How Non-Existent Company Was Awarded Multi-Billion Naira Railway Contract
Eser Contracting and industry Company Incorporated was unregistered but was awarded a N19.2 billion railway rehabilitation contract in violation of public procurement regulations.

ByTaiwo-Hassan Adebayo

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.

Against the rules

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.

The Cover: Enters Eser West Africa

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.


Family link

An initial procurement process for the Eastern line rehabilitation contract was cancelled by then transport minister, Mr Suleiman, over allegations of fraud and irregularities. Among the companies that benefited in that cancelled initial process was Eser Nigeria Contracting Company Limited, registered in March 2009, just before bidding opened.

That was the first appearance of Eser in railway procurement activities. Eser Nigeria Contracting – different from the legally non-existent Eser Contracting and Industry Company Incorporated and Eser West Africa, registered in June 2011 ostensibly to smoothen irregularities – has among its owners and directors Project Niche Limited, alongside Lihan Adiloglu, a Turkish businessman, according to incorporation filings we obtained.

Project Niche is owned and directed by Mr and Mrs Alokolaro, who represent that company as directors on the board of Eser Nigeria Contracting, according to incorporation filings. Mrs Alokolaro, a daughter of the late Ooni of Ile-Ife, Okunade Sijuwade, shares family ties with Mr Sijuwade, who oversaw the procurement process. This is the possible link our investigation showed may exist between Mr Sijuwade’s family members and promoters of Eser.

Also, an Eser-associated company, Espro Asphalt, has Mrs Alokolaro as one of its directors alongside Eser Contracting and Industry, represented by Cagatay Tezsezen.

Eser could not be reached for comments. Nothing resulted from our visit to the Lagos address the company listed in its incorporations filings. Security staff at the building said the company does not operate from that address. An email to the address listed on the website of its parent company based in Turkey was not replied.

Then minister, Mr Suleiman, said determining the validity of the claims made by Eser was outside his charge as minister.

“I honestly was not aware,” he said. “Everything about tendering, due diligence and all that were by the railway corporation as well as the BPP. As a minister, I was not the accounting officer and was only transmitting letters to the President for approval. But I had power to cancel or review if there was genuine complaint. But I got no complaints. I cancelled the initial process because of complaints about irregularities.”


“Not rehabilitation really”

PREMIUM TIMES investigation included the tracking of the work done by the contractors in Rivers, Abia, Enugu, Benue, Nasarawa and Kaduna States, which the Eastern Railway line transverses before linking Kuru in Plateau State and going through Bauchi and Gombe States before terminating in Borno State. We had earlier conducted fieldwork from Kuru to Gombe for our earlier report.

At the railway station in Port Harcourt, a board bearing “Eser West Africa” as the contractor stands conspicuously at the entrance. This company, though found to have taken the contract in ways that violate Nigeria’s law, worked from Port Harcourt to Makurdi, the endpoint of the section it was assigned, railway staff on the ground and community sources said.

Inside Makurdi station where a staff said balance stones were used by CGGC to make the rails appear new though old rails kept in the stores were used.

However, the staff also said the rehabilitation work was only done by Eser in selected places, especially areas close to stations.

“I can’t say that was true rehabilitation,” one staff said, echoing the concerns of others in Otukpo, Benue State. And what the staff complained was manipulation and abuse of their labour rights. They said Eser “used us to do their contract and did not pay us. They manipulated that we were doing our normal official work but they collected billions to do the work and hire workers.”

At least three persons corroborated this claim. Then, the staff further alleged that Eser used old rails and accessories that were kept in stores for the rehabilitation work.

The staff did not agree to be named because of fear they could be punished by authorities.

In what appears to support the claim of the complaining staff, PREMIUM TIMES observed that old rails of BS-60 model with dates that preceded independence were still on the tracks, which in various places have been covered by trash, sand and bushes.

After Eser’s work, trains started using the track but stopped in 2017. “But trains were just derailing because of the nature of the work they (Eser) did,” one staff said.

However, PREMIUM TIMES confirmed that daily service between Port Harcourt and Aba only stopped due to the COVID-19 restrictions based on interviews with staff and several persons who had used the service.

“It is a safer and cheaper way of travelling,” Tunde Lasisi, a trader in Port Harcourt said, adding that train service was his means of sending goods to Aba, the commercial nerve centre of Abia State.

In Makurdi, where CGGC started its work, one senior staff on the ground, who only agreed to speak without being identified by name, largely corroborated the claims of his colleagues previously interviewed in the section handled by Eser.

Submerged track outside Otukpo station, said to be untouched for rehabilitation by residents and railway staff.

“They only put balance stones to make the track look new,” the staff said. “They replaced the rails but they used the old ones in the store and they used our men.”

Yet that was limited to within the station yard, the staff said, explaining that rehabilitation did not take place in the wider Makurdi area.

Recalling the January 2015 inauguration of “modern trains” for Port Harcourt-Makurdi service by Mr Jonathan’s deputy, former Vice President Namadi Sambo, the staff said, “We only rode the train within the yard, between the level crossings. It was all formality but the VP may not know about the type of work that was done.”

The staff further said that “passenger service started but trains were derailing. So, the loss was too much. We stopped in 2017, two years after the rehabilitation.”

In Lafia, a staff member said CGGC worked outside the station but “if they worked well, why are trains not working? Why is our service not effective. They used old materials already kept in stores.”

In Kafanchan, Kaduna State, connected to the Eastern Railway line through a spur line, a staff said, “they (CGGC) worked here but only skeletal rehabilitation. It was not rehabilitation really. They did some kilometres and left some.

The staff said service that followed the rehabilitation lasted only for a “short period”

The company did not work up to Kuru Junction and it also did not work on the branch line from Kuru to Jos station, PREMIUM TIMES confirmed.

CGGC did not comment for this report. A text message was not replied and an official ended a call abruptly as our reporter introduced himself and explained he wanted to make inquiries on the Eastern rail line project. Repeated calls were ignored.

No part of the section rehabilitated by CGGC is now used for train service. And except between Port Harcourt and Aba before COVID-19, the Eastern Railway line is not functioning despite several billions of naira pumped into the project.

The frontline staff on the ground are only reporting to stations daily without any real work, they said.


Seeking N5.5 billion in exit plan

As the N67.3 billion rehabilitation contract has failed, authorities are planning a fresh procurement process and have asked the failed contractors to submit exit plans.

PREMIUM TIMES had previously reported how Lingo, the contractor awarded the Kuru-Maiduguri section, requested N9.2 billion, after being previously paid at least N9.4 billion, despite underperforming on the contract. Government’s assessors have now rejected Lingo’s claim and concluded the company instead owed the country N1.6 billion for being overpaid, corroborating PREMIUM TIMES’ findings that the company made inaccurate claims about its work. The company is also being investigated by the anti-graft agency, EFCC.

PREMIUM TIMES

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