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Investigation: Police Service Commission used NSA fund to train 500 ghost workers

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Investigators tracking disbursement and spending of the controversial billions of naira of National Security Agency (NSA) fund prior to the last presidential election are now looking the way of the Police Service Commission (PSC), as new documents revealed that the commission was an eleventh-hour beneficiary of what is now known as the Dasukigate.

With only nine days to the 2015 general elections the PSC under the leadership of a former Inspector General of Police, Mike Okiro, having obtained N350 million from the spy agency, made a dash for the Bureau of Public Procurement (BPP) where it sought approval to train its staff members on monitoring of police conduct during the elections. In the letter with reference no. PSC.1499/VOL.III/138 and dated March 19, 2015 the Police Service Commission requested for the issuance of “No Objection” for it to adopt selective tendering method for the training. The Commission had said that “due to the limited time frame available to which to utilize the funds to the elections, it became impracticable to embark on a competitive bidding exercise”.

Documents seen by SATELLITE TIMES showed that the BPP declined to grant a “No Objection” letter on several grounds, one of which was that the Commission failed to disclose the source and amount it received for the proposed training. A later report by the Independent Corrupt Practices and other related offences Commission (ICPC) put the amount received from the NSA at N350 million. The BPP observed that citing of time factor as reason for selective tendering instead of competitive bidding “might have been deliberate given that the Nigeria general election is an every four year event which permits more than ample time to plan, prepare and perform all procurement procedures associated with the elections”.

Arithmetical checks conducted by the Bureau showed that each of the quotations submitted by three different companies handpicked from the selective tendering had figures discrepancies. Documents show that in the quotation of Messrs. Bobec and Associates, selected for Abuja Training Lot 1, the correct arithmetic for the grand total is N96, 525,000.00 (Ninety-Six Million, Five Hundred and Twenty-Five Naira); not N95, 525,000.00 (Ninety-Five Million, Five Hundred and Twenty-Five Naira)as presented by the Commission to the Bureau.

Similarly, arithmetical checks conducted on the quotation of Messrs. Direct Knowledge Consult Limited for the Kano Training Programme Lot 2 showed that the correct total sum of the contract was N110, 570, 000.00 (One Hundred and Ten Million, Five Hundred and Seventy Thousand Naira), not N95,000,000.00 (Ninety-Five Million) as the Commission had indicated.

The same arithmetic error was seen in the quotations of T Zone Communications Ltd selected for the Lagos Training Programme Lot 3. While total contract sum was N83, 970,001.01 (Eighty Three Million, Nine Hundred and Seventy Thousand, One Naira and One Kobo) the figures in the papers submitted by the PSC to BPP was N85, 000, 001.10 (Eighty-Five Million, One Naira, One Kobo).

It was gathered that in the selective tendering exercise, Bobec and Associates with N95, 525,000.00 bid was chosen in preference over two other companies namely New Frontiers Technology (N97,050, 000.00) and Direct Knowledge Consult Limited (N178,132, 500.00). It won the bid “having given the lowest responsive price” according to the Commission.

Messrs. Direct Knowledge Consult Limited which lost out in the Abuja Training Lot 1 bid was however declared the preferred bidder for the Kano Training Lot 2 at N95 million. The other bidders were T Zones Communications Ltd (100 million) and T-One Technology Limited (110 million).

In turn T-Zone Communications Ltd, one of the two companies that lost out in the Kano Training Lot 2 bid got lucky as it emerged winner of the Lagos Training Lot 3 with bid of N85 million. This company was picked over T-One Technology Ltd (N110, 000, 047.50) and Direct Knowledge Consult Limited (N100, 000, 112.10).

The Police Service Commission stated in the contract papers that Bobec and Associates would train 500 headquarters staff in Abuja. Similarly Direct Knowledge Consult Limited would train 200 staff members in Kano while another 200 of its workers would be trained in Lagos by T-Zone Communications Ltd. Polled together the trainees on paper were 900.

