Posted by By Jide Ajani on
For a governor who goes by the nick-name Alams, the alarm raised by the arrest of Diepreye Alamieyeseigha by London's Metropolitan Police, again brings the issue of round-tripping to the fore.
For a governor who goes by the nick-name Alams, the alarm raised by the arrest of Diepreye Alamieyeseigha by London's Metropolitan Police, again brings the issue of round-tripping to the fore. In an environment where funds meant for state governments are funneled through the instrument of an Irrevocable Standing Payment Order, ISPO, this report takes you through how governors and top public office holders use the window of an ISPO to siphon billions of naira out of the country into private bank accounts.
September 2003: President Olusegun Obasanjo orders that any Irrevocable Standing Payment Order, ISPO, not sanctioned by him, should not be honoured by the Office of the Accountant General of the Federation.
Mr. President, help us out please!
On Sunday, December 15, 2002, some leaders of Bayelsa State were in Aso Rock Presidential Villa. The team was led by elder statesman, Melford Okilo, Second Republic Governor of old Rivers State. Also on that team were Chief Ebitimi Banigo, bank mogul and former minister, Serena Dokubo esq, who was at the recently concluded National Political Reforms Conference, NPRC, and Chief Gordon Bozimo, among others. Their mission that Sunday in Aso Rock was to explain to President Obasanjo about happenings in their state. It was at a time when the primaries of the Peoples Democratic Party, PDP, were still causing its own ripples all over the nation. Their state governor, Diepriye Alamieyeseigha, was also not having it easy securing his ticket for a second term. Perpetually shuttling between Yenegoa, the state capital, and the Federal Capital Territory, FCT, Abuja, Alamieyeseigha was battling an avalanche of petitions written against him by some opinion leaders in Bayelsa State.
Although attempts to contact members of this team last night was unsuccessful, it was nonetheless learnt that just like this team, there had been reports alerting Obasanjo about the magnitude of fraud some governors had been allegedly involved in - an involvement which, until then, remained in the realm of mere allegations.
Their governor, who would turn out to be one of the last governors to be cleared to seek re-election on the platform of the PDP, was alleged to have been involved in an Irrevocable Standing Payment Order, ISPO, racket which had seen the state pay a whopping N12 billion. That the sum of N12 billion had been allegedly paid back to the bank was not the issue. It was that the said money reportedly came in the form of a loan from the bank to the state and was a mere N2 billion. With deductions of N750 million every month from the period stipulated in the ISPO, the deductions, as at the time the leaders met Obasanjo had risen to N12 billion.
The following day, a Monday, December 16, Obasanjo, who operates with a combination of a high sense of moral inclination but an obtuse political technique, did not mind the fact that he would be needing votes from the Bayelsa governor at his party's presidential primaries some two weeks away, simply sent for the Accountant General of the Federation, ACF, J. Kayode Naiyeju . Obasanjo wanted to confirm whether or not there was such a thing called ISPO to which some state governors had committed their states. Naiyeju answered in the affirmative. President Obasanjo became livid with anger. He flew into a rage.
Immediately, he ordered the stoppage of such deductions.
This state was not alone in this act. Therefore, when Mustapha Akanbi, Chairman of the Independent Corrupt Practices (and other related offences) Commission, ICPC, declared in the first week of September, 2002, that some governors were being investigated, he was merely giving publicity to President Obasanjo's state of mind.
In fact, there is more to the ISPO scandal than this and this is how it works.
A deal is born
It is simply called a window or a vehicle.
At least, within the circle of those who know what they want to achieve - and, make no mistake, it is indeed, a vehicle because it conveys quite a lot. The commodity, cash. This is how it works and has been working; but all that until recently.
A bank comes up with a facility which goes by the luring appellation, Infrastructure Development Facility, IDF. What this means is that the bank is providing a facility, a financial assistance - call it loan, which is what it really is - with a view to assisting the state in question develop its infrastructure. This could range from an assorted range of projects, from the real to the imagined, the serious to the unserious, the important to the not so important, the necessary to the outrightly frivolous, all that has to be done is to get the governor of a state and those who call the shots in the bank to agree to provide the facility.
In some cases, the facility was provided at the instance of the bank, sensing the non-availability of ready funds to prosecute projects and in the face of demanding and contending needs of the state administration, as well as the demand by the populace to see the dividends of democracy. But in most cases, as has been discovered, the request for the provision of the facility has become something which the state governor has had to push and request for. Even the request has had to do with the prompting of those who had enjoyed such facilities and who now felt the need to assist a fellow governor(s).
The request for the facility and the projects meant to be developed are almost always not cost specific - costs are not usually attached to each project. The reason for this is that it provides an elbow room for the government to dance around the issue of cost when the time comes, a time the relevance of which would be discussed later.
That way, a facility could be provided for say, four projects, and for this purpose, the following: Public Toilets; Stadium Complex; Youth Corpers lodge; Hotel Complex; and Renovation of Government House Complex.
Mind you, no cost has been attached to each of these projects; and it would appear to have been deliberate.
