NDDC MOU: How Management Ignored Act • Fraud Was Being Concocted-Board Member
8 min read
The management of the NDDC has received more knocks over the controversial MOU between the commission and a US firm for the construction of a rail line from Lagos to Calabar.
The MOU was signed by the MD, Dr Samuel Ogbuku at a summit in Lagos. Board members, including the chairman, Mrs Lauretta Onochie were not present at the event.
Already, Onochie has disowned the contract agreement on the grounds that it was illegal and without the consent of the board.
On Friday, the commission, through the head of corporate affairs, Dr Ibitoye Abosede, made efforts to explain away the MOU signing. In the statement, Abosede said “ the Niger Delta Development Commission, NDDC, appreciates the need to be seen to be accountable and transparent as it collaborates with its stakeholders in the arduous task of developing the Niger Delta region.
“At the Public Private Partnerships, PPP, Summit which we organised in Lagos on Tuesday, April 25, 2023, we signed a Memorandum of Understanding, MOU, with a United States-based firm, Atlanta Global Resources Inc., AGRI to build a railway network that will connect the nine states of the Niger Delta region.
“This foundational process may have been misconstrued by some persons to mean that the NDDC has signed the Engineering, Procurement and Construction, EPC, contract.
“We have been inundated with enquiries over what is ordinarily one of the preliminary steps necessary for the actualization of a partnership arrangement with the private sector.
“All we signed at the PPP Summit was a basic MOU to commence the preliminary processes of feasibility and viability of the rail project. It did not include any agreement on details.
“It is only after the preliminary studies, that the finance appraisals will be done and then the civil engineering procurements and the locomotive hardware will be considered.
“For those who may not know, the Atlanta Global Resources Inc deals with financing for Industrial products, infrastructure projects, agriculture equipment, capital equipment financing etc. They came recommended by a reliable US financial institution, especially for the deployment of US-produced locomotives.”
Based on the provisions of the NDDC Act, the board ought to have authorised the contract. Section 8 subsection (a-f) of the NDDC Act provides that the Board shall have the power to:-
(a) manage and supervise affairs of the Commission;
(b) make rules and regulations for carrying out the functions of the Commission
(c) enter into such contracts as may be necessary or expedient for the discharge of its functions and ensure the efficient performance of the functions of the Commission,
(d)pay the staff of the Commission such remuneration and allowances as appropriate.
(e) enter into such contracts as may be necessary or expedient for the discharge of its functions and ensure the efficient performance of the functions of the Commission,
(f) do such other things as are necessary and expedient for the efficient performance of the functions of the Commission.
The commission’s statement did not, however, make any reference to the chairman’s media statement which caused uproar on Friday. Abosede dodged that aspect and merely said what the MD signed was a preliminary agreement, even though no mention of this was made when the MOU was signed.
Below is how the MOU was, before it was signed:
A
MEMORANDUM OF UNDERSTANDING
BETWEEN
ATLANTA GLOBAL RESOURCES INC. (“AGRI”)
AND
NIGER DELTA DEVELOPMENT COMMISSION (NDDC)
TO
PROVIDE RAILWAY LOCOMOTIVES, CONSTRUCT RAIL LINES AND OPERATE THE SAME IN THE NINE OIL PRODUCING STATES, NAMELY (1) RIVER STATE, (2) ONDO STATE, (3) EDO STATE, (4) DELTA STATE, (5)BAYELSA STATE, (6) AKWA IBOM STATE, (7) CROSS RIVER STATE, (8) IMO STATE, AND (9) ABIA STATE, NIGERIA.
Made this __________ day of _______________ 20____
This Memorandum summarizes the terms and conditions of the Public Private Partnership Agreement to be entered into by Atlanta Global Resources, Inc., (“AGRI”) and the Niger Delta Development Commission, (“NDDC”), to provide Railway Locomotives, Construct Rail Lines and Operate the same in the Nine Oil Producing States of the Niger Delta, namely: (1) River State, (2) Ondo State, (3) Edo State, (4) Delta State, (5) Bayelsa State, (6) Akwa Ibom State, (7) Cross River State, (8) Imo State, and (9) Abia State, Nigeria, (“THE PROJECT”). All defined terms used in this memorandum and not otherwise defined herein shall have the meaning as set forth in the draft Agreement (as defined below).
1.0 THE SCOPE OF THE PUBLIC PRIVATE PROPOSED NETWORK PROJECT
AGRI and NDDC will enter into a “Public Private Partnership agreement”,to design, construct, finance, license and permit procurement, ownership, and operation of the project(“Project”) with proposed Network of Rail outlined below. (a) Lagos – Calabar; (b) Calabar – Port Harcourt; (c) Port Harcourt – Umuahia; (d) Umuahia – Owerri; (e) Owerri – Asaba; (f) Asaba – Benin; (g) Benin – Ondo; (h) Ondo – Lagos; (i) Port Harcourt – Yenagoa; (j) Yenagoa – Benin; (k) Asaba – Warri; (l) Owerri – Yenagoa; (m) Warri –Lagos – Calabar; (n) Yenagoa – Lagos – Calabar; and (o) Port Harcourt – Bonny – Lagos – Calabar.
The Project company [which shall be called Atlanta Global NDDC, LLC], will be a limited liability company formed in the state of Delaware in the United States of America.