Fact-checks however showed that at the time of the election preparations, the total work force of the Police Service Commission was 391. While staff members in Kano was less than ten, the Commission had no office in Lagos where it claimed it would train 200 workers.

Petitions sent to the ICPC and the EFCC by a whistleblower, Mr Aaron Kaase who was a former protocol officer of the Police Service Commission, revealed that the contractors organized “mock trainings” in Nasarawa State instead of in Kano, Lagos and Abuja.

Investigations by the ICPC confirmed that total number of the Commission’s workers in Abuja and Kano was not more than 391. A ICPC letter with reference ICPC/INV/GBP/HOD/352, dated 16th August 2015 and addressed to the Permanent Secretary of the Police Service Commission stated that the anti-graft agency “has conducted thorough investigations into the matters raised in the referred petition and found that the Commission budgeted for training of 900 staff and to conduct trainings in Abuja, Lagos and Kano however the entire work force was not more than 391”.

Also findings were that instead of the four days approved for the training in Kano, Direct Knowledge Consult Limited held a two-hour programme inside Northgate Hotels Limited in Maraba, Nasarawa State. Similarly, Bobec and Associates conducted its own election monitoring strategies for about two hours inside Oasis Hotel in Maraba, Nasarawa State.

Earlier the BPP had in its assessment frowned at the profiles of the three selected firms submitted to it as they contained only evidence of registration with the Corporate Affairs Commission (CAC).

“Evidence of compliance with other mandatory requirements such as tax, pension and other social security obligations as stipulated by Section 16(6) of the Public Procurement Act, 2007 were not forwarded along with this submission” the BPP said in its letter.

The Bureau described the provision of N53 million for consultancy fee for the Abuja training as “rather excessive” just as it reviewed downwards the cost of the Kano training from N110.5 million to N94.8 million. It also condemned as “rather excessive” the provision of N53 million for the Kano training and N52.2 million as consultancy fee for the Lagos training. The BPP in the end gave approval for the trainings but based respectively on revised costs.

Findings from ICPC investigations showed that the Police Service Commission paid Duty Tour Allowance (DTA) to all staff including those in Abuja who participated in the 2-hour training programme in Maraba, near Abuja. DTA and air-ticket allowances were paid to management staff and others who monitored elections in Abuja and nearby places such as Minna and Lokoja which had no airport services.

Against a 2007 circular from the office of the Secretary to the Federal Government Ref. No. 59729/T.1/154 reiterating the non-eligibility for payment of estacode and DTA to personal assistance to political appointees accompanying their principals on local or foreign trips, it was discovered that the Police Service Commission has been paying these allowances to the personal assistants of its Chairman, Mike Okiro.

The circular which was explicit reads: “With the Monitization Policy, salaries of personal assistants are being paid along with the salaries of Honourable Ministers/Ministers of State and other entitled officers because these are staff that are personal to such officers. Government funds should therefore not be spent on the personal assistants when they travel with their principals either locally or abroad. When a political appointee insists that his/her personal accompany him/her on such trips he/she should be prepared to pay the expenses of the personal assistant”.

Among other things the ICPC in its letter to the Permanent Secretary directed that a total balance of N133, 413, 845.99 from the N350 million NSA fund domiciled within FCMB be remitted to the Federal Treasury through the ICPC Recovery Account No. 1012929790 at Zenith Bank Plc.

The anti-graft agency also directed that staff of the Police Service Commission who were paid two-way return ticket and airport taxi to location within FCT and states of close proximity to Abuja amounting to N11.7 million should refund same to the federal treasury through the same ICPC Recovery Account.

However the directive was silent on the fund purportedly expended in training 509 phantom workers in Abuja, Lagos and Kano.

SATELLITE TIMES made several visits to the ICPC to find out if the Commission’s directive to Okiro and other PSC officials to return money to the government treasury has been complied with. ICPC spokesperson, Mrs. Rasheedat Adunni Okoduwa said she would get back after she had done her checks. Several calls made to her afterwards were unreturned.

