28th May, 2012
New facts emerge on the brewing crisis over the proposed American Hospital project in Abuja, as allegations of forgery fly on some vital documents
After investigations by the Inspector-General of Police, the Economic and Financial Crimes Commission, EFCC, and the National Security Adviser, it will soon be the turn of the House of Representatives to probe the same contentious issue. Under scrutiny is a N2.5 billion sum released by the federal government “specifically”, as maintained by Dr. Ifeanyi Obiakor, “for building the American Hospital, AH, and the American University of Medical Sciences, AUMS”, in Abuja, the Federal Capital Territory.
But Felix Akhabue, immediate former national president of the Association of Local Governments of Nigeria, ALGON, and Chief Chikwe Udensi, the association’s erstwhile secretary-general insist the fund was meant for deployment on “capacity building” generally for ALGON but had been “judiciously expended” on an immediate, inescapable court directive. Udensi said he can’t wait for even the Special Fraud Unit of the Nigeria Police to wade into the issue “to uncover certain improprieties that Obiakor perpetrated in his desperation to lay his hands on the funds and blow it”.
Late last year, Obiakor, principal promoter of the American Hospital project, using the American Hospital Limited, AHL, registered name, wrote a petition to the Presidency “to formally register a complaint against Chief Chukwe Udensi, the former Secretary General of ALGON and Honourable Felix Akhabue for embezzlement of N2.5 billion out of the N4.5bn approved by President Goodluck Jonathan for the American Hospital and University projects”. Obiakor explained how he conceived the hospital and university projects “in the overiding public interest of solving the healthcare needs of 160 million Nigerians by building a five-star hospital that will render the standard of quality care of Cornell University, the American University and a specialised university dedicated solely to training doctors and allied health personnel to American standards”.
The proposal aimed at providing what Dr. Obiakor descibed as high quality health facilities and manpower in Nigeria. Specifically, it spoke of building health capacity in each of the 774 local governments in the country by training manpower in medical and allied fields. Obiakor argued that the idea would increase the number of medical doctors by 1000 every year. The proposal hoped to train, at least, one doctor and two other health hands from each of all the local governments. The medical university was expected to produce 2000 doctorate degree holders in medicine and allied courses. Because the project was designed as a collaboration with ALGON, preference for admission was to be given to nominees of the local governments.
ALGON bought into the idea and agreed, in a Memorandum of Understanding signed on 30 July 2010, to collaborate with AHL through its own business vehicle, the ALGON Healthcare Development Company. On 12 August 2010, AHL sent an “Investment Profile For Building Sustainable Capacity In The Primary Healthcare Of All Local Governments In Nigeria” to President Goodluck Jonathan. The “Marshal Plan”, as Dr. Obiakor called it, “proposes the financing of medical and allied health professionals’ education, as well as the employment and deployment of the trained medical and allied health personnel to rural areas.”
The promoter also informed the President that a public-private partnership had been formed “to address this problem of poor capacity in the healthcare industry of Nigeria”. The PPP involved the AHL, “which has been incorporated and registered with the Corporate Affairs Commission”; the Federal Government of Nigeria, through Abuja Investments Company Limited, AICL, a subsidiary company of the Federal Capital Territory Administration, FCTA; and American and Nigerian institutional investors, including AFAM Comprehensive Health Care Group (a primary care medical practice based in New York), American Hospital Management Company Limited, Nnamdi Azikiwe University Awka, First City Monument Bank and ALGON. Personalities involved are Tunde Ayeni, chairman of Skye Bank plc; Mr. Ifeanyi Uba, the Capital Oil boss; Mr. Chike Chikeluba, Dr. Tom Adaba and Dr. Umar Faruk.
ALGON and AICL alone share between them 50 per cent of the stakeholding. “In the proposed hospital and university,” Obiakor explained in the Investment Profile, “ALGON, in partnership will have 30 per cent shares of the university and 30 per cent of the hospital in the paid-up equity shares.” AICL’s 20 per cent contribution is a 102-hectare piece of land on the road leading to the Nnamdi Azikiwe International Airport for the erection of the American Hospital and the American University of Medical Sciences. The Investment Profile was endorsed by Chief Udensi.
Udensi told TheNEWS that the healthcare and medical project was dear to his heart because of the promise it held for sutainable healthcare delivery and mass production of medical doctors and allied professionals across all the 774 local governments. In fact, earlier, before Obiakor submitted his proposal, ALGON had initiated and awarded a N38 billion Health Centre contract but which was cancelled by the late President Umaru Yar’Adua. ALGON had gone to court on the matter and won. The AH and AUMS projects, therefore, keyed into ALGON’s original heathcare initiative and lent themselves to ready approval.
