CSNAC petitions EFCC over multi-million dollars defence contract fraud

Posted by News Express | 20 August 2018 | 1,088 times

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•EFCC Acting Chairman Ibrahim Magu

The Civil Society Network Against Corruption (CSNAC), a coalition of over 150 anti-corruption organisations, has urged the Economic and Financial Crimes Commission (EFCC) to commence investigation into the Shaldag’s multi-million dollars defence contract fraud being currently prosecuted by the Israeli government.

In a petition forwarded to the EFCC and signed by CSNAC’s chairman, Mr Olanrewaju Suraju, the Network said the Shaldag contract is one of the deals that paved the way for a regime of kleptocracy in the Nigerian defence sector and the emergence of a gang that has grown to be one of the most powerful in the country.

It noted in the petition that the 2010 deal saw the Israeli shipbuilder win a $25 million contract to supply Nigerian Navy with two fast assault boats.

The petition reads: “We hereby demand the urgent investigation of the multi-million dollar defence contract fraud with respect to the Nigerian Navy’s procurement of two (2) Shaldags (military boats) which the Israeli government is currently prosecuting some of its government officials for.

“According to a report on the Premium Times Newspaper published on the 16th day of May, 2018, the Israeli police arrested three senior officials of Israel Shipyard on charges of bribing government officials in Nigeria on Sunday, March 18, 2018.

“The company’s Vice President for Marketing, Oded Breier, was one of the suspects arrested. The next day, Samy Katsav, another senior Israeli defence businessman, was questioned by police in connection with the same bribery case. Both Mr. Kastav and Mr. Breier were later released to house arrest, and parts of Israel Shipyards’ bank accounts frozen, Gold Bond Group, their parent company announced shortly after the event.

“The arrests followed investigations by the Israeli police and tax authority as well as other international financial crime-busting organisations into a 2010 contract with the Nigerian government to supply two Shaldags – military boats.

“The Israeli police and tax authorities are confident the suspects won the contract after paying bribes to government officials in Nigeria, and as such the suspects have been charged."

CSNAC said the Defence Web, a leading defence news portal, confirmed the existence of the deal when it reported in 2012 that the Nigerian navy is believed to be the buyer of three Shaldag fast patrol boats.

“It said that the report revealed that Israel Shipyards has sold three Shaldag fast patrol boats to an African country, which is believed to be Nigeria. The West African nation is in the midst of expanding its navy in order to combat maritime insecurity such as piracy and oil theft.

“Israel Shipyards on July 17 said that it had agreed upon a deal for the sale of three Shaldag (Kingfisher) vessels for 80 million shekels (US$19 million). The Gold Bond Group, which owns 20% of the company, said it expected to make a profit of 16 million shekels (US$3.9 million) out of the deal.

“It was reported that the fast patrol boats would be delivered to an African country, which has already paid a deposit for them. This country is almost certainly Nigeria – its 2012 Defence Budget Proposal makes provision for three Shaldag Mk III fast patrol craft, according to Budget Office documents. It is however surprising that the Nigerian government and its security agencies have been silent on the said monumental fraud, which is the reason for our indicating interest in same and bringing this to the attention of the commission.

“Experts believe the Shaldag contract is one of the deals that paved the way for a regime of kleptocracy in the Nigerian defence sector and the emergence of a gang that has grown to be one of the most powerful in the country.

The 2010 deal saw the Israeli shipbuilder win a $25 million contract to supply Nigerian Navy with two fast assault boats.

“Their market value at the time was estimated to be $5 million each. Nigeria, therefore, lost $15 million in the deal. It is unclear how the $15 million excess was shared between everyone involved, but the Israeli police have established that the middleman, Amit Sade, received $1.47 million in what is now termed brokerage fee.

“Mr. Sade is believed to be one of the suspects arrested by the Israeli police. He was for a long time resident in Nigeria. But his latest whereabouts remain unknown.

“Mr. Sade remains wanted in Nigeria. As at last year, he was recommended for “further investigation” after a committee investigating defence equipment procurements between 2007 and 2015 found a number of irregularities in contracts for which his companies were paid public funds. Within this period, Mr. Sade’s companies, Doiyatec Comms Ltd and DYI Global Services, won six major defence contracts valued at N6.7 billion. He also brokered many others, including the Shaldags deal” CSNAC noted that according to a Transparency International report, Nigerian military chiefs, politicians, and contractors worked together to steal $15 billion through arms procurement contracts – including the Shaldags – between 2008 and 2017.

“Also, in July 2016, an investigative committee released a report that indicted 18 senior military officials, 12 retired and serving government officials, as well as 24 CEOs. The report suggested further investigation and prosecution of the indicted individuals.

“The Nigerian Defence Contracting gang which emerged in 2007 according to sources, is said to involve a network of government guys, middlemen and manufacturers. The Government Guys allegedly are made up of government officials leading various defence units and committees, the defence minister and permanent secretaries, Secretary to the Government of the Federation, the National Security Adviser, and the President. This gang makes up the most important node in the network.

“Then, there are also middlemen, they consist of contractors, former and current government officials, politicians, family, and friends of members of the Government Guys gang. They are the link between authority figures and the third group. Within this group, contractors serve as the face of each deal, cloaking each contract with the legality the public is later presented with.

“While the Government Guys serve as the source of funds, the contractors are the conduit. They receive legal payments and redistribute to every other member of the expanded gang. Others in this node mostly serve as ideators and influencers.

“The manufacturers are established defence manufacturing factories outside Nigeria. In an ideal situation, the purchasing units of Nigerian government agencies should be dealing directly with the sales departments of manufacturers. However, they outsource sales and marketing to members of the Middlemen gang, considered as “Africa experts” in the industry.

“In Israel, the trial of Israeli Shipyard for involvement in the Shaldag bribery continued on March 30. Bribing a foreign official is a crime in Israel, especially after Israel joined the Organization for Economic Cooperation and Development and the United Nations Convention against Corruption in 2008.

“It is on the basis of the foregoing that we hereby make a case for the urgent need to put an end to this never-ending crime cycle without fear or favour and regardless of whose ox is gored. Similar cases of corruption with international connections of this nature, wherein other countries take active measures, while Nigeria feign ignorance or do very little in the face of exact same circumstance is fast becoming international embarrassments,” CSNAC said.

Source: News Express

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