The Accidental Public Servant

by El-Rufai, Nasir

  Chinelo Anohu opted for this option and converted. It was under this programme that we hired many

  of our future bright lights, my assistants, Lai Yahaya, Aishetu Fatima Kolo, Dr. Abdu Mukhtar, and

  line staff like Hassan Musa Usman, Eyo Ekpo, Emeka Obi, Dr. Lanre Babalola and many others. By

  the time USAID funding was running out, DFID gave us a grant of ten million pounds so we were able

  to continue and also expand the scope of the programme. I am always disappointed when the whole

  ‘core team’ programme gets reduced to a dollar-salary story, conveniently forgetting its openness to

  all, and the urgent need for us to have qualified staff to deliver on our programme objectives and

  timelines. [30] Aishetu Kolo was particularly unfairly maligned and while I was in FCT, left Nigeria

  unhappy and despondent, to join the World Bank Young Professionals Programme. I was pleased

  when she returned to the country some years later to settle down to a career in the private sector.

  However, the story of how the payment of allowances due to Dr. Abdu Mukhtar and Ms Aishetu

  Fatima Kolo became the subject of a Senate Committee investigation is best summarized by reading

  Appendix 3 which contains the last two pages of the entire file of six pages of what really transpired

  and what was truly paid. Years after, Jonathan’s choristers falsely claimed I was paying a youth

  corper some N2 million per month as salary. I never bothered to respond as the person behind the

  false allegations, Senator Mamman Ali, had become governor and subsequently died of cancer, so

  was no longer in a position to defend himself. I have decided to simply reproduce extracts from the

  file on the matter for any interested reader to review and make up his or her mind.

  The World Bank Steps In

  The early successes of our programme attracted the attention of the World Bank country office then

  headed by Trevor Byer, a West Indian, who had some experience in power sector reforms. We met

  regularly and he raised the idea of a privatization support credit just in case we get starved of funds

  by the legislature. I did not think it was possible bearing in mind the commitment of my bosses, both

  Obasanjo and Atiku, to the programme, but felt there was nothing wrong with taking an insurance

  policy, just in case. Am I glad we did? Discussions and approvals were sought and negotiations for

  the credit began in earnest, lasting about 18 months before the $110 million credit became effective. It

  was the shortest time a credit was ever made effective in Nigeria since it began relations with the

  Bank in the 1960s. The credit covered not just the BPE, but the Nigeria Communications Commission

  (NCC), and the Abuja and Lagos State Water Corporations. The BPE not only led and anchored the

  negotiations but met the credit-effectiveness conditions ahead of every other agency - a further

  confirmation of the competence and internal capacity of the BPE staff, for which I remain very proud.

  With the credit in place, we could spend more on training and capacity building, hire advisers and

  consulting firms with expertise in sector reforms, pay for many more individual consultants and ‘core

  team’ members, and undertake more study tours. We still had our DFID grants available for first

  spending before drawing down on the credit - which attracted 0.5% interest, so it was almost nearly

  cost-free! And as correctly predicted by the World Bank, we began to face funding challenges from

  the legislature shortly after. Whenever we proposed an amount in the budget for privatization

  transaction costs, the Ministry of Finance would either reduce or omit it entirely, and the legislature

  would either delete the reduced amount or just leave it at zero. Our representations to committees on

  privatization as well as appropriations consistently came up with nothing. After two consecutive

  years of zero allocation for privatization transactions costs, I was summoned by Hon. Nze Chidi Duru

  and his committee members to explain how we were able to finance such transactions! I explained

  that we had the World Bank credit to draw upon, whereupon I was asked to explain how we

  borrowed without the approval of the legislature. My one paragraph response was "Ask the Minister

  of Finance." After all, it was it was the Federal Government, through the Federal Ministry of Finance,

  and not the BPE that obtained the credit.

  It was then I realized that the non-funding of the BPE transaction costs was deliberate, and unless we

  were willing to 'play ball' nothing was forthcoming either from the Finance Ministry or the National

  Assembly. The legislators in particular were quite clear that unless we were willing to provide pay-

  offs or appoint their friends as privatisation consultants or advisers, none of our budgets on

  transactions would be approved, and they never were. This was because our competitive, open and

  transparent selection process lent itself to no such prior 'arrangements'. The legislators also wanted

  various relations, cronies and friends hired, whether qualified or not, but our aptitude test and

  interview process reduced such opportunities to a minimum. The privatisation committee chairmen,

  Senator Haruna Zego Aziz and Hon. Nze Chidi Duru had a hard time reining in the anger and hostility

  of their members that were interested in both immediate cash and other non-cash benefits which were

  not forthcoming from BPE. Of course this created other future problems for me, being identified as a

  ‘non-cooperating individual’ by the political system, as we will see later.