But funding ALGON’s financial contribution to the project would be a problem. To solve this, Udensi, on 31 August 2010, wrote a letter titled “Re: Local Governments Witholding Taxes and VAT Liability: An Appeal for Waiver On Penalties” to President Jonathan. The letter referred the President to an outstanding issue of ALGON’s tax liabilities to the Federal Inland Revenue Service, FIRS, and informed that the association had commenced moves to settle the liabilities. “In the course of due diligence on the records of the liabilities, it was discovered that a large percentage of the charges are penalties. Your Excellency, as a responsible tier of government, it is important to state that we are desirous of settling our tax liabilities and ensuring that no backlog of liabilities will accumulate in the future… We, therefore, pray Your Excellency to kindly approve a waiver of all penalties on the tax penalties. It is anticipated that our savings on the waiver will be invested on the attached Investment Profile,” the Secretary-General wrote.
The tax matter had come up via a letter from the Federal Inland Revenue Service, FIRS, titled “Re: Local Government WHT (Witholding Tax) and VAT (Value Added Tax) Liabilities” dated 7 July 2010. The letter, addressed to ALGON’s national president and signed by Dr. J.E. Opara for the FIRS Executive Chairman, intimated the association of its debts to the FIRS and the urgent need to service it. “The amounts owed total N37,199,724,624.62 for local governments and each local government Chairman has been duly communicated,” the letter stated. Upon receipt of the letter, ALGON mandated its consultant chartered auditor, Chuks-Samuel and Co., to conduct due diligence on the FIRS claim with the aim of substantially reducing the debts to be paid the FIRS.
Chuks-Samuel and Co., a firm of chartered accountants and tax practitioners whose Managing Partner is Eze Samuel Ezekwo, has been ALGON’s auditors since 2003. And contrary to an earlier report in a news magazine that the firm is not registered with the Corporate Affairs Commission, Chuks-Samuel has been so registered since 14 February 1997, with registration number LAZ. 048229, to practise audit, taxation, accountancy and general consultancy services. Chuks-Samuel and ALGON reached an agreement that the auditor would collect 30 per cent of whatever amount it was able to save from the N37 billion tax bill the FIRS slammed on the association. Brandishing documents detailing tables and figures covering the local governments, Eze Ezekwo said the firm visited them, poring over their books to determine the extent of their tax defaults. Ezekwo said that Chuks-Samuel lacked the financial muscle to execute the project in local governments across the country and had to source for funds from Impecca Services Limited to enable it do the job efficiently. Chuks-Samuel and Impecca Services entered into an agreement to that effect.
On 14 April 2010, the auditing firm submitted its findings to ALGON. The company noted that the FIRS grossly overshot the mark with its N37.199 billion tax debt claim. “Based on the above findings and explanations, the claim of N37,199,724,624.62 by the Federal Inland Revenue Service shall be rejected by the Association of Local Governments of Nigeria,” Chuks-Samuel recommended. Ezekwo said he further advised ALGON to plead for approval of a waiver on all penalties on the tax liabilities, hence the 31 August 2010 Secretary-General’s letter to the Presidency for the purpose.
Proceeding from these recommendations and subsequent meetings between ALGON executives and the FIRS management, the latter, on 24 November 2010, sent a letter to the ALGON Secretary-General informing that it was slashing the tax liabilities to N11,456,967,099.16. The letter, signed by I.N. Onu, Head, Debt Management Office on behalf of the FIRS Executive Chairman, read: “Please note that the initial figure of N37.4bn earlier communicated as outstanding liabilities was found to have been grossly exaggerated as a result of contentious items considered in determining the principal liabilities, wrongly imposed penalties and application of incorrect rates of interest. The figures have, however, been cleaned up, hence the drastic reduction in the amounts outstanding,” the FIRS explained. Consequently, instead of the N37bn that the FIRS initially requested ALGON to pay as tax liabilities, it was N11bn that the association eventually paid after the due diligence.
