Over N16 billion of Subsidy Reinvestment and Empowerment Programme (SURE-P) funds released by the Goodluck Jonathan administration in 2012 for the Public Mass Transit Revolving Fund (PMTF) was squandered, the International Centre for Investigative Reporting icirnigeria.org has found.
The fund, administered as a revolving loan by The Infrastructure Bank (TIB) was given out in form of mass transit vehicles to 31 beneficiaries, mostly commercial transport operators. A total of 1,179 vehicles were released to the beneficiaries under the scheme, with a repayment plan covering four years.
But four years after the vehicles were disbursed, only two of the beneficiaries-ABC Transport PLC and Young Shall Grow Transport Limited, have fully repaid their loans. Most of the other beneficiaries are yet to pay back as stipulated in the contractual agreements signed between them and the TIB.
The bank lists as “chronic defaulters 15 companies and organizations, owing a total of N4,586,088,671.63 as at December 2015. That figure would have gone up as at the time of filing this report.
The loan defaulters include National Union of Road Transport Workers (NURTW), which got N2.3 billion; Nigerian Association of Road Transport Owners (NARTO), N403,487,239; Road Transport Employers Association of Nigeria (RTEAN), N370,738,460; Greenline Bus, N370,500,000; Global Ginikana, N295,290,190 and Classic Link Express, N123,500,000.
Those familiar with the disbursement say the Jonathan administration gave out the loans largely as political patronage, with many of the recipient believing that they were actually helping the government out of the ditch it ran into after the fuel subsidy protests of January 2012.
Investigations by the icirnigeria.org revealed that the scheme was compromised by stakeholders, including the beneficiaries, TIB and the Bureau of Public Procurement (BPP).
Most of the beneficiaries who defaulted in loan repayment cited supply of poor quality vehicles by TIB as major reason for their inability to pay back. While the beneficiaries requested Toyota, Mercedes and Ashley Leyland high capacity buses, they were supplied Hyundai and IVM Innoson vehicles, which they said is unsuitable for commercial use.
Unlike Mercedez, Leyland and Toyota vehicles, the loan defaulters claim spare parts for Hyundai and Innoson vehicles are also not easily available in the country, a situation that forced many of the beneficiaries to park the vehicles less than a year after delivery.
Najim Yasin, National President of NURTW, said the organization rejected the vehicles provided by TIB but was persuaded to take them as a show of support to the Jonathan administration which was then facing a debilitating country-wide workers strike over the cut in fuel subsidy.
Mr. Yasin said of the 234 mass transit buses given to the NURTW, less than 65 were Toyota vehicles, the others were Hyundai and Innoson buses that broke down within the first month of operation.
Communications between the NURTW and TIB, seen by this website, show that the organization complained about the poor quality of the vehicles and the fact that there were no spare parts to fix those that broke down.
Mr. Yasin said the complaints were ignored by TIB.
In a letter dated May 22, 2012, the NURTW wrote to TIB to reject all the Hyundai and Innoson buses given to it by the bank, claiming that they were not good for transportation business.
Also, in a reply to a letter from the TIB for settlement of the N4.7 billion loan given to NURTW dated July1, 2015, the NURTW wrote: “We reiterate the fact that our good intentions to defray the loan have been hampered and challenged by the fact that these vehicles are mostly grounded due to their inferior and sub-standard qualities. Others are accidented, and despite the fact that we have sent several claims for insurance cover/payment on the buses, these claims have not been paid by the consortium of insurance companies solely appointed by you.”
TREAN, another beneficiary, said it requested TIB to supply it 100 Toyota and Ashley Leyland buses but was given only 10 Toyota buses and 32 Hyundai and Innoson buses, all at the cost of N370.7 million.
The National President of the association, Musa Shehu, told the icirnigeria.org that most of the Hyundai and Innoson buses broke down within the first month because of the rigour of travelling on bad roads, while the others could not last a year, thereby making it impossible to repay the loan.
Mr. Shehu gave our reporter copies of the letters his association wrote TIB to supply them the remaining 58 vehicles and make sure they were Toyota or Ashley Leyland buses so that they could off-set the loan on the bad vehicles with money from the good ones. He said although TIB promised to give them the vehicles the bank never kept the promise.
On May 24, 2012, RTEAN wrote to TIB, complaining that some of the buses were “faulty and draining our pocket.” The association said many of the vehicles they got developed faults within days or weeks after they were delivered.
“Most of the vehicles giving us severe problem are Innoson and Hyundai models,” it said in the letter, asking that the buses be replaced.
In another letter dated July 19, 2012, the association complained that it could not continue to meets its repayment obligation under the agreement as some of the buses given to its members were breaking down daily.
“These buses can hardly be used for 3 days without developing some sort of fault or the other. There is no week that passes by without these buses going to a mechanic’s workshop,” the association wrote.
“We hereby appeal that these Innoson buses should be retracted by you and in exchange, release to us Hummer buses in order for us to effectively run our commercial businesses…”
Both NURTW and RTEAN said those who got the Toyota buses, who are few, met their contractual obligations because the buses are still on the road. “But those who got Hyundai and Innoson cannot pay back because the vehicles have been parked due to lack of spare parts. While the former has paid only N350 million till date, the later has paid back less than N30 million,” Mr. Shehu stated.
But our investigations also show that the transporters were also wont to complain about just any vehicle given to then, even Toyota buses. For instance, in a letter written to TIB by RTEAN in September, 2012, the association also complained about a Toyota Coaster bus which it said developed faults three months after
It was supplied. “This particular vehicle (a Toyota Coaster bus), which has not been on the road for more than three months, has been associated with all sorts of problems which include perpetual break down, faulty internal parts of the vehicle and high cost of maintenance.”