Investigations

Exclusive: 44 companies import 500 containers using cloned Form M  

-over N9 billion diverted in tariff fraud

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A photo of Apapa Port in Lagos, Nigeria used to illustrate the story

In what is probably the most brazen display of impunity by powerful syndicates at the Lagos seaport, a total of 44 companies are discovered to have imported about 500 containers into the country using same Form M. Of the 44 companies (see list below) 30 brought in various consignments using Form M with number MF20170010026/ BA No. 21420170005250 which was cloned and recycled 29 times over a period of two years between 2017 and 2018 in a massive and sophisticated serial tariff fraud.

Five of the 44 companies namely Max Holding & Sons Ltd, Auto Creation E-Hub Ltd, Joneble Holding & Sons Ltd, Bossman Holding Ltd and Vintage Nigeria Ltd used another cloned Form M with number MF20170019026/ BA No. 21420170005260 for their shipping transactions while the Form M used by three companies, Garba Murtala Tafida, Ogwuni Rolland Edwin and Pedrona Ltd are so tampered with vital information scrubbed out that this newspaper is unable to read them.

Two companies with business names The Seacorp Nig. Ltd and Flex Nig. Ltd utilised for their transactions one Form M MF2017013894/BA No. 21450034.

The last four companies each quoted Form M numbers in their documents thus: Sonai Shipping Ltd MF20180052740; Cosmos &Sons Ltd MF20170010111; Duncan Maritime Ventures Nig. Ltd MF20170094928 and Emoko Real Properties Nig. Ltd MF20130010026. Curiously, all the four Form Ms have no batch numbers thus making it impossible to determine the name of the bank that issued the Form Ms in the first place and also making it difficult to track the source of funds used by the business owners in the transactions.

Two months ago, in September, SATELLITE TIMES blew the lid on a powerful “Port Cabal” that specialised in using clone Form M documents to perpetrate large scale fraud at the Lagos seaports. The report exposed how the Cabal imported millions of dollars’ worth of luxury vehicles, many of them armoured, into the country using just one Form M. The offensive Form M with number: MF 20170010026 was used in importing a total of 554 luxury vehicles that included one Rolls Royce, 84 Toyota Landcruiser, 41 Toyota Fortuner, 123 Toyota Prado, 46 Lexus 570/460, 140 Toyota Hilux, 32 Toyota Camry, 21 Toyota Coaster, 43 Toyota Hiace, 21 Mitsbushi Pajero and 2 Range Rover, most of them armoured and targeted at high-end market.

Cargo manifest

Cargo manifest

While the September report about 17 companies colluding to use one Form M had left ordinary Nigerians and anti-corruption crusaders in utter disbelief, the story pales into insignificance with the latest discovery of 44 companies pulling off an even bigger fraud without the Colonel Hameed Ali-led leadership of the Nigerian Customs Service being any wiser. Intriguingly, it was the same Form M MF 20170010026 used by the 17 companies to bring in 554 exotic cars that was also utilized by a new group of 27 companies to import more cargoes, bringing the number to 44 consignees.

Form M explained

Form M is the most important item in the documentation process put in place by the Federal Government of Nigeria through the Central Bank of Nigeria (CBN) and the Nigeria Customs Service (NCS), to monitor goods imported into the country as well as to enable collection of import duties where applicable.

Any person intending to import physical goods into Nigeria must initiate the importation by processing a Form M through an authorised dealer (licensed bank). Alongside the Form M, a host of other documentation will be presented to the bank. Where approved, the Form M serves as authority to the bank to open letters of credit for foreign exchange transactions on behalf of the importer.

This form has a unique number which must be quoted/written on all the shipping documents; although there are exemptions such as Diplomatic cargos (of reasonable quantity), personal effects, goods shipped in by government agencies or goods shipped into Free Trade Zones in Nigeria such as the Calabar Free Trade Zone (CFTZ).

Form M is the first official document needed to initiate shipment to NigeriaThe life span of a Form M is 6 months (for general merchandise) and one year (for plant and machinery), after which an extension of 6 months (for general merchandise) and one year (for plant and machinery).

