As Tinubu Inherits E-Customs Project of Controversy

Three years after the Federal Executive Council approved the E-Customs Project, aimed at automating the activities of the Nigerian Customs Service, the project is still marred by a legal battle over the allegation that the immediate past leadership of the NCS surreptitiously picked a different company to replace Bionica Technologies endorsed by the FEC, reports Festus Akanbi

Four months into the tenure of the current administration, controversies are still trailing some of the economic decisions taken at the twilight of the tenure of the immediate past administration, with economic watchers calling for a review of such controversial policy decisions.

Observers maintained that one of the best ways the current regime can endear itself to the people is to take steps to show that nobody is above the law in terms of the sanctity of the policies initiated and executed by past and present public officers.

One of these controversies centred on a core developmental initiative of the Buhari administration –the Presidential Initiative on Custom Modernisation: E-Customs Project which began in 2015. The project, at full operationalisation, is a digital platform that offers an all-encompassing automation system for efficient administration, payment, border management, import, export, and transit processing designed to migrate the customs service from paper to a paperless system of operation.

However, there are reports that contrary to the approval of the choice of Bionica Technologies (WA) Limited by the Federal Executive Council after a painstaking process of evaluation, the former leadership of the customs last year decided to throw their weight behind a new firm in a defiant move said to have made nonsense of the FEC approval.

Industry watchers therefore challenged the Tinubu administration to wade in and ensure the sanctity of the Draft Concession Agreement that formed the basis of FEC approval of the E-Customs project on September 2, 2020. “Such gesture is critical in attracting investors and keeping their confidence,” a bank chief said last week while reviewing the project.

They also called for the recognition of Bionica Technologies (WA) Limited as the “Sponsor and Lead Promoter” of the E-Customs project as captured in documents concerning the project before the incorporation of the SPV and therefore deserving such position of relevance based on the quantum of input towards securing FEC approval. 

However, the Acting Customs Comptroller General, Mr. Adewale Adeniyi, told THISDAY last week that unless there is an out-of-court settlement on the issue, the NCS is poised to follow the court process to the end. 

“The update as you probably know is that the project is the subject of an ongoing litigation at the Federal High Court, Abuja. Except if there is an out-of-court arbitration, we will wait to see out the legal proceedings,” the customs boss said.

The Modernisation Project

THISDAY gathered that the NCS in 2015, conceived what it termed the “NCS Modernisation Project” and developed a qualification evaluation based on pass-fail criteria for bidding companies. The evaluation summary covered financial capability, eligibility, the content of the presentation, and experience.

The petitioner claimed that official records revealed that NCS received presentations from 94 companies which culminated in the offer to Bionica Technologies (WA) Limited “to partner the NCS by direct capital investment to modernise the scanners and ICT infrastructure of the NCS”. 

Bionica was said to have immediately swung into action by conducting a nationwide assessment of NCS land and marine facilities as well as ICT infrastructures in 51 land borders, 11 seaports, and five airports.

Field assessments indicated serious challenges and gaps which centred on dysfunctional scanners and other gadgets, tax evasion, lack of monitoring systems, smuggling of goods across the borders, illegal inflows of banned items, onerous manual administrative processes, and lack of transparency.

With the guidance of the Presidency, the NCS reportedly issued a Request for Proposal to selected companies that demonstrated satisfactory records of expertise and experience in E-Customs deployment and implementation. The proposal and submission of Bionica and its partners, namely, Huawei Technologies (ICT) Nuctec of China, and Smith Detection of France (both for Scanners) were adjudged to be the best.

To show its commitment, Bionica was said to have invited three other original equipment manufacturers to join the consortium to cover the marine, surveillance, enforcement, and other border security infrastructures to attain the status of service that is obtained in ultramodern ports like Singapore, Shangai, California, Iraq, etc. This, according to sources, resulted in renaming the consortium ‘Huawei Consortium’ since digitalisation is common to all the other services and is central to the operation.

Public, Private Partnership

The choice of the Huawei Consortium as the proposed partner in the E-Customs project was said to have been communicated via a letter to the President by the NCS in which the Comptroller General of Customs reportedly proposed a Public Partnership Arrangement (PPP) concession arrangement to develop, design, implement and maintain the required E-Customs end-to-end ICT platform to digitalise Customs Business Processes and Procedures.

The Infrastructure Concession Regulatory Commission (ICRC) got the directive of the Presidency in line with Section 33 of the ICRC Establishment Act to engage with the NCS to undertake full diligence of the Huawei Consortium’s Public Private Partnership proposal and conduct full negotiation with Huawei Consortium including the preparation of a Draft Concession Agreement and a Full Business Case for the E-Customs Project for the approval of the Federal Executive Council. 

Subsequently, the NCS Board appointed three sets of Transaction advisers, namely: Technical – TYP; financial – Price Waterhouse Coopers and legal – Olaninwun Ajayi & Co, Perchstone and Graeys and Bola Ajibola & Co.

According to a source privy to the deal, after more than eight months of continuous engagement, the Transaction Advisers reportedly issued a Due Diligence Certificate to the Consortium. With representatives of NCS and ICRC, they also paid the Mandatory Due Diligence visits to the Original Equipment Manufacturers in India, China, and South Africa. 

On its part, the IT Project Clearance Team of the National Information Technology Development Agency was said to have reviewed the E-Customs Project and issued its Non-objection Certificate. “All regulatory hurdles were cleared with distinction and ICRC issued its Compliance Certificate which cleared the way for the Minister of Finance to make her presentation to FEC,” the managing director of Bionica, Alhaji Umaru Kuta said in an affidavit filed in court.

Going further, the Federal Executive Council approved the PPP model for the modernisation of customs operations on September 2, 2020, thus ratifying the earlier September 17, 2019, anticipatory approval by former President Buhari.

The consortium decided to hit the ground running by assembling in Abuja within five days all its foreign and local consultants, OEMS, African Finance Corporation, and First Bank top officials to work on a Document titled “Transiting from FEC Approval to Operationalisation.” 

Double Standards

 According to findings, trouble started when the document which was addressed to the Comptroller General of Customs and dated October 9, 2020, precisely five weeks after FEC approval, was allegedly rejected. According to Bionica, the former Customs boss, Col. Hameed Ali refused to acknowledge it, with the allegation that he made sure that Bergman Securities and Supplies Ltd, a company where he allegedly has interest as the SPV was tipped for the job. 

Justifying the claim that Bergmans and NCS were up to frustrate the execution of the concession agreement already approved by FEC, SPV/Bionica alleged that the duo caused substantial material alterations to the draft concession agreement to set outrageous preconditions for the execution of the concession agreement and with absolute disregard for the consequences to the financial model in the Business Case approved by FEC. 

Also, the SPV/Bionica’s lawyer was said to have been banned from attending any future meetings called by NCS to highlight the more than 80 alterations NCS made to the FEC-approved Concession Agreement and requesting that they should be discussed item by item to understand the implication(s) of each alteration on the concession agreement and the financial model. 

It was gathered that despite several representations made to the former Attorney-General and Minister of Justice, the former Minister of Finance as well as the ICRC, the material alterations and preconditions were allowed to stay. The two ministers did not even respond to more than half a dozen letters sent by the SPV/Bionica.  

Economic analysts have therefore called for a review of the entire process by the Tinubu administration to enable the government reap the double benefit of securing Nigeria’s borders and maximising revenue from customs operations.