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PEOPLE AND POLITICS BY MOHAMMED HARUNA The NITEL Privatization Saga: A Word for the President
Last week several newspapers reported that the Federal Government reversed itself at the last minute in its decision to return the management of NICON and Nigeria Re-insurance to Mr. Jimoh Ibrahim. Government had seized the two insurance companies from him in November following widespread concerns that his share acquisition of 70% of the first and 40% of the second were dubious. Indeed there were speculations that Ibrahim was merely fronting for President Olusegun Obasanjo and the transaction therefore raised serious questions about conflicts interest.
The government seizure of the management of NICON and Nigeria – Re was in the face of a subsisting court order that it shouldn’t. Apparently criticisms that its action contradicted its constant refrain of respect for the rule of law as one of its cardinal principles of state policy, prompted the Attorney General of the Federation, Mr Michael Aandoakaa, to initiate and sign an agreement with Ibrahim’s lawyers to return the management of the two companies to the gentleman. It was this agreement that government decided to bow out of at the very last moment before the two contending parties were to have signed it.
This somersault has since become typical of President Umaru Musa Yar’adua. Since taking office barely 10 months ago, he has reversed himself and counter-reserved himself so many times his government faces the imminent danger of becoming the most wishy-washy in the country’s history.
This is a danger that he must do everything to avert in the shortest possible time. And the only way to do so is, first, to take decisions purely in the public interest and nothing else, and, second, to do so only after doing his homework thoroughly.
Of course identifying the public interest is easier said than done if only because the public itself is never a monolith with uniform priorities. Because the public is invariably divided along ethnic, regional, sectarian and class lines, etc, and because the interests of these groups are often in conflict, balancing them is not easy. But then neither is it impossible. The trick is to provide for the greatest good of the greatest number of the people of a country.
As for the president doing his homework thoroughly, there is the paradox of his now popular image as Mr. Go Slow. Indeed only the other day General T. Y. Danjuma, former minister of defense in a widely reported newspaper interview that must have resonated well with Nigerians, said the president, worse than being Mr. Go Slow, was actually Mr. Standstill.
It is a paradox that the same person many see as reversing himself too often because they think he is too hasty in taking decisions is simultaneously accused by others of being too slow. For me, the simple explanation for this seeming paradox is that his decisions have not been firm and transparent. In other words he has not had the courage of his convictions in arriving at his decisions so far. And without such courage - a courage which comes from an honesty of purpose and from being transparent - he will always be swayed not by the best arguments but by the last, regardless of their merit.
Take for example the saga of the privatization of the Nigeria Telecommunication Ltd (NITEL), hitherto the wholly government owned Nigerian phone company.
Over six years ago, the federal government decided to sell it off as part of it privatization drive. At that time Nitel was arguably the most solvent if not the most liquid of the federal government owned companies. It was not exactly efficient in providing service to its customers, but it had solid assets and it was one of few parastatals that paid its staff well and as at when due. In other words Nitel as a government company was not exactly a basket cast.
All these were to change for the worse as its privatization proceeded apace. It started with the Indian owned Investors Intentional (London) Limited (IILL) which won its 1.3 billion dollar bid for the company in November 2001. Then after paying the mandatory and non-refundable 10% of its bid, it failed to meet the deadline for the payment of the balance. Consequently it lost the company in accordance with the terms of agreement.
Next came the Dutch owned Pentascope which turned out to have neither the money nor the expertise to own or manage Nitel. Not surprisingly the company, whose brief was to nurse Nitel into an efficient entity that would attract new investors following the ill-fated IILL deal, thoroughly mismanaged it; by the time it was through with Nitel not only could the company no longer pay salaries, its account in both local and foreign currencies went from black to redder than red. All this happened barely one year after with IILL fiasco.
In obvious embarrassment government terminated the management agreement with the company. However even though investigations by the National Assembly exposed the huge mess the company made of Nitel, no one was punished. Instead Mr. Nasir El-Rufai, who, as the Director-General of BPE, was the principal actor in the whole mess, boasted to the world that his political masters, whose opinions were all that mattered, were so happy with his performance that they rewarded him with the powerful office of the minister of the Federal Capital Tertiary.
Next came Orascom, the Egyptian owned phone company which, similar to Pentascope, turned out to have neither the money nor expertise nor the size to own Nitel. Orascom made a ridiculous bid of 250 million dollars for Nitel. The bid, mercifully, was rejected out of hand. Even then the no-deal reportedly cost Nigeria $800,000 as fees paid to KPMG by BPE for a due diligence examination which was obviously far from thorough.
Finally came our own Transcorp International, the company in which the Director-General of the Nigeria Stock Exchange Dr. Ndi Okereke-Onyiuke and President Obasanjo had substantial shares. In more civilized climes this fact alone should have stopped government from selling off Nitel - and for that matter any other government owned company - to Transcorp. But then this was Nigeria where, generally speaking, public officers have no shame whatsoever in abusing their offices.
And so shortly after Orascom’s no-bid the government quietly sold 75% of Nitel to Transcorp in a deal that could not have been more opaque. Then when it became apparent that Transcorp could not raise the 750 million dollars for its 75% share – note that Nitel’s price had been brought down to 1 billion dollars from the 1.3 billion IILL bid, itself already a gross undervaluation of Nitel’s net worth – it was given the option of paying for 51% at 500 million dollars. Even this it could not pay in time.
Going by precedence, Transcorp should then have forfeited its shares. However, being the blue-eyed favorite of those in power, nothing like that happened. Instead the company was allowed not only to still own Nitel, it almost got away with its moves to sell off some of Nitel’s assets to a foreign company and sack its workers.
Then last November government decided finally to do the right thing - play by the rules that had been agreed to by both buyer and seller.
However, no sooner had government decided to do the right thing than certain sections of the media came down on the president for indulging in too many policy somersaults. In apparent response to this criticism, the president reversed himself again; Transcorp, said a government announcement, would now remain owners of Nitel in proportion to the payment it had made.
Obviously the president did not have the courage of his conviction in sacking Transcorp from Nitel. It is safe to say that he had come under enormous pressure to reverse himself from President Obasanjo as a big stakeholder in Transcorp. If Yar’adua had the courage of his conviction he would have stood his ground.
Like so many decisions under Obasanjo’s so-called economic reform, the sale of Nitel to Transcorp reeked of too much conflict of interest to have been consummated to begin with. To allow these decisions to still stand where the beneficiaries have broken their own side of the bargain with so much impunity is not only a contradiction in terms, it is a betrayal of the public interest of the vast majority of Nigerians.
How President Yar’adua handles the Nitel/Transcorp saga would be critical in defining the essential character of his government. Already regardless of what the courts think of his election last May the rest of the world believe his government is, to paraphrase America’s Abraham Lincoln, a government BY and OF a small clique around President Obasanjo. How he handles the Nitel/Transcorp saga will determine whether the government is FOR the powerless majority of Nigerians rather than also FOR the same small clique around Obasanjo that fixed the May election for him.
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