 

Cargo manifest

Cargo manifest

A Form M is usually issued for a particular supply contract (between the oversea manufacturer and the Nigerian importer) and allows for part shipments within the validity period. For large project such as stadium construction, a Bulk Form M can be issued, which allows continuous part shipments throughout the validity of the Form M.

Form M is a form of licence. Approval of a Form M depends, among other things, on the forex okayed for the importer by the CBN for a particular import. To obtain Form M, the importer must present his Tax Identification Number (TIN). In fact, the TIN is now key-username to log into the electronic platform to process this all-important document. Form M is not transferable from one importer to another. And a Form M approved for the import of a particular item cannot be used even by the same importer to bring in a different item.

An industry stakeholder (names withheld) gave “a rough estimate” of the values of the 500 containers imported by the 44 companies as “over N100 billion”. It will take the expertise of forensic financial investigators to arrive at the true value of the imports. However, SATELLITE TIMES was told that “because all the imports were luxury goods, they attract 20% duty of the true value, 50% levy and 5% VAT. Indeed, the cloning and manipulations of Form M and allied shipping documents are aimed at escaping payment of accurate levies and tariffs. The industry stakeholder added that the Federal government must have “lost nothing less than N9 billion to this batch alone of cloned Form M imports”.

Official reactions were sought by this newspaper at the headquarters of the Nigerian Customs Service in Abuja. Clearly-worded text messages sent to the mobile number of the Service PRO, Mr. Joe Attah, was not responded to at press time.

List of the 44 companies

1. Five Stax Group Ltd

2. Emy Cargo & Shipping Services

3. Volta MP Equipment Nig. Ltd

4. Vintage Nig. Ltd.

5. Suplus Nig. Ltd

6. Brasslet Nig. Ltd.

7. Sonnex Nig. Ltd.

8. Zako Bag Allied Nig. Ltd.

9. Kaslak Nig. Ltd.

10.Zeb Holding Ltd.

11.Cosmos & Sons Nig. Ltd.

12. Joneble Holding & Sons Nig. Ltd.

13. Amaju & Sons Nig. Ltd.

14. Zinktex Nig. Ltd.

15. Dabik Holding & Sons Nig. Ltd.

!6. Landhoast Ltd.

17. Ogwuni Rolland Edwin

18. Ruffo Nig. Ltd.

19. Marko Nig. Ltd.

20. Sengenmenge Nig. Ltd.

21. Offor and Sons Nig. Ltd.

22. Lext Vin Nig. Ltd.

23. Modul Oil and Gas Ltd

24. Ducan Maritime Ventures Nig. Ltd.

25. Carmen Ltd.

26. Garba Murtala Tafida

27. Auto Creation E-Hub Ltd.

28.  Emoko Real Properties Nig. Ltd.

29.  Osland Ltd.

30.  Brimax Still Nig. Ltd.

31. Akuabia Prince Afamefuna

32. Max Holding & Sons Ltd,

33.Auto Creation E-Hub Ltd,

34.Joneble Holding & Sons Ltd,

35.Bossman Holding Ltd

36. Vintage Nigeria Ltd

37. Garba Murtala Tafida,

38. Ogwuni Rolland Edwin and

39. Pedrona Ltd

40. The Seacorp Nig. Ltd

41. Flex Nig. Ltd

42. Sonai Shipping Ltd

43. Cosmos &Sons Ltd

44. Duncan Maritime Ventures Nig. Ltd

 

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Investigations

Exclusive: After $2 Billion tax evasion, another MTN’s multi-billion offshore transfer discovered

-shifts billions to companies in Dubai and Mauritius

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MTN building showing its logo

Weeks after the Nigerian authorities discovered that telecom giant MTN had skipped paying $2 billion in tax relating to import duties, VAT and withholding taxes on foreign imports/payments, new tranches of transfer are yet discovered to have been made by MTN to companies in Dubai and Mauritius using sophisticated tax avoidance schemes.