A disagreement, however, developed between Chuks-Samuel Limited and ALGON after the execution of the due diligence job, as ALGON refused to pay the auditors as agreed between them. So the auditors went to the Federal High Court, Abuja to seek redress. Impecca Services Limited and Eze Samuel Ezekwo, who were the plaintiffs, prayed the court for an Order of Declaration that the 2nd Plaintiff (Chuks-Samuel) was entitled to “30 per cent of any reduction/savings arising as a result of the due diligence exercise upon the realisation of the reduction/savings and/or approval of the waiver on the sum of N37.2bn demanded by the FIRS…; and an Order of Injunction restraining the Defendant, their servants, banks, agents, privies or other howsoever from distributing monies from their bank accounts unless the amount owed and payable to the 1st plaintiff is first deduced therefrom and paid to the 2nd Plaintiff or his order”.
On 12 July 2011, at the court, the two parties and their respective lawyers signed a Memorandum of Settlement praying the court to “kindly enter judgment on the following terms of settlement as agreed upon between the parties in this suit”. The terms were: That the amount of N7,722,827,257.64 claimed by the plaintiffs is discounted by 10 per cent by the deduction of the sum of N772,282,725.76, leaving the balance of N6,950,544,521.88 as the agreed sum due to and payable by the defendant; that the sum of N6,950.544,531.88 shall be made to the 1st Plaintiff who financed the project; and that the Defendant shall make immediate payment of the sum of N2.5bn to the 1st Plaintiff and the balance of the sum of N4,450,544,531.88 to be paid within 90 days from the date of judgment. More importantly, Udensi pointed out, the court directed that “the above payment shall be made from the bank account of the Defendant first before any other payment or deduction is made out of the Defendant’s bank account number 1280016493 with Bank PHB”.
This court directive would throw a spanner in the hopes of Dr. Obiakor’s AH and AUMS collaborative projects with ALGON. The Presidency acquiesced to ALGON’s request for waivers on penalties on tax liabilities. On 4 July 2011, the Central Bank of Nigeria, obeying the order of the Accountant-General of the Federation, paid N3.8bn out of the N4.5bn as gains from the waivers to ALGON. From the N3.8bn, Udensi and Akhabue authorised advance payment of N1.3bn to the American Hospital project and expended the remaining N2.5bn on complying with the court directive to pay off Chuks-Samuel Limited. Ezekwo, who claimed ALGON owes him an old debt of N3mn, said the ALGON executives then pleaded with him to forgo the remaining N4.450bn as ALGON was no longer financially buoyant to service it. He said after much pleading, he agreed. All the parties then signed an agreement at the Federal High Court, Abuja to that effect.
Obiakor, piqued that the entire N3.8bn was not released for the AH and AUMS projects, has since been fuming. He fired a petition to the Interim Management Committee, IMC, of ALGON, alleging fraud against Udensi and Akhabue. On 19 August 2011, the IMC met and deliberated on the matter and removed Akhabue as ALGON’s National President and Udensi as Secretary-General. The IMC then appointed Professor Ilochi Okafor, former Vice-Chancellor of the Nnamdi Azikiwe University, Awka as acting Secretary-General. But the IMC later reversed its decision when Udensi presented “genuine court documents”, as Obiakor himself described the papers, directing ALGON to immediately offset the debt owed its auditors. The IMC reinstated Akhabue and Udensi to their positions and removed Okafor as acting Secretary-General.
Obiakor was enraged. He stated in a petition that “in a most bizarre move, on or about 1 November 2011, the IMC passed a resolution claiming responsibility for authorising the payment of N2.5bn to Impecca Services Ltd. and the chairman, Eng, U.K. Ibrahim sent a letter to the investigating authorities and a few influential and highly-placed Nigerians, essentially nullifying his earlier complaint and report that both Chief Udensi and Hon. Akhabue acted without the authorisation of the IMC.” But Engineer U.K. Ibrahim, Chairman of the ALGON Board of Trustees, explained to TheNEWS last week that the IMC members were obliged to comply with the Rule of Law when they saw the court papers mandating ALGON to pay Chuks-Samuel Limited its dues. “We had no option but to obey the court,” he said.
On 1 November 2011, 10 members of the IMC wrote and signed a letter directed to the National Security Adviser, the Inspector-General of Police and the EFCC Chairman clarifying their stand on the matter. The letter, titled, Detailed Report On The Fraud And Mismanagement Of Funds (2.5 Billion) Property Of Association Of Local Governments Of Nigeria Algon By Former President And General Secretary Further And Better Information In Respect, read: “We refer to the above subject matter particularly to the earlier report, allegedly fraud and mismanagement of N2.5 billion against the President of ALGON, Mr. Felix Akhabue and the General Secretary, Chief Chikwe Udensi when we issued the report referred to herein we did not have at our disposal certain information that we now have regarding the following issues we raised in our said report.“Further information revealed that by minutes of meeting of the national Executive Council (NEC) of ALGON held on Thursday 30th July 2009 at the ALGON Conference Hall at pages 8 paragraph 12 deliberation was held on the matter.