  We presented our ‘no-win’ situation to the Vice President and on the advice of the Attorney-General

  of the Federation who is a statutory member of the NCP, BPE was authorized to begin the practice of

  adding up all transaction costs associated with any sale, and deducting them in full before remitting

  the net amount of proceeds to the privatization proceeds account at the Central Bank of Nigeria. The

  implementation of some of the smaller, less prominent but critical, transactions that could not be

  financed by the credit would have been impossible without this flexible and necessary interpretation

  of sections 9 and 19 of the Privatization and Commercialization Act.

  Years later in October 2011, a Senate Committee investigating privatisation transactions ruled this

  legal opinion of the Attorney-General ‘illegal’ and the practice as unconstitutional, and recommended

  that I and other DGs ‘be reprimanded’ for the deductions of transaction costs. It was an absurd

  recommendation as one can only reprimand one’s employee, which I and three of my successors were

  not any longer. My guess is that the committee was duty-bound to find something against El-Rufai, and

  that was all they could pin on me after examining my nearly four years at the helm in BPE.

  An Encounter with Enron

  One of my most memorable early experiences in BPE was a political baptism of fire - an encounter

  that put me smack in the middle of ethnicity, politics and policy conflicts, involving a company that

  became globally notorious for its internal misgovernance and deception - the Houston-based Enron

  Corporation. Electricity shortages have become a way of life in Nigeria, and Enron saw an

  opportunity to cash in on that misfortune. They did something similar in India in the 1990s and it went

  really wrong but they learnt some lessons and came to Nigeria with a more refined approach. What

  Enron proposed was to supply second-hand, barge-b
ased generators (movable and easy to relocate in

  case of payment defaults) using diesel initially, to be supplied by Wale Tinubu's Ocean & Oil Ltd.

  (now Oando) until gas pipelines are extended from Egbin to the barges' location, to provide initially

  90MW and expandable to 540MW of electricity exclusively for Lagos State.

  The Lagos State governor, Bola Tinubu, his finance commissioner Wale Edun, budget commissioner

  Yemi Cardoso, Gbenga Oyebode of Aluko & Oyebode, Wale Tinubu and Tunde Folawiyo, all of

  them friends or acquaintances of mine, were involved in the transaction at various levels and

  capacities. There were only three hurdles that needed to be crossed. First was the legal reality of the

  time: that only federally-owned National Electricity Power Authority (NEPA) could buy, transmit and

  distribute power so the cooperation of the Federal Government (FGN) was needed. Second was that

  NEPA was notorious for not paying its bills (even to government-owned companies like the Nigerian

  Gas Company which supplies it with feedstock), so some payment security arrangements needed to be

  put in place in anticipation of NEPA's default, and finally Enron would require a sovereign guarantee

  in the event that NEPA fails to pay and the security arrangement fails to crystallize or is exhausted by

  multiple defaults. Enron and Bola Tinubu found a way by getting Chief Bola Ige, a fellow opposition

  AD party leader working in a PDP administration, to get Obasanjo to sign off on the transaction

  without any cabinet review or rigorous inter-agency discussions. Bola Ige also obtained the

  president's consent to sign a sovereign guarantee on behalf of the Federal Government of Nigeria -

  something only the Minister of Finance was legally authorized to do.

  There were no loud protests from NEPA management who could foresee the dangers of potential

  corporate insolvency because they all believed resistance was fruitless since Minister Bola Ige had

  the ears of President Obasanjo. Everything was signed, sealed and delivered and we all read about it

  in the newspapers. I was concerned that this could negatively impact the future privatization of NEPA

  and requested the VP to obtain copies of the agreements signed for our review. This was barely two

  weeks after I resumed, and then early in December 1999, we received the ‘power purchase

  agreement’ (PPA) of over 100 pages including annexes, annexures and other attachments. We could

  not make any sense out of it. We approached Norton Rose of the UK, and two local law firms, A B

  Mahmoud & Co. based in Kano and George Ikoli & Okagbue of Lagos to undertake a review of the

  power purchase agreement. Norton Rose needed several weeks, and instinctively I knew we had to

  figure this out before it got too late, and several weeks might be too late.

  The local law firms submitted the outcome of their reviews within a short period, but what we got

  were not very helpful in isolating the potential impact of the PPA on our power sector reform

  programme. The agreement was highly technical with enough equations and integrals to scare all but

  the most mathematically proficient of lawyers. At this point, I approached the World Bank country

  office for assistance. Trevor Byer, the country director who fortuitously had been involved in power

  sector reforms elsewhere before his posting to Nigeria, was very helpful, proactive and immediately

  responsive. Within a couple of weeks, we received a summary of the agreement, its impact on

  privatization, what the equations and annexes meant in terms of tariffs, security arrangements, dollar

  payments and contingent liabilities. I immediately briefed the Vice President who was alarmed at the

  findings, and he instructed me to draft a memo for onward transmission to President Obasanjo.

