SUMMARY OF A PRESENTATION BY MR. AYUBA DOGARA AYENEJEH, THE HONOURABLE COMMISSIONER OF FINANCE AND ECONOMIC DEVELOPMENT ON NIPDC AT A PRESS CONFERENCE IN LAFIA
gentlemen of the press, the purpose of this press conference is to update you on the reasons behind the winding up of Nasarawa Investment and Development Company (NIPDC).
You may be aware of a write – up title ‘Shameful Winding up of NIDC by Governor Umaru Tanko Al-makura and the conspiracy of NSHA; which is being currently circulated in the social media.
Ordinarily, the write – up deserves neither our attention nor our response, given the obvious lies put forward as facts and the feeble arguments put forward which are in themselves a proof of the ignorance and mischief of the author behind the write – up.
But this press conference has become necessary in view of the fact that when such baseless allegation fed to the unsuspecting public is allowed to go uncorrected, it might be mistaken for truth by those who are not abreast of the issue at stake.
2. The Writer’s Allegations
To be fair to the writer, he did point out some basic facts about the NIPDC. He noted that Nasarawa Investment and Mineral Development Company (NIMDC) was incorporated in March, 1997. And that when Nasarawa State was created the assets and liabilities of plateau State was shared between the two States in the ratio of 53:47. And when the sharing based on this ratio was concluded, the aggregate of investments and assets due to Nasarawa State then was #40 million. Subsequently, the NIPDC was incorporated in March, 2001, with an authorized share capital of #150 million.
Beyond these facts, however, the writer seems to know very little about the company, its legal entity and how it had been run without regard to rules and the consequences of such actions, which had now led to its winding up.
services in this knowledge gap, the writer portrayed NIPDC as a government parastatal rather than a limited liability company with the state government as only a shareholder. Then he went about wild, speculations, including insinuations that the governor, His Excellency Umaru Tanko Al-makura is interested in buying up properties of the company that is why he is closing it up.
3. The Legal Position Of The Company
To clear the ignorance about the legal position, it is necessary to briefly explain the real legal entity of the company as enshrined in the rules and regulations of the company Allied Matters Act, (CAMA) 1990.
(a) A limited liability company is an association of two or more persons carrying out business with the ultimate aim of making profit.
(b) The liability of its members are limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them.
(c) As from the date of incorporation, the subscriber of the memorandum together with such other persons as may be, from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the powers and functions of an incorporated company.
(d) it is worthy of note here that these powers and functions include the right to hold land and the right to perpetual succession and a common seal, but with such liability on the part of members to contribute to the assets of the company in the event of it being wind up.
4. The Legal Implications
From the above regulations as stipulated by CAMA it is quite clear that NIPDC is a limited liability company.
(a) It is a legal entity distinct from its members, with the powers to own land and movable properties, sue and be sued in its own name, and the powers to hire or fire, in case of non performance.
(b) Even though NIPDC may be hundred percent owned by the state government, it is not a Nasarawa State government parastatal, but a legal entity with its legal rights and financial autonomy. The government is only a shareholder.
(c) It is a private sector operation, which is purely a profit making business, a business to create wealth for the owners. It is to work closely with the private sector operators in order to promote economically viable industrial projects in the state, but not to be directly involved in business operation.
5. The Management’s Disregard For The Rules
Contrary to the well spelt out attributes of the company’s legal entity, however, its management had consistently operated without adherence to the rules.
(a) The management never bothered about carrying out the mandatory preparation of annual financial statements and submitting same to the shareholder, which the state government in this case, for her to know the annual performance of her investment. The company’s financial statement was last prepared and audited 12, 2013 against the statutory requirement of the law which stipulates that they should be prepared and submitted to the owners of the company annually.
(b) They went about carrying out activities that were not consistent with the company’s schedule. Rather than concentrating on wooing investors and developing properties they went into full scale business, thereby courting unnecessary risks.
(c) Examples of the misplacement of priority and none adherent to the rules in the establishment and running of Nasarawa Spring Water Nigeria Ltd and the direct operation of Nasarawa Conference Hotel Ltd. These are supposed to be managed by cored investors who will in turn share the profits with the company as dividends.
(d) The company also engaged in disposing their land banks which was supposed to be developed in collaboration with co-investors for the the investing public to acquire either for their business or residential purpose.
6. The Management’s Fraudulent Practices
Apart from the management’s failure to abide by the rules of public liability company which had led to many losses, its fraudulent deals have also contributed to the collapse of the company. A typical case is the Keffi Site and Services Scheme transaction.
(a) The company applied for #350 million loan facility from Unity Bank Plc to finance the project. And on approval one of the accounts of the company was converted for that purpose with a credit balance of #29,734.56. On the invariably accounted for the steady losses incurred by the hotel, which climaxed to over #210 million as at 31/12/2015.
(f) There was also wanton disregard to the rules of recruitment and staff discipline. There was a typical case of a staff whose appointment was earlier terminated for his services were no longer required, but was later reengaged on pensionable appoint in violation of the rules. The present administration had to sack that staff again. This was a case of double pensionable appointment contrary to both private and public service rules.
(g) It is against company ethics for the directors of a business organization to set up a parallel business to compete with company in which they serve. Some of the NIPDC management staff were active in this regard.