“The NEC appointed the Auditor to work on the matter and approved the benchmark for payment and other conditions of engagement.We have since seen the Certified True Copy of the judgment of Hon. Justice Oniyango of the FCT High Court and have come to realise that it was specially stated in the judgment that the sum of N2.5b be paid to the Auditor as the first instalment payment.We have further discovered that from the court judgment it was ordered that the payment of the N2.5b be made through Impecca Services Limited. Though the assignment was given to the Auditor, the Auditor in the course of executing the assignment collaborated with Impecca.The money was therefore paid through Impecca Services Limited on the basis of the court judgment and the instruction, understanding and agreement of the Auditor. The foregoing has helped to explain the grey areas that generated the strong suspicions and aroused the curiosity and apprehension of some of the members of the Interim Management Committee.”
In desperation, Obiakor has sent petitions to the Presidency, the EFCC, the Inspector-General of Police and the National Security Adviser, NSA, alleging fraud against Udensi and Akhabue. But the two men had been invited by the EFCC and the NSA, questioned and released. Even Ezekwo had also been guest of the EFCC twice. But as the men told this magazine, all the agencies had to let them go when they realised they had not acted illegally. Ezekwo, who was miffed that Chuks-Samuel was described as an unregistered company, is considering taking Obiakor to court for levelling allegations of fraud against him. “As Director-General of the Anti-Fraud Initiative of Nigeria, National President of the Association of the Anti-Fraud Advocates of Nigeria and a Justice of the Peace, besides being a chartered accountant, chartered tax practitioner and renowned management consultant, I should be concerned about anybody attempting to soil my name. I am seriously thinking of going to court,” he declared.
Akhabue said: “Obiakor is only concerned about collecting the entire money, even though he has not justified how he spent the N1.3bn ALGON gave him.” Nothing has been done on the site. Instead, Obiakor decided to buy a huge house at Wuse 2 without informing any of us and said he used N200mn as legal fees,” Akhabue told this magazine. But Obiakor had told a news magazine that he bought the property to use it as a satellite campus of the university until the permanent site is ready. Akhabue added that ALGON is not the only listed director of the AHL and AUMS projects, “yet it is the only one that has put down substantial money for it.” He said Obiakor has not been able to convince ALGON that other directors have invested funds in it.
Udensi disclosed that the medical doctor has not been sincere in his dealings with ALGON. The former Secretary-General said Obiakor tampered with certain documents in his desperation to get the project done. One is a Resolution dated 26 January 2010 on the approval of the AU and AUMS supposedly signed by the Secretary-General and the National President. Udensi maintained that the document couldn’t have been genuine because while it was true that he was Secretary-General of ALGON by that stated date, Akhabue was not yet its Interim National President. “Akhabue became ALGON president only in August 2010. Before then, he was its NEC publicity secretary. So how could he have signed a Resolution as Interim National President of ALGON in January 2010?” he asked.
Again, Obiakor was alleged to have tampered with the Memorandum of Understanding that he signed with ALGON on 30 July 2010. What the medical doctor tendered is titled an Agreement, a 6-page document rather the 5-page MoU that Udensi insisted was signed by the parties. Both documents bear the same date and contain the same signatories, although Udensi maintained that Obiakor merely took the signatures from the genuine MoU document and superimposed them on the the Agreement that he forged. Udensi particularly pointed to a clause in Obiakor’s Agreement which says that, “in the unlikely event of cancellation, default or breach of this contract, ALGON shall forfeit all funds from its WHT and VAT waivers and/or any other investments already made into this collaboration to AHL and AUMedSc.” Udensi screamed: “We never agreed on anything like that.”
Udensi also directed attention to what he said was fraudulent use of the letter-head of the ALGON Secretary-General. He cited instances where he alleged Obiakor forged Resolution documents purportedly signed by the Secretary-General. He pointed to the lower part of the “fake” letter-head which bears the names of the directors. “The letter-head of the Office of the National President and that of the Secretary-General of ALGON does not bear the names of its directors. It is only that of the Board of Trustees that does. So where did Obiakor get all those signed Resolutions signed by Akhabue or me?” he queried. He also mentioned that the doctor had been referring in some of the “forged documents to the waivers on penalties as far back as July 2010 when the letter to President Jonathan appealing for waivers had not even been written.”