MTN has consistently prided itself as the foremost telephone company that gets Nigerians talking the most. Now the South African company is about to set tongues wagging across networks with revelations that it has routinely been shipping billions of naira overseas to avoid paying its fair share of tax in Nigeria.

An 11-month- investigation by this reporter in collaboration with UK-based Finance Uncovered reveals that MTN has been running circles around Nigerian revenue authorities using a complex but noxious tax avoidance scheme called Transfer Pricing. For any economy, it is a slow death.

The red flag was raised the moment our investigations showed that MTN Nigeria has been making payments to two overseas companies – MTN Dubai and MTN International in Mauritius – both located in tax havens.

It was discovered that in 2013 for example, MTN set aside N11.398 billion from MTN Nigeria to pay to MTN Dubai. A similar transfer of N11.789 billion was made by MTN Ghana to the same MTN Dubai, making it a total of N23.187 billion that was shipped to the Dubai offshore account.

In a rare disclosure in 2013, MTN admitted it made unauthorized payments of N37.6 billion to MTN Dubai between 2010 and 2013. The transfers were then “on-paid” to Mauritius, a shell company with zero number of staff and which physical presence in the capital Port Louis is nothing more than a post office letter box.

The disclosure amounted to a confession given that MTN made the dodgy transfers without seeking approval from the National Office for Technology Acquisition and Promotion (NOTAP), the body mandated to oversight such transfers.

N90.2 billion transferred out of Nigeria

On the basis of an earlier management fees agreement that was technically quashed by NOTAP and on the basis of MTN’s reported revenues, it is estimated that N90.2 billion could have been transferred out of Nigeria in management fees alone since the company was founded in 2002.

READ ALSO: INVESTIGATION: Secret memos and documents from MTN’s $14 Billion offshore transfers

A menace called Transfer Pricing

For corporate organizations determined to escape the taxman but still cleverly staying on the right side of the law, Transfer Pricing is the new cellar door constructed by the most ingenious of accountants. It is a new global disease to which Third World economies are the most vulnerable.

Multinationals employ Transfer Pricing to move their profits offshore, leaving behind a shrinking tax base in their host countries and inexorable cuts to public services.

In Africa, tax avoidance has been named as one of the factors holding the continent back by starving governments of the revenues it needs for development.

A report jointly commissioned by the United Nations and the African Union and drafted by a high-level panel led by former South African president Thabo Mbeki considered tax avoidance by multinationals to be an “illicit financial flow” and a significant drain on government resources across the continent.

In total, illicit financial flows -which included corruption and the proceeds of crime – were determined to be costing the continent $50billion a year.

Just last year, South Africa’s deputy president Cyril Ramaphosa had harsh words for tax dodgers. He said: “Tax evasion is not only a crime against the state; it’s also a crime against the people of our country, ordinary people.”

Curiously, the same Cyril Rhamaposa was non-executive chairman of the board of MTN between 2001 and 2013 before he became South Africa’s No.2 man. In effect, the same tax practices which the deputy president strongly condemned in his country as financial crime is vigorously being promoted in Nigeria.

READ ALSO: INVESTIGATION: AGF Malami may file “criminal charges” against Standard Chartered, Stanbic IBTC and Citi Bank over MTN’s $14 billion transfers

MTN is the largest cell phone company in Africa with 227.5 million subscribers. The company, which operates in more than 20 countries across Africa and the Middle East, has Nigeria as its biggest operation.

Until now, tax justice investigations had focused on computer giants, corporations in the extractive industry, food and beverages; in fact, everywhere but the mobile phone sector despite the cell phone industry in Africa being one of the largest and most important industries for the continent.

Mobile phone has been a cheap and quick way of rolling out the vital communications infrastructure that has underpinned Africa’s growth story over the last decade. As a result, the industry has seen explosive growth. With 685million mobile phone users in Africa, the success story means that cell phone companies are now the largest contributor to government revenues in many African countries. That is if they pay their fair share of taxes.