The sum being borrowed is N2 billion. Once the facility has been provided, between the said bank and the state government (read governor), terms of repayment would have to be agreed upon and that is where the story begins to get interesting.
THE FRAUD
Somewhere along the line, a new term is introduced just so the transaction takes an air of intricacy which is not actually needed - its only relevance being to confuse those who would want to take more than a passing interest.
There emerges what is called a Note Issuance Facility, NIF. This is another matter entirely and its relevance is far-fetched but is nonetheless introduced. This gives the impression that the state government has issued, or is issuing a Note which members of the public are being asked to invest in. But it is all part of the game. The tenure of the NIF could be, say, 10 months. And that, in a way, is expected to be the official transaction and the mode of repayment by the state government.
But that is not how it really works. All that the introduction of the NIF is meant to take care of is the books of the bank as it affects the facility which it is providing to the state government. That way, the bank keeps its books clean and even when external auditors look in, they would have nothing to complain about because the bank has gone about the provision of the facility the best possible way just as it has taken appropriate steps to ensure that the mode of repayment is neither endangered nor injured.
In fact, for the avoidance of doubt that a real banking transaction is to take place or has taken place, the tenure of the NIF, as has been discovered, would remain valid until May 29, 2003, 'from the day of first draw down", as the statement is couched.
In that same repayment agreement, the amount to be paid back to the bank would be stated along with the duration.
But as would be discovered as the story progresses, all these are just meant to fulfill banking righteousness.
‘ACCOUNTANT GENERAL, DEDUCT OUR MONEY'
Now, because it is almost always better to seek to repay a debt from source, if there is an opportunity, the state government is almost always advised to allow for a payment pattern which would be sourced from source.
And to the Office of the Accountant General of The Federation they must go.
Another term, which has been featuring in the racket is the ISPO, which means: Irrevocable Standing Payment Order.
What it means, as the phrase implies, is that the Accountant General of the Federation, is by the payment order, being charged to effect a payment to a particular recipient which, in this case, would be the lending bank.
The ISPO would normally read something like this that the AGF should transfer monthly, a particular sum of money (which is categorical) from the statutory allocation of the state from the Federal Government of Nigeria. It would be an ISPO in favour of Account number, say 080231223457, belonging to State ‘A' at the said bank.
A state is at liberty to decide which bank its monthly allocations should be paid into.
TWISTING AND TURNING CONTINUES
Meanwhile, whereas the facility provided was meant to take care of the following:
Public Toilets; Stadium Complex; Hotel Complex among others, the ISPO which the Accountant General of the Federation would receive from the said state government would be padded with at least three or four more projects. The reason for this is to make the ISPO authentic and worthy of its statement, as well as justify the lending.
Therefore, a facility which was originally intended to cater for four projects, at the cost of N2 billion, the re-payment of which was supposed to be at the rate of say N750 million, remaining valid until May 29, 2003, would now be conveyed to the Accountant General of the Federation in the ISPO as catering for seven or eight projects. The sum borrowed may not even be stated as was discovered in the ISPO allegedly issued by this state, and which was sent to the Accountant General of the Federation.
By the time the said state was to send its ISPO to the Accountant General of the Federation, it simply said a sum of N750 million should be deducted from source and paid into a particular account with a bank in order to enable it defray the IDF it had procured.
That was not all. The state was also alleged to have added two more projects in its ISPO to the Accountant General. The reason for this addition was with a view to justifying the monthly deduction. The condition was that the ISPO shall remain valid until May 29, 2003.
However, there was to be another additional condition attached, which was that the ISPO stands irrevocable and shall only be reversed when the state government is no longer indebted to the bank and one which shall be confirmed by the bank. From the time the deductions started to the month of December, specifically, Monday, December 16, 2002, when the President Olusegun Obasanjo was said to have ordered the stoppage of such a deduction, over ten billion had already been deducted.
But a confusion has since arisen as a result of the action. While information which was to emanate from the Government House in the state insisted that the state government was not owing any bank and that the issue directing the Accountant General to over-deduct and remit to the account at the said bank was false and baseless, another group of stakeholders in the state were in court at the same period to push their case against the state governor and the bank.
AND HOW DO THEY MOVE THE MONEY OUT
The excess of the deduction is siphoned by awarding highly inflated contracts to bogus companies, the companies then go to the bank to collect money. That way, the difference in the deductions is taken care of.
What this typical deal exposes is the high level of unconstitutionality which goes on in the states and perpetrated by some governors. The unconstitutionality lies in the fact that hardly do their state Houses of Assembly approve of the deductions from source to facilitate repayment. The purpose for requesting the facility is also almost always kept vague for manoeuvring. The projects ought to be cost specific. The intention was deliberate and was meant to deceive and cheat.
When a state says there is a Note Issuance Facility (NIF), it means that it is issuing a note into which people are investing. The tenures are contradictory and are so done to leave options open. Things would soon blow open; and some people are threatening to go before Justice Mustapha Akanbi anti corruption commission to spill the beans.
With the Bayelsa governor arrested in London by the Metropolitan police on his way from Germany, it remains to be seen how this emerging story would end.