Wednesday, July 26, 2000
As you are aware, this issue was extensively discussed at our confidential executive session towards the end of our first legislative year, where it was decided that the issue be laid to rest after explanations by all concerned. However, the audit report and publications in the newspapers have more or less resurrected the issue again, which led to the establishment of the Contract Investigation Committee.
I must confess that I have been very excited and encouraged by this opportunity to put to rest, once and for all, all the mudsliding, accusations, finger-pointing and character assassination that have been going on for months on end in the Senate and the country as a whole regarding this issue of Senate contracts.
When the facts are laid down and presented, as I intend to do in this report, the committee, Senate, nation and the press should be the wiser for it.
1999 Capital Appropriation (NASS)
See appendix 1 [SEE NOTE 2] which breaks down the main capital as agreed by the Senate and House Services Committee and endorsed by the principals officers of both houses and management. The senate was allocated N319,600,000, House of Representatives N399,400,000 and management N88,900,000 exclusive of the provision of N880,000,000 for vehicles and those marked "joint", which denotes commonality between both chambers, and amounts to N255,000,000. It was later agreed that the management should handle the design of Phase III office complex which had an allocation of N20,000,000 and liaise with the FCDA accordingly.
Decision and Procedure for Contract Award
See Appendix II (minutes of meeting of principal officers) [SEE NOTE 2]
Consequent to the meeting of 16th November, 1999, the Senate Services Chairman, Senator A.T Ahmed, Director of Planning, Alhaji Kabiru and myself met in the office of the chairman (Senator A.T. Ahmed) to discuss and agree on the general principles of the senate portion of the 1999 NASS Capital appropriation. That is the N319,600,000 agreed to as indicated above. See Appendix III. [SEE NOTE 2]
All general decisions regarding the procedures, processes, responsibilities of members, time frame etc were taken prior to the change of Senate President on November 18th 1999.
Attached documents are self-evident and can be crossed checked with management for authentication.
Main Capital Projects (Senate)
After my recommendation of specifications and product brand, 6 companies submitted quotations for the supply of Dell Laptops, Dell High End Computers and HP Workgroup Printers, Compaq Desk Tops, Hewlett Packard Laser Jet Printers, Surge Protectors, and UPSs. Out of the 6 companies, 3 were chosen, namely Tasks Systems Limited, Microproducts Limited and Tritech Limited.
These 3 companies are unarguably amongst the leading computer firms in the country and are accredited representatives of Compaq and Dell in Nigeria and major stockiest of computer accessories with a well-established engineering support department. They have all supplied the products at prices that I challenge any government establishment to match or beat.
For instance, while we paid roughly N400,000 per unit (Compaq Deskpro, HP LaserJet 1100 Printer, 650 V UPS and Surge Protector) the government recommended price for only the Compaq Deskpro and Printer is N550,000. That is the Senate saved about N200,000 per unit or N22,000,000 on 110 units.
I have, times without number, asked those who are literate enough to use the computer and have access to the Internet to visit the website of Dell Corporation at www.dell.com were the prices of the Dell Latitude Cpx laptop and accompanying Leather Case is quoted at $3,221 and $90 respectively. That is $3,311 directly from the manufacturers. See attached Dell price list as published by the company. Appendix IV. The equivalent factory price in naira is therefore N354,277 at N107 to the dollar.
If we add a very conservative 30 per cent of factory price to cover airfreight, import duty, 7 per cent Import Surcharge, 5 per cent VAT, port charges etc, we arrive at a landed cost in Nigeria of N460,560 each or N50,661,600 for 110 laptops. The total contract price to Tritech Computers was N59,400,000 out of which N5,940,000 was deducted as VAT and withholding tax, leaving a balance of N53,460,000 or N486,000 per unit. That gives the company a 5.5 per cent profit margin, hardly an inflated price as constantly reported by the press and accusation by colleagues who know little or nothing about computers. See Appendix V. [SEE NOTE 2]
Purchase of office equipment
As politicians, we are all constantly and consistently bombarded by members of our constituencies, friends, relatives, businessmen etc for assistance, referral and outright monetary gifts. It is worse for members of the Senate Services Committee because of the public perception that contracts abound within the committee.
It is thus not unusual to find a crowd of people waiting to see the chairman of the Senate Services Committee. It was ins the realisation of this peculiar situation that a decision was taken to patronise nominees of Senate Services Committee members for the supply of office equipment.
Most senators have at one point or the other recommended, referred or nominated companies, persons or groups fore one patronage or the other. We shall all continue to do that for as long as we are politicians. This is a worldwide phenomenon in the world of politics.
Irrespective of the above, a decision was taken to standardise all equipment and purchase only Rank Xerox products because of the need for after sales service and the support of a world acclaimed and reputable company.
I can tell you categorically that all 11 companies awarded the supply of office equipment (Rank Xerox products) (Appendix V) instructed the National Assembly to domicile all payments directly with the bankers of Rank Xerox, FSB International Bank Plc. See Appendix VI. N66,296,000 less 10 per cent deduction for VAT and Withholding Tax (N59,666,400) was paid directly to Rank Xerox. [SEE NOTE 4]
It is legitimate business practice for companies to give domiciliation instructions to their clients where they find the return on investment unattractive or do not have the finances and require 3rd party to execute the supply. The executing 3rd party pays a small fee for the transaction.
In this case, fees in the range of 11-17 per cent of the LPO value Rank Xerox prices are no secrets and I challenge the Ad Hoc Committee and members of the public to compare the prices at which we procured these equipments with other government and private establishment.
For instance, the price of the Rexxel Shredder from Rank Xerox is N60,000 each, we issued LPOs for Shredders at N72,000 each or N65,454.5 after deducting VAT and Withholding Tax. A margin of only 9 per cent. Instead of giving principal officers and management staff gold medals for negotiating hard and getting value for money, we are being castigated, abused, maligned and investigated.
There is this rumour going around that Rank Xerox paid a sum of N200,000,000 to an agent of mine on behalf of the principals officers at my instruction. What a preposterous allegation!! How can a company get payments of N59,666,400 and pay commissions of N200,000,000. Rank Xerox is no back street company and the so-called agent is neither dead, deaf nor dumb. I give full permission to the press and the public to ask Rank Xerox and the agent, who I am willing to name at the appropriate time.
All office equipments ordered have been fully delivered, are being used by senators and have been fully paid for.
We are being painted as criminals and our colleagues are inadvertently feeding the press and nation with falsehood, impinging on the collective character of the Senate and National Assembly.
Those who think that principal officers corruptly made some huge amount of money from contracts, singularly or collectively, cannot be further from the truth. It is intriguing that the annoyance of members is not in the inappropriateness of corrupt enrichment, but the fact that this imagined wealth was not shared amongst the senate family.
I want to reiterate once again that no wealth was corruptly made; therefore there was nothing to share.
Chairman: Idris Ibrahim Kuta of Niger State;
The volume two of the report (containing summary findings, conclusions and recommendations) was submitted to the Senate on August 1 and the volume one (containing verbatim report and exhibits) was submitted on August 3.
NOTE 4: The Xerox Letter
NOTE 5: The DFC Letter