Artificial operating costs

To pay little or no tax, companies determined to cheat begin by seeking ways to create artificial operating costs in the country where they operate. For example, a company is in Nigeria but has a parent or subsidiary company in another country. It makes huge profit but decides to declare a much lower profit-before-tax. To achieve this, it pays the parent and/ or subsidiary company for services not rendered and ships cash to them. Where services are rendered, the costs are inflated. Such services may include royalty for the use of brand name, procurement services, technical services and management services.

Typically, the recipient company is located in an offshore territory under a different financial jurisdiction. MTN has a substantial network of subsidiaries in offshore tax havens, including the British Virgin Islands, Dubai and Mauritius.

Because of the growing concerns that multinationals are using intra-company trading to shift profits around the world by overcharging for services delivered or in more extreme cases by creating artificial transactions where no services were rendered at all, respective countries have a maximum percentage of profits it can allow companies to pay out as management fees.

For example, in Senegal, accounts from the company Sonatel show that the company has a ‘cooperation agreement’ with parent company France Telecom that is capped at 1.43% of revenue.

Until 2010 MTN Nigeria had an agreement with MTN Dubai to pay 1.75% of revenues to the company for management, and royalties for the use of the MTN trademark. Nigeria requires that management fees paid by multinationals are approved by the National Office for Technology Acquisition and Promotion (NOTAP). The fee payments had been reversed following a failure to come to a new agreement on management fees with Nigerian regulators.

READ ALSO: CBN yields to Satellite Times’ report; orders MTN to refund $8 billion

MTN’s previous agreement with NOTAP expired in 2010.

Notwithstanding, MTN has continued to make payments overseas. When these journalists sent questions to MTN over these unauthorized payments, the company told us that this was because they expected NOTAP to approve a new deal and backdate it to the date of the expiry of the previous deal.

MTN’s financial activities are now being questioned by more than one tax authorizes in Africa.

In Ghana the MTN subsidiary, Scancom, has been paying vast management fees to companies located offshore. Our investigations reveal that Scancom paid 758m GHS in management and technical fees to MTN Dubai between 2008 and 2013. This was 9.64% of the company’s revenue. Normally the maximum fee level allowed in Ghana is 6%.

We can reveal that the high levels of fees attracted the attention of Ghana’s intelligence services, which launched an investigation into “economic fraud” between 2012 and 2013.

MTN’s management fees need approval from the Ghana Investment Promotion Centre (GIPC). The Ghanaian “National Security Taskforce” has called for a “review of all technology transfer and management service agreements currently held by GIPC to remove sections which are inapplicable and wrongly provided for” and upgrading and training of state systems and staff.

In response to this, MTN in Ghana told us: “The technical and management services agreements between Scancom and Investcom were duly approved by the GIPC.”

The current head of the GIPC is Mrs. Mawuena Trebarh, who between 2007 and 2012 was responsible for government relations at MTN Ghana. This reporting team asked Mrs Trebarh to comment on whether her previous role could be perceived a conflict of interest. She did not respond to our requests.

In response to our enquiries MTN confirmed that the company paid 12 billion West African Francs in 2012 and 14 billion West African Francs in 2013 in management fees to MTN International. The figure for 2013 is equivalent to 5% of the revenue made by MTN in Cote d’Ivoire.

Dubai paradox

Dubai is one of the places MTN ships huge profits to. Meanwhile, MTN does not operate any mobile phones in Dubai, yet it has significant operations in the small city state.

MTN told us that it employs around 115 people in Dubai who provides services to the MTN group such as group procurement, group finance, legal services, human resources and other corporate functions.

One tool that campaigners have said will be helpful is to look at company reporting on a country by country basis. If a company is making huge revenues in a country where it has few employees but there is a low tax rate, which would suggest that there may be some profit shifting taking place.

In Uganda, a dispute between the Uganda Revenue Authority and MTN has revealed that the company is paying 3% of its turnover in management fees to MTN International.

