Daily News

INVESTIGATION: How non-existent company was awarded multi-billion naira railway contract


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.

Dangote adbanner 728x90_2 (1)

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.

Eser West Africa boldly on the body at Port Harcourt station. 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.

Equipment belonging to CGGC abandoned at the Lafia station.PT Mag Campaign AD