7. Consequences Of Non Adherence To The Rules
The consequence of all the unethical practices listed above were could be seen in the company’s gradual decline and the final collapse
(a) In a vain attempt to cover up the real problems, the social media write-up claimed that NIPDC was worth over #6 billion naira in asset, with a liability of less than #1.5 billion nairal, and should therefore not have been closed down.
But this is not the true profile of the company. Agreed, since inception in 1997, the company made a profit of #12,179,392 in 2011 and #4556,311 in 2012. Aside from 23/11/2017 the company (NIPDC Ltd) and Unity Bank PLC credited the Account with #3.5 million and #350 million. Then shortly after, the #3.5 million was immediately withdrawn by the accountant of the company for purpose (s) not stated.
(b) Out of the #267 million that was drawn by the company, #59 million was used for the purpose outside the Keffi Site and Service Scheme.
(c) There was also the case of the procurement of a parcel of land at Agyaragu measuring 0.095HA at the cost of #3.75 million contrary to the offer letter of the loan.
It is this facility that has grown to #899,556,068.58 as at 25/7/2017 as a result of non servicing of same accrued, interest and penalties on the account.
(d) While the finances of the company was being depleted by underhand deals, the management insisted the company staff must benefit from the state government’s minimum wage regime even though they had their salary structure known as Investment Salary Structure (ISS). This salary structure has nothing to do with the public service salary structure.
(e) In addition to the unrealistically heavy wages, the workforce was bloated due to random recruitment based on sentiment. For instance, the Investment Hotel, which had only 32 chalets, had a workforce of 47 workers. These, it hasn’t made any other profit, rather it has been operating at a loss. In fact, as at 31st December, 2015, the company and its subsidiaries, the Nasarawa Conference Hotel, recorded accumulative losses of #532,073,971.12, #150,191,937.00 and #46,333,781.00 respectively. And the downward trend continued unabated.
(b) The company’s liquidity position as at 2015, according to the financial statement, was #993,000 (less than one million naira).
(a) And as at the time of compiling this write – up, the company has a corporate liability of over #1.6 billion, apart from the staff entitlement of over #170 million that was graciously approved and released by the shareholder to alleviate the sufferings of company staff as part of the liquidation process.
8. Obvious Signs Of Decline
Even for those who have no access to this disturbing record of financial retrogression, there were visible signs everywhere indicating the downward slide, which actually began in 2008 and degenerated over time.
(a) For instance, the company had been consistently unable to meet its obligation of the mandatory filing of its annual returns with the corporate Affairs Commission (CAC). The penalty for this gross breach of business procedure is de-listing of the company by the CAC. In fact, it will not be surprising if the company is de-listed before the ongoing liquidation process is concluded. This invariably means that the company was already dead even before the state government / shareholder though of its closure.
(b) Another indication of the company’s comatose state is the sealing of the company’s headquarters and Conference Hotel by the Federal Inland Revenue (FIRS) for failure to remit taxes to the federal government as required by the Company Allied Matters Act, 1990. The notices pasted at the frontage of the premises, which have been there for years, are enough to tell any right thinking person that the company was gone and its closure was just a mere formality.
(c) Not only were the VATs collected over the years not remitted to the accounts of FIR, even the Pay As You Earn (PAYES) deducted from the staff salaries were not remitted to the Nasarawa State Board of Internal Revenue.
(d) And the most glaring sign that the company was no longer viable was its inability to pay staff salaries for many months. If a company cannot pay its staff salaries. How can it undertake other responsibilities that would ensure its growth and survival?
9. On The Government Bailout
In the writer’s myopic view, he talked about government financial intervention as an alternative to closure of the company. He forgot that NIPDC was a limited liability company and that by law it was supposed to be self-financing.
Of course, legally there are ways by which the government could have intervened if the company had not been hopelessly run down by its management over the years. For instance, government/shareholder could approve deposit for shares in anticipation of recapitalization. It could as well approved utilization of reserves after approval had been sought and obtained from the shareholder.
But how could the government, who is the shareholder, do these when there are no bases for such action. Or does the writer mean government / shareholder should channel the state’s hard earned and scarce resources into ventures that should have been self-sustaining but failed to do so?
With all the scenarios enumerated above, and in line with the legal position of NIPDC, one could say it is unfair, callous, deceptive and misleading for a few people who contributed in ruining the company to go on social media and accuse the government, led by His Excellency Umaru Tanko Al-makura, insinuating that the decision to close down the company was taken so as to acquire its.
Let me reiterate here that no reasonable government/shareholder who knows what it is doing would allow a dying company to continue to exist at the detriment of the vast majority when the assets of the company could be easily put to use in other profitable ventures for the benefit of all.
To this end, the shareholder/state government is currently working on the entitlement of the management staff; as soon as issues raised by the auditor and liquidator’s reports are sorted out, the entitlement will be considered.
The truth is that the action of any reasonable government is usually based on priority; promoting what will serve the common interest and needs of the people and doing away with aspects that constitute drawbacks. And this is exactly what informed the action of His Excellency Governor Umaru Tanko Al-makura as regards the closure of NIPDC.
Honourable Commissioner, Finance and Economic Development.