Arms Probe: House Blames Embezzlement on Non-enforcement of Procurement Act

To probe operations of Defence Corporation, scam by govt officials, insurance brokers
Damilola Oyedele in Abuja

The House of Representatives has blamed the alleged embezzlement of some of the $2.1billion in the arms deal scandal on the non-application of the Public Procurement Act in defence procurement.
The Speaker of the House, Hon. Yakubu Dogara, said this when he declared open yesterday’s hearing on the proposed amendment to the Act, to allow its application to defence expenditure.

This is as the House at plenary yesterday directed its Committee on Defence to investigate the operation of the Defence Industry Corporation of Nigeria (DICON) to determine why the company has not been able to live up its responsibility of manufacturing military kits and equipment.

Dogara, who was represented by the House Minority Whip, Hon. Yakubu Barde, said alleged the embezzlement, was an avoidable one.
“The president has ordered an investigation into defence spending in the past years. By extending the application of this Act to defence spending, some of these problems will be addressed,” the speaker said.

The Chairman of the Committee on Public Procurement, Hon. Wole Oke, noted that the current provisions of Section 15 (2) of the PP Act exempts certain defence expenditure from compliance on the grounds of national defence or national security, except when otherwise stated by the president.

The amendment being sought does not jeopardise national security, Oke noted, adding that the House seeks to insert the following into the law: ”Procurement involving national security or national defence shall be conducted in line with the provisions of this Act, but its supervision shall be handled by a Special Committee appointed by the council and the council shall be entitled to grant waiver or exemption from application of specific provisions of this Act.”

The Bureau of Public Procurement (BPP), however expressed its opposition to  the proposed amendment to Section 7 (1) of the  PP Act, to subject the approval of the appointment of its Director-General to the confirmation by the National Assembly.
The power to appoint the DG of the BPP is vested in the president subject to recommendation from the council. The proposed amendment seeks to vest the power of confirmation in the National Assembly, following recommendation by the president.

The Legal Adviser of BPP, Mrs. Amaka Obinna, said the proposed amendment is a breach of Section 171(27)(d) of the 1999 Constitution, which solely  empowers the president  to make appoint the heads of extra-ministerial bodies.
At plenary, the House said the failure of DICON in achieving the mandate for which it was set up, has resulted in the country expending scarce foreign exchange to procure kits and equipment for the military and other security agencies, to prosecute the fight against Boko Haram.

The lower chamber also called for collaboration with local manufacturers, where necessary.
The resolutions followed a motion sponsored by Hon. Olajide Boladale (Oyo APC) who expressed worry at the continued dependence on importation of kits and weapons for the Armed Forces and other security agencies.
The lawmaker said the monies expended on importing kits and equipment would have helped create employment, if it had been invested in local production and fabrication of military equipment.

“Nigerian Air Force would have been forced to ground its entire fleet of Alpha jets due to lack of brake assembly, but for Innoson Vehicle Manufacturing Company which helped to modify and overhaul the brake assembly of the MB-339 Aircraft for adoption on the Alpha Jets, which feat helped to save huge foreign exchange for the countries and also helped the Air Force to sustain its bombardments against the insurgents,” he argued.

The Defence Industry Corporation of Nigeria, was established in Kaduna in 1964, and is charged, among other things,  with the operation, maintenance and control of factories for the manufacturing and storage of kits and weapons for the Armed Forces and other security agencies.

The committee is expected to submit its report to the House in six weeks.
In another development, the House resolved to investigate alleged scam by insurance firms in connivance with unscrupulous government officials on kick-backs for insurance premiums.
It therefore directed the Head of Service of the Federation and other  government establishments that purchase direct insurance covers, to provide detailed data of all premiums paid on group life (general) and related government assets within the last three years.

The resolution followed a motion by Hon. Prestige Ossy (Abia APGA) who noted that  over N35billion was appropriated and expended on insurance covers of fixed and non-fixed government assets in the 2015 appropriation.

 Prestige explained that beginning of every financial year, brokerage, firm, insurance and Reinsurance companies are invited to bid for insurance of government fixed and non-fixed assets.
That although the process are presumably carried out in line with the Public Procurement Act, it is generally believed that some companies are unduly favoured during such bids, he said.

“Unduly favoured companies reciprocate by engaging in a fraudulent practice termed return on premium, whereby a percentage–as much as fifty percent (50 per cent) of the premium paid  by government are returned to government officials as cash pay back thus creating the biggest recurring fraud in the public sector. To best appreciate the magnitude of fraud being perpetrated, for every N10billion paid as insurance premium by government, N5billion is returned to corrupt government officials,” he said.
“If this criminal practice is not checked, billions of naira meant for other pressing national needs, will continue to go into private pockets not to mention the adverse effect on the national economy,” Prestige added.