau of Public Enterprises. The same prudent BPE. Yet we all know that NITEL's management could not, at the time in question, award a contract that is in excess of N300,000. Where was the BPE when this fraud was being perpetrated? BPE was duly represented at the top level, in the caretaker management of NITEL within the period under review. What contribution did BPE make in the production of the Technical Committee's report?
NITEL already had a bad name. But it would be unfair to the organization for anybody or a government department to use it to shine. If NITEL would be blame for trying to defraud government of such a large sum of money, the BPE should not be exonerated. What is bad for the goose should also be bad for the gander. Unless of course there are different rules for different categories of people.
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