Documents in possession of the website indicate that the BPP in January 2012 issued a Certificate of No Objection to TIB’s request to engage nine vehicle providers under the scheme.
The vehicle providers include Globe Motors and IVM Innoson, among others. The document also showed that the selection of vehicle providers was based on their ability to deliver high capacity buses within a very short time, and not to provide vehicles with high durability.
The TIB and the BPP were more concerned with helping government to provide transport palliative to cushion effect of fuel subsidy removal at the time, and not making the loan scheme efficient.
There are also allegations that TIB received and supplied sub-standard vehicles because officials of the bank received gratifications from the vehicle providers. We are unable to independently verify that claim, and is unable to accuse anyone of receiving gratifications at this time.
Some of the beneficiaries told our reporter that TIB never discussed with them the brand of vehicles they would be given, but only specified that they would be high capacity buses. Moreover, they alleged, TIB ignored their request for vehicles of their choice and instead decided on its own to impose the vehicles on them.
Besides, our investigations show that the government-owned bank has continued to give out loans in form of mass transit buses to companies without appearing to have learnt from its experience managing the SURE-P revolving loans scheme.
Investigations show that in 2015, TIB gave vehicles for mass transit purposes to companies that either never operated in the transport business or lacked capacity to successfully manage a mass transit operation. In some cases, it appeared, some of the companies were registered or their initial business focus changed to be able to take the car loans.
For example, Global Leasing Limited, a company incorporated in 1997 to “carry on the business of equipment leasing, hiring, renting or otherwise dealing in tractors, machines and other heavy duty equipment, machinery and vehicles normally used in dredging, loading, carting in the oil industry” got two loans totaling over N2 billion. It got the first loan of N1,058,300,000 or 60 buses (one billion, fifty eight million, three hundred thousand naira) on January 20, 2015 and a second one of N1,005,337,500 or 60 buses (one billion, five million, three hundred and thirty seven thousand five hundred naira on December 24, 2015.
It is one of only few companies to have received loans twice and the private firm with the second largest loan portfolio but checks at the Corporate Affairs Commission, CAC, shows that it was not incorporated to do and had never been involved in mass transit business. Besides, the company that got a loan of over two billion had a share capital of only N2 million. However, the company is not known to have defaulted on its loans.
Intermission Global Investment Limited, the company that got the biggest loan of N2,999,053,575 or 206 buses from TIB in March, 2015 was incorporated in 2009 to undertake strictly construction business. With a share capital of N1 million, the company’s ownership changed in June 2014, the same day that its focus of business shifted from construction business to mass transportation.
Also questionable is the loan given to Safetrip Limited, a company incorporated in 2009 to carry on all kinds of businesses in the transportation sector. The company actually got two loans; the first one of N227,620,000in January, 2012. A year after, the loan had to be restructured as the company was falling back badly on repayments. Safetrip commenced repayment of the restructured loan in March 2013 and as at March 2016 it had repaid only N32,575,295, according to bank documents obtained by the icirnigeria.org, thus entering the bad books of chronic defaulters. However, in spite of its terrible experience with the company, TIB went ahead to grant another loan of N185,250,000 to Safetrip in April 2014. Not surprisingly, the company has paid back only N6.3 million of the loan as at March 2016.
Efforts to get TIB’s reaction to this story were fruitless as the bank refused to provide information on the loans or respond to the allegations against it and its officials.
The bank denied the request for information by the icirnigeria.org written to it since March 17. In the letter addressed to the bank’s Managing Director, the icirnigeria.org asked for details of the Federal Executive Council approval for the scheme, a copy of the Funds Management Agreement signed between the bank and the federal government, documentation on beneficiaries of the scheme, including number, type and total value of vehicles obtained, documentation on all vehicle suppliers including the number, type, cost and date of delivery of the vehiclesand a copy of the Standard Bidding Documents issued to all bidders to supply the vehicles.
We also requested the final signed contract award documents, documentation on total money spent on loan revolving scheme, documentation on total loans redeemed and total outstanding and documentation on beneficiaries who have defaulted, including how much is outstanding on each name.
In a reply to the letter dated March 24 signed by Abiodun Daria and Ezinwanyi Ken-Ahia, of the Corporate Legal Department, the bank asked for time to provide the information requested.
“We have noted your request as contained in the letter and we are presently in the process of attending to it. We shall respond to you after the Easter holidays.”
However, when our reporter called Ms Ken-Ahia about two weeks later, she said the bank was waiting for approval from the ministry of finance before replying and providing the information. Asked if the information was domiciled with the ministry, she said it was not but added that since it was the supervisory ministry, the bank had to obtain permission before replying to the request.
But, as at press time, TIB has not provided the information, in flagrant disobedience of the FOI Act.
When our reporter visited the bank’s headquarter offices in the Central Business District in Abuja on Monday, the Administrative Manager, Hamisu Umar, who attended to him said that he could not respond to the questions put to him because they were management issues and advised the reporter to write officially to the bank’s management.
When he was told that an FOI Act request for information had been submitted to the bank for over two months but ignored, Mr. Umar said that a reminder should be written and sent to the bank.
It was gathered that the matter is now being investigated by the Independent Corrupt Practices Commission (ICPC), and that many of the key players had been interrogated. No one has, however, been charged to court.
But some of the beneficiaries, including the NURTW and RTEAN, have taken TIB to court for insisting that they repay the loan given to them. They are claiming that the loan was impossible to repay because TIB deliberately supplied them poor quality vehicles and ignored their complaints that the vehicles were not performing