PHCN privatization: Senate investigation reveals loss of N387m to Canadian company

Posted by News Express | 16 January 2021 | 389 times

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The Senate Committee on Public Account has been presented with startling reports of how the federal government lost the sum of N387million to a Canadian company.

CPCS Transcom Limited, in the course of privatization of the defunct Power Holding Company of Nigeria (PHCN).

The office of the Auditor General of the Federation, Anthony Ayine has queried payment of 1 per cent of the proceeds of the sale of a minimum of 51 per cent of FGN’s equity holding in the successor companies (SCs), to the Canadian firm without accounting for the mandatory 10 per cent Withholding Tax amounting to N387.7 million contrary to Financial Regulation.

The report submitted to the Senate Committee Chairman on Public Account, Senator Mathew Urhoghide revealed that N383 billion was earned as proceeds from sales of PHCN Generation and Distribution companies which represented 99 per cent of the total cost, while CPCS Transcom Limited which was appointed in 2010 as sole consultant Privatization Advisory Services of the Distribution and General Company created out of PHCN earned 1 per cent of the proceeds, amounting to N3.8 billion.

The query addressed to Director-General of BPE by the office of the Auditor General of the Federation which was sustained by the Senate asked the former to explain the circumstances surrounding the payment to consultant the sales proceeds at source without deducting the mandatory 10 per cent WHT.

It read in part: “A company was appointed as sole consultant for the Privatization Advisory Services of the Distribution and General Company created out of PHCN in December 2010 at the cost of 1 per cent of the proceeds of the sale of a minimum of 51 per cent of FGN’s equity holding in the successor companies (SCs).

“Audit scrutiny revealed that the sum of N383,894,023,770.79 (Three hundred and eighty-three billion, eight hundred and ninety-four million, twenty-three thousand, seven hundred and seventy naira, seventy-nine kobo) was received as proceeds from sales of PHCN Generation and Distribution companies which represented 99% of the total cost, while the balance of 1 per cent amounting to N3,877,717,411.82 was paid as service charge to the consultant by the successor companies without accounting for the mandatory 10 per cent Withholding tax amounting to N387,771,741.82 contrary to Financial Regulation 234(i) and (ii).

“The Director-General of BPE has been requested to explain the circumstances surrounding the payment to consultant the sales proceeds at the source without deducting the mandatory 10 per cent WHT.

“Also, the sum of N387 million should be recovered from the consultant while particulars of recovery are forwarded for audit verification.”

Further investigation revealed that sequel to the query of AuGF, the Director-General of BPE, Alex Okoh in a letter dated 19 April 2018 requested for the transfer of withholding tax of N387 million to the Federal Inland Revenue Services (FIRS).

But, the Canadian company in its response to the DG, BPE, dated July 26, 2018, claimed that there is an income tax treaty (Agreement between the government of Canada and Federal government for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes and capital gain) between Nigeria and Canada. “The agreement is available at the FIRS website.”

The company further submitted: “We would like to confirm that we have paid taxes in Canada and as per provisions of the agreement. CPCS being a Canadian entity having paid incomes taxes in Canada for the revenue earned associated with the project is not required to pay additional taxes in Nigeria.”  (Saturday Tribune)

 

 

 


Source: News Express

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