Itakpe Is Bleeding To Death
By Onesimus Enesi
The Federal Government has been called upon to institute an independent probe panel to investigate the activities of the management of the National Iron Ore Mining Company, Itakpe, in Kogi State.
In a public petition addressed to the President, Chief Olusegun Obasanjo, with copies sent to the Independent Corrupt Practices Commission (ICPC), the Economic and Financial Crimes Commission (EFCC) and the Code of Conduct Bureau, a group under the aegis of Concerned Citizens of Ebiraland for Good Governance, accused the Managing Director of NIOMCO of pissing off the N3billion capital allocation made to the Company between 1999 and 2002, on shoddy deals, sub-standard materials and inflated contracts.
The group also accused the Board of Directors of the Company of conniving with the Managing Director by accepting contracts at bloated values, as a way of shielding the MD from his criminal misuse of the company resources.
The NIOMCO managing director is accused specifically of not auditing the accounts of the company in the last five years, in spite of the fact that a reputable audit firm, Coopers & Lybrand, had prepared detailed financial management manuals for the company. It is contended that the company’s deputy general manager (finance) is not qualified or experienced enough to handle the company’s finance.
The MD was said to have been indicted by another firm of auditors, Robert Ade-Odiachi & Co., over misappropriation of hundreds of millions of Naira, following the audit of finances and manpower in 2001. In flagrant disregard of laid-down procedures, the MD is accused of having awarded some frivolous contracts to questionable or shadowy organizations, resulting in the loss of millions to the company.
“Cutting Edges and caterpillar spare parts contracts were awarded by the MD and his management to the Board members through their fronts to sweep the audit reports under the carpet, even though items supplied to the stores were usually re-supplied three or four times to the same stores.”
In collaboration with some key directors in the company’s parent ministry, the Ministry of Power and Steel, the NIOMCO MD either sacked or transferred three management staff, who frowned at his dubious activities, and in their place unqualified junior staff were elevated to those positions, a development, which made it easier for the MD to continue his nefarious activities without challenge from within.
According to the petition, a one-time Internal Auditor of NIOMCO, Mr. Isaac Odeh, once raised an audit alarm over the payment of the sum of N38million as mobilization fees in gross violation of official guidelines in such transactions. In 1997, out of the N102million quarterly allocation to the company, the MD was said to have claimed that Power and Steel ministry officials demanded that N80million be recycled back to them, the process being in form of dubious contract awards.
Although the ministry failed to query the MD over the audit alarm, Mr. Odeh was not only queried, he was first transferred and made redundant and was eventually sacked. In his place, a less qualified staff was made to do his job, who obviously will rubberstamp all MD’s expenditures.
In 1998, the members of the NIOMCO management Tenders Board sent a memorandum to the MD (who was then acting Project Director) over the N38million contract, pointing out certain irregularities from which they dissociated themselves and advised that the contract be suspended. Those members, who were of the rank of deputy general managers, were eventually transferred away by the MD, with the assistance of the Director of Steel and the Director of Personnel of the ministry.
The petitioners also alleged that the MD awarded controversial and highly inflated contracts for the supply of auto electrical spare parts, pay-loaders and caterpillar spare parts, which are about 845% to 1000% above the normal price offered by Tractor & Equipment (T & E), the major supplier of such items. Giving examples of such ultra-high contracts, the petitioners cited the following:-
- Contractor: Pateko Limited. Contracts Reference & Date: MD/02/45A/158 of 19th July, 2001. Items: Electrical spare-parts. Contract Sum: N19,083,437.78 million.
- Contractor: Tina Ventures. Items: Pay-loader spare-parts. Contract Sum: N19,244,451.75 million.
Above all, 8 caterpillars, which were supposed to be new and the latest model, purchased at over N800million in 2001 and delivered in March, 2003, were found to be refurbished with used engines but well painted bodies. Complement parts such as drilling equipment and compressors were not purchased but its money was shared, while the old ones at NIOMCO site were painted for use. While the tenders for all these were slated to be opened on 28 September, 2000, the ‘successful’ contractors had been issued with their award letters by the 26th September, 2000.
The major business of the company is the blasting and stockpiling of Ore. The management claimed that in 1999, they spent N12.11million, N146,070,000 in 2000 and N285,524,348.64k and N689,256,000 representing first- and second-quarter allocation in 2001 on Mine Development/Working Capital; but there is no meaningful activities at the mining hills to show for the huge expenditure.
The petitioners claimed that most of the infrastructures in place and the production in stock were the achievements of past Chief Executives such as Engr. Ayeni and Engr. Philip Umunakwe. They believe that a proper survey will reveal that since 1997, no genuine production took place at the main mine hills at Itakpe. And in spite of this, a total sum of N46,626,000 million was spent on Explosives and Safety for production, Rehabilitation of equipment, Drilling Accessories, Mine Development and other spare-parts, respectively.