The fees have been challenged by the Uganda Revenue Authority (URA) who issued MTN with a “notice of assessment” in 2011. This was for a number of tax issues between 2003 and 2009, but a large portion was to do with a dispute over management fees, most of which had been paid to Mauritius.

READ ALSO: EXCLUSIVE: South African President, UK and UAE lobbyists fought hard to stop MTN’s $8 billion sanction

Correspondence between the URA and MTN seen by us show that the URA questioned the legitimacy of these fees, and pointed out that MTNI, the company providing “management services” to MTN Uganda had not spent any money in the years they had looked into. The URA said this could only mean two things: that management services provided to MTN Uganda had either already been paid for by MTN Uganda (and so MTN was in effect charging twice for the same thing) or they were never provided at all.

The Ugandan authority told the company: “We have repeatedly asked for evidence of specific work performed by MTN Group for MTN Uganda for each of the tax years 2003 to 2009. We have only been provided with very little information relating to 2009 and the latter years. This information is very far from justifying a payment of 3 per cent of MTN Uganda’s turnover as management fees.”

NOTAP keeps mum

Asked to confirm the amount of fees paid out to MTN Dubai and Mauritius based on the company’s reported revenue between 2002 and today, MTN said: “There is no disclosure obligation for this information in South Africa or Nigeria.”

Asked to explain the possible justification for MTN Nigeria to pay fees for management and technical services to a company with no employees, MTN said: “It is the contracting party’s prerogative as to how it elects to discharge its contractual obligations.”

Meaning is that MTN Mauritius can perform its task without a single staff member.

This reporter made sustained efforts to get NOTAP and the Federal Inland Revenue Service (FIRS) to comment on the MTN practices in Nigeria.

The Director in charge of Technology Transfer and Agreement, Ephraim Okejiri, initially pleaded that he was in a meeting, and that the reporter should wait. But after over four hours of waiting, he sent a secretary to say he would not be able to give any information on MTN.

Similarly, at Nigeria’s tax agency, the Federal Inland Revenue Service, the Director of Public Communications, Emmanuel Obeta, who had earlier promised on three occasion to make information available on the matter suddenly had a change of mind. He claimed relevant officials who should provide him with the information sought were all not available.

Emmanuel Mayah first published this investigation in October 2015

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Investigations

Shipping fraud: 17 companies import Rolls Royce, 553 bullet-proof vehicles into Nigeria using only one Form M

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A Rolls Royce used to illustrate the story
A Rolls Royce used to illustrate the story

Large scale fraud in the Nigeria Customs Service has taken a turn for the worse as a total of 17 companies are discovered to have imported millions of dollars’ worth of luxury vehicles, many of them armoured, into the country using just one Form M.

SATELLITE TIMES has been following the paper trail of high flier importers since last year when the Senate’s Joint Committee on Customs, Excise and Tariff raised the alarm on the activities of people it described as “Port Cabal” which it said had “swindled Nigeria of over 30 trillion naira in recent years”.

Documents gathered by SATELLITE TIMES show that between 2017 and May 2018, a total of 554 luxury vehicles were imported by the 17 companies using the same Form M No: MF 20170010026. The luxury cars included one Rolls Royce, 84 Toyota Landcruiser, 41 Toyota Fortuner, 123 Toyota Prado, 46 Lexus 570/460, 140 Toyota Hilux, 32 Toyota Camry, 21 Toyota Coaster, 43 Toyota Hiace, 21 Mitsbushi Pajero and 2 Range Rover. The vehicles, targeted at high-end market, are 2017 and 2018 models; most of them armoured.

 

In looking into the activities of the Customs, financial leakages and malpractices in the nation’s ports and revenue system, the Senate Joint Committee had in 2017 said: “a group of unpatriotic persons brazenly constitute themselves into a cabal to inflict infractions at the nation’s sea ports.”