  Within five weeks of taking over the headship of BPE, I drafted the first of many memos which would

  be forwarded to the President, drawing attention to surreptitious steps being taken by line ministries

  to frustrate sector reforms and privatization. The Lagos State-Enron case was particularly dangerous

  as it would have bankrupted NEPA almost overnight! The president immediately put the transaction

  on hold and commended the vice president for briefing him on the implications of the deal. The VP

  set up a ministerial committee chaired by Minister of State Danjuma Goje, with BPE, the Federal

  Ministry of Finance, and Lagos State Government represented as members, to review the agreement.

  Enron immediately hired GoodWorks International, the global advisory firm co-founded by former

  US Ambassador to the UN, Andrew Young, to influence the outcome of the review, while Bola Ige

  and some sections of the South-West media got busy attacking me, the vice president and the BPE for

  'depriving Lagos and Yoruba people of steady electricity'. We declined to respond, focusing on fixing

  what we saw as a potential stumbling block to reforming and privatizing our electricity supply

  industry. I am glad we truncated the original deal, but even the better and revised arrangement which

  reduced tariffs from 8.5 cents per kilowatt-hour to just 1 cent a kilowatt-hour ended up placing huge

  financial burdens on NEPA years into the future – and the undertaking we extracted from Lagos State

  to share part of the burden was subsequently challenged in court, and remained in dispute until we left

  office.

  My Enron experience was an education of sorts. I learnt many new lessons that dispelled my naivety.

  Well-informed and trusted friends put pressure on me to look the other way because they were

  advisers or consultants to Enron, or were potential beneficiaries in the transaction. My explanations

  and passionate representations that the transaction was inimical to national interest, negatively

  impacts the long-term viability of NEPA and threatened the reforms of the electricity industry were

  neither important nor relevant to their position. I saw starkly how government officials were willing

  to pervert the interest of the country to impress foreigners, or obtain preferences for those they thought

  were their kinsmen. It was an early sobering experience and an appreciation of the reigning dictum of

  every one for himself, and no one for the country.

  The hypocrisy of multinational commercial interests that think ‘contract sanctity’ overrode Nigeria's

  laws, our national interest and the voidability of a contract based on a mistake also came to the fore.

  The even-handedness of the World Bank officials was commendable; for their efforts however, some

  of them were moved out of Nigeria, and some reportedly took early retirement due to pressure from

  the Executive Director representing the US on the board of the World Bank, as a result of complaints

  filed against them by Enron. It was gratifying (and I felt that it was divine judgment for the sleepless

  nights and media attacks we in the BPE were put through by their executives and Nigerian

  collaborators for no reason other than their narrow commercial interests!) that I had to witness the

  collapse of that evil corporation. I remember vividly I was in Houston, Texas when on December 2,

  2001, Enron filed for bankruptcy protection.

  The Swiss Tycoon and the Nicon-Noga-Hilton Hotel

  Another early case which taught me a lot about the penchant of the Nigerian elite to subordinate

  public interest to their individual greed involved a businessman with a long history in Nigeria.

  Nessim Gaon began exporting groundnuts from Nigeria in the 1960s when the marke
ting boards were

  in charge, and quickly became a close friend and business associate of many northern leaders,

  including a prominent prince that became the Sultan of Sokoto in the 1980s, Alhaji Ibrahim Dasuki.

  Gaon, a Swiss-Jew, diversified into trading, construction and hotels development. He was awarded

  the $320 million contract to build the Nicon-Noga-Hilton Hotel in Abuja in the early eighties. This

  was to become what is now the Transcorp Hilton Hotel - Abuja's premier hotel destination. The Noga

  in the name is derived from Gaon's name, even though his company, Aprofim, and its sister, Afro-

  Continental Construction Ltd., did not invest a penny in cash in the hotel company's equity, and the

  hotel design, construction and furnishing ought not to have cost more than about $120 million then. In

  the estimation of a reputable quantity surveying firm, Gaon may have walked away with at least $100

  million from the project after netting all expenses, kickbacks and other payments back in the mid-

  1980s. Yet, his company claimed to be a 25% shareholder in the hotel-ownership company, Nicon

  Hotels Ltd., under a very questionable management contract executed with the Nicon Insurance

  Corporation, which was never approved by the regulator – the National Office of Industrial Property,

  Iponri, which has now been renamed NOTAP.

  By 2001, when preparing to privatize Nicon Insurance, and its associated companies including the

  hotel property itself, I was directed by Vice President Atiku Abubakar to meet with Gaon to resolve

  his alleged ownership claim, something which Nicon Insurance denied explicitly. Gaon's petition to

  Atiku Abubakar, cataloguing the injustice done him by Nicon Insurance were referred to me, and two

  of the VP's aides including his Special Assistant, Economic Matters and former secretary of PIMCO,

  Dr. Ajuji Ahmed, came to the meeting uninvited, on a 'watching brief' so to say. Within the BPE, our

  minds were open to logic and evidence of ownership. Even if Gaon owned 25%, we still had 75% to

  sell; as long as there were no provisions for pre-emptive rights exercisable by existing shareholders,