According to the petition, the MD’s claim on BENEFICIATION PLANT (SUPERCONCENTRATE) were totally false and contrived, even though the following sum have gone under the drain:
1999 – N17.31 million (with a false claim of 60% performance);
2000 – N332,270,000.00 “ “ “ “ “
2001 – N190,544,805.73 “ “ “ “ “
2002 – N203,900,000.00 (with a false claim of 70% performance).
Yet, a close survey of the Beneficiation Plant will reveal that it remains what it used to be 5 years ago, which could only mean that the percentage achievement per performance are to deceive government so as to attract more budgetary allocation or funds, whereas no progress is achieved at all. In addition, the sum of N62,900,000.00 said to have been spent on Benefaction Plant upkeep and maintenance, on furniture and office equipment, consumables and printed matters, Manpower Development and Training, computerization and software – are all phony and ghost expenditures.
Even though ‘Goods Received Note’ (GRN) and Store Inspection Voucher (SIV) and other papers are issued to look as if the items have been purchased, received and used,” an inspection of offices would show no new furniture or office equipment beside those purchased in 1998/2000, except perhaps in the MD’s office. It is also claimed that no lubricants and other petroleum products has been supplied to NIOMCO for the past 4 years in spite of the false claims of the management and the millions of naira voted for the items.
Another honey pot unit in NIOMCO is INSURANCE – where hundreds of millions of Naira has been siphoned through questionable Insurance Brokerage and Risk Coverage premiums. It is believed that most of the insurance brokerage firms are floated within the company – meaning that many management staffs are the owners of such companies.
It is the contention of many observers of the company that NIOMCO is so rotten with corruption as a result of the selfish and nefarious activities of its Chief Executive and some senior management staff whose employment or promotion were influenced by the MD and his collaborators in the ministry for the sole purpose of feathering their nests at NIOMCO – a reason why the company needs a staff overhaul.
Another serious allegation leveled against the MD is his continuous employment of management staff in spite of the low production output of the mines. It is alleged that since his resumption, he has employed about 800 persons, with Offa, the MD’s hometown, have the highest number. The duties of these staffs are largely to monitor the activities of other staffs and report back to the MD. This way, any untoward reaction of the staff against the MD’s mismanagement and recklessness would be nipped in the bud.
A Consultant firm, SOFREMINES, recommended in 1985 a staff ratio of 16% senior staff to 84% junior workers. But what do we see? As at October 2001, there were 903 junior staff workers to 1011 senior and management staff, a ratio of 47.2% to 52%, respectively. By October 2003, the MD was said to be busy still employing new staff into the senior cadre without normal procedure. In fact, appointments into offices are said to have been made several months ahead of interviews.
Selection, interview and recruitment would then be a smokescreen to legitimize the illegal procedure, thereby defeating the objectives of the government – which is to give all applicants from all areas of the federation, who are qualified for jobs, equal opportunity. Yet, government appeared to have condoned the MD’s excesses and illegalities because of the pecuniary benefits accruing to some directors and officials of the parent ministry.
On staff promotions, it is the view of the petitioners that it has always “been carried out to favour the MD’s cronies to the detriment of the hardworking ones. Some persons are placed above others in positions where they are not ordinarily qualified to head,” whereas promotion should be the compensation given to those, who have track-record of hard work and loyalty to employers. As at now, the MD is reported to be over-burdened as nine sectional and eight departmental heads, plus his personal staff, report directly to him on daily basis, an arrangement to fence off the prying eyes of senior management staffs, who are then made to look stupid ad their juniors wield greater influence with the MD.
The NIOMCO MD’s activities at Itakpe is said to have benefited many government officials financially – a reason why in spite of the revelations of corrupt deals in the company, widely reported by some national newsmagazines and newspapers in 1999 and 2000, were ignored by both the Power and Steel ministry and the federal government. Even when the Ministry set up a ministerial committee to investigate alleged management irregularities in October, 2000, the committee did a shoddy job of it – a reason why nothing has been done so far to check the rampaging Chief Executive.
There are agreements among informed watchers of the Company that some former Ministers of Power and Steel used the MD to siphon money from the company’s coffers for political purposes. It is believed that one of them is a now governor of a PDP state in the South-West. The governor’s influence on the federal government is said to have helped substantially in shielding the NIOMCO MD from investigation.
Observers are worried that a government, who is verbally fighting corruption, is accommodating a corruption-ridden head of a vital sector such as the Iron Ore Company. More worrisome is the nepotism allegedly displayed and practiced by the MD – an action, which is said to be a source of ‘bad blood’ between the Company’s management and the Steel & Engineering Workers Union in NIOMCO.
Socio-political analysts are of the opinion that mismanagement such as leveled against NIOMCO’s MD has a lot of negative implications. One of such is that the host community is shortchanged staff-wise, and would become restive, and eventually could become hostile to the management of the Company – a phenomena playing itself out in the Niger-Delta area today. People in the area are beginning to ask that, if NIOMCO were to be in Abeokuta, Kano or Enugu, would it be run in a manner that shortchanges the host community? They are about concluding that they are being cheated because they are a minority ethnic group. Could all these be true?
Culled from Our VISION, Vol.5, No.2, 2004