Cargo manifest

Cargo manifest

The Committee had added that the infractions had become daily occurrence just as it accused commercial banks, shipping companies, terminal owners and operators of colluding with officials of Nigeria Customs Service and Nigerian Ports Authority (NPA) to defraud the country in trillions of naira and inversely constitute a clear and present security threat to our nation.”

Investigations revealed that infractions at the seaports and airport cargo terminals come in various forms including Form M racketeering, the abuse and violation of foreign exchange issued by the Central Bank of Nigeria (CBN), incorrect classification and under valuation of consignments coming into the country.

What is Form M?

Form M is the most important item in the documentation process put in place by the Federal Government of Nigeria through the Central Bank of Nigeria (CBN) and the Nigeria Customs Service (NCS), to monitor goods imported into the country as well as to enable collection of import duties where applicable.

Any person intending to import physical goods into Nigeria must initiate the importation by processing a Form M through an authorised dealer (licensed bank). Alongside the Form M, a host of other documentation will be presented to the bank. Where approved, the Form M serves as authority to the bank to open letters of credit for foreign exchange transactions on behalf of the importer.

This form has a unique number which must be quoted/written on all the shipping documents; although there are exemptions such as Diplomatic cargos (of reasonable quantity), personal effects, goods shipped in by government agencies or goods shipped into Free Trade Zones in Nigeria such as the Calabar Free Trade Zone (CFTZ).

Form M is the first official document needed to initiate shipment to Nigeria. The life span of a Form M is 6 months (for general merchandise) and one year (for plant and machinery), after which an extension of 6 months (for general merchandise) and one year (for plant and machinery).

A Form M is usually issued for a particular supply contract (between the oversea manufacturer and the Nigerian importer) and allows for part shipments within the validity period. For large project such as stadium construction, a Bulk Form M can be issued, which allows continuous part shipments throughout the validity of the Form M.

Form M is a form of licence. Approval of a Form M depends, among other things, on the forex okayed for the importer by the CBN for a particular import. To obtain Form M, the importer must present his Tax Identification Number (TIN). In fact, the TIN is nowkey-username to log into the electronic platform to process this all-important document. Form M is not transferable from one importer to another. And a Form M approved for the import of a particular item cannot be used even by the same importer to bring in a different item.

The 17 companies

The 17 companies that managed to beat the system, cloning and utilizing Form M No: MF 20170010026  to bring in their different consignments, instead of obtaining 17 different Form M with 17 different tax identification numbers are:

1.Sengenmenge Nig. Ltd

2. Marko Nig. Ltd

3. Brasslet Nig. Ltd

4. Offor & Son Nig. Ltd

5. Lext Vin Nig. Ltd

6. Modul Oil & Gas Limited.

7. Supulus Nig. Limited

8. Zeb Holdings Limited

9. Amaju & Son Limited

10. Vintage Nig. Limited

11. Joneble Holding & Sons Limited

12. Kaslak Nig. Limited

13. Handhoast Limited

14. Ruffo Nig. Limited

15. Auto Creation E-Hub Limited

16. Sonnex Nig. Limited

17. Emy Cargo and Shipping Services.

Speaking on the issue of the Form M, Mr. Ojerinde Solomon, an importer at PTML container terminal said he had serious doubt if a Form M is transferable to another importer or consignments “because each consigned goods has its own Form M.”

Cargo manifest

Cargo manifest

Anti-corruption campaigner, Olalekan Akande, expressed his shock to SATELLITE TIMES that the systems of the Nigeria Customs Service did not detect the cloned Form M.

“There are many things involved here. Is it that the 16 companies do not have tax identification numbers to process their own Form M or is it that they were unable to get forex allocations locally to import and then resorted to using their funds in overseas to bring in goods but do not know how to explain their sources of the forex to CBN to get approval for Form M? We might be dealing with a case of money laundering here,” Akande intoned.

Under the Forex Restriction Guidelines, any importer that intends to finance imports using funds from overseas is required to submit a written confirmation from the authorised dealer on the source of funds, and evidence of the source of funds, before a Form M can be issued. This is to check money laundering and terrorism financing.

(to be continued)

 

 

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