A Delaware limited liability is taxed as partnership pursuant to the Internal Revenue Code of the United States and a Delaware limited liability company provides the benefit of shielding both NDDC and AGRI from liability similar to the liability insulation afforded a Delaware Corporation, as relates to the Project Company.
The Project Company will be formed by filing its Articles of Organization with the Secretary of State of Delaware. A limited liability company agreement (the “Agreement”) between the Niger Delta Development Commission (NDDC)and Atlanta Global Resources, Inc., (AGRI) will serve as the “Public Private Partnership agreement” governing the terms and conditions of NDDC and AGRI management, profit sharing and other issues as related to the Project Company. The Project Company will generate both profits and losses as part of its ongoing operations. The losses are of importance to AGRI as they may provide certain tax benefits to AGRI and its investors. The profits and losses from the Project company will be apportioned sixty percent (60%) to AGRI and forty percent (40%) to NDDC.
2.0 PUBLIC PRIVATE PARTNERSHIP AGREEMENT
The Agreement will set forth certain terms and conditions governing AGRI and NDDC as relates to the “public private joint agreement” Project Company, including:
- Management of the Project Company. The project Company will be managed by a management committee (” Management Committee”) comprised of five “Managers”, three to be appointed by AGRI and two to be appointed by the NDDC.
- Officers of the Project Company. The Management elect a President, a Treasurer and a Secretary and other appropriate officers to be responsible for the day-to-day management of the Project Company.
- Project Developer and Project Manager. The [Management Committee] [President] will be responsible for the negotiation and execution of both a Development Agreement with a Project Developer and a Management Agreement with the Project Manager. The project Developer will enter into a Development Agreement with the Project Company pursuant to which the Project Developer will be responsible for all development aspects of the project, including the feasibility review for the Project and the rail operation. The Project Manager will enter into Management Agreement with the Project Company pursuant to which the Project Manager will be responsible for the day-to-day management and operation of the rail operation.
3.0. CONTRIBUTION TO THE PROJECT COMPANY
Å. AGRI Contribution to the Project Company.
AGRI will make the following contributions to the Project Company:
- Shall provide the funds through a U.S. local bank [amount
to be Determined] guaranteed by the U.S. Export Import Bank for the purchase of all locomotives, rail lines and construction, rail cars, spare parts, maintenance facility for the rails and cars and other support equipment as may be determined.
- An insurance policy issued to support the Project Company’s debt financing of the Facility (project).
- Pledge of the collateral by AGRI as relates to the issuance of the above -referenced insurance.
- Plan, construct, and manage the Project.
- Transfer the project to NDDC after 20 years or remain as may be agreed.
- NDDC Contributions to the Project Company.
NDDC shall make the following contribution to the Project Company.
- Provide the Sovereign Guarantee of Nigeria to be issued by the Ministry of Finance
- The license now owned by NDDC or to be issued granting it the right to develop and to purchase, construct and operate the rail operation.
- The license now (AGRI License) [now owned] [to be procured] by NDDC granting it the right of way to conduct the Project discussed in Section 4 below.
Upon execution of the Agreement, the AGRI and NDDC contributions to the Project Company will become the property of the Project Company.
4.0. FORMATION AND TRANSFER OF INTEREST.
Upon (or shortly after) the execution of the Agreement, and as part
of the Public Private Partnership arrangement, NDDC will transfer to the Project Company the Operating license and other permits granting the project company the right to commence work on the project.
5.0. UNITED STATES TAX PROVISIONS
Certain provisions of the Agreement set forth terms relevant to the United States partnership tax treatment that a limited liability company is entitled to by the United States Internal Revenue Code. These provisions are the following: Sections 2.7, 3.3, 5.1, 5.2, 5.3, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 8.9, 9.1, 9.2, 9.3, and 9.4, respectively.
6.0 CONCLUSION
This memorandum sets forth a brief overview of both the structure and the terms and conditions of the Public Private Partnership Agreement to be entered into by AGRI and NDDC to develop and operate the Project (Facilities). This memorandum has been prepared to assist in the review and dissuasion of the terms and conditions of the Public Partnership arrangement between AGRI and NDDC. This memorandum has no legal effect, and it should be understood the Agreement is the only document with legal effect as to the terms and conditions of the relationship between AGRI and NDDC as relates to their Public Private Partnership arrangement. Both parties should conduct a careful review of the Agreement to ensure that its terms and conditions setting forth the arrangements are acceptable to both parties.
Signed on Behalf of the within named AGRI Inc
_______________________________
In the presence of:
Name: _________________________
Address: ________________________
Signature:_______________________
Date: ___________________________
Signed on Behalf of the within named NDDC
_______________________________
In the presence of:
Name: _________________________
Address: ________________________
Signature:_______________________
Date: ___________________________
Meanwhile, a member of the board who spoke with TNN in confidence said the MOU signing event was done without the knowledge of the board members, adding that from the beginning, “fraud was clearly being concocted.”
He said it was unfortunate that the management team was yet to purge itself of the fraudulent style of running the affairs of the NDDC in the past and noted that the board would not watch and allow corruption fester in the commission.
TNN has also found out that the said railway project had been initiated by the federal government a few years ago, though construction is yet to commence.
