How N215billion Import Waiver Was Disbursed In 4 years, Mostly During ‘Night Visits To President’
A total N215 billion in import duty exemptions was granted in four years, between 2011 and May 2014 under the leadership of ex-President Goodluck Jonathan, PREMIUM TIMES can report today.
Most of the waiver deals, it was gathered, were sealed during midnight visits to the presidential villa.
Data obtained from the Budget Office of the Federation detail a fiscal policy recklessness that made duty waivers in Nigeria synonymous with cronyism, racketeering, political patronage and outright brigandage.
In 2011 the sum of N56 billion was issued by the Federal Government as waivers on import duties, levies, ECOWAS Trade Liberalisation Scheme (ETLS) charges, Comprehensive Import Scheme (CIS) and other charges.
The waiver beneficiaries included operators and individuals in the gas sector, agriculture, health, mines and steel and “other sectors”.
Whilst some of the waivers may have been well-meaning and granted for the purposes of stimulating local production, economic growth and job creation, the data, riddled with red flags, show that some of those who benefited did not deserve such concessions.
For instance, a steel company, Verod,was granted a fabulous N12.6 billion in waivers to import iron rods. In applying for the waiver, the only reason given by this company, owned by a foreign businessman, was “compassionate grounds”. Curiously this waiver was granted weeks before the 2011 presidential election.
In the agricultural sector, another company McSally Investment Limited received an equally staggering N21.1billion waivers to import 250,000 metric tons of vegetable oil.
That was at a time local producers of vegetable oil in Nigeria were swimming against the tide and begging for government protection against merchants flooding the market with imported oil. The indiscriminate issuance of waiver soon sounded the death knell for local manufacturers, including the Nigeria Oil Mills and the Kano Oil Mill which, unable to compete, sent thousands of workers away as they closed shop.
But if the perfidy in the 2011import waivers appear not too explicit in some areas, a cursory look at the “other sectors” soon begets a riveting attention as names and incongruous items combine in a clear defeat of the same economic policy the concessions were meant to promote.
Waivers were granted for the importation of Mercedes Benz cars; personal effects like refrigerators, tiles, marbles, beddings, sunglasses, chairs and cups.
Seizing the moment, the Rivers State Government under Mr. Rotimi Amaechi joined the frenzy and imported 200 units of luxury cars, including BMW Ford and other brands.
There was no agricultural machinery nor any economic enhancement tool in the Rivers’ import. The sum of N503.3 million in duty was not paid as a result of the waiver, thus there was no discouragement of any sort for state executives that chose to waste taxpayers’ sweats on luxury goods.
Inside the 2011 waiver document
In the 2011 waiver, N502 million was given to beneficiaries in the gas sector. A total of N4.6 billion went to the health sector; 9.1 billion to Mines & Steel; N21 billion to agriculture while N3 billion went to “other sectors”.
For the gas sector, the imports were generally plants, machinery, equipment and spare parts.
In this category waivers of values N7.8 billion went to Shell Petroleum Development Company Limited; N3.4 billion to Chevron Nigeria Limited and Frontier Oil Ltd while N502 million went to the Delta State Ministry of Energy for the import of “Machinery for Utilization of Natural Gas”.
For the health sector, concessions were given for the import of medical equipment, sola vaccine refrigerator, test kits, vaccines, malaria control drugs, anti-retroviral, cancer and tuberculosis drugs.
While Mines & Steel comprised imports of iron rods, machinery, equipment and spare parts, N1.9 billion was granted as waivers to Peugeot Automobile to bring into the country CKDs (Completely Knocked Down) and CBUs (Completely Built Up) engines.
PREMIUM TIMES gathered that CKD and CBU are some of the common areas of waiver abuses. Issuing import waiver on CKD to an automobile assembly plant could be justified in that CKD means that certain parts of the car are shipped to the country of sale where they will be assembled to form a complete car and in the process create or sustain local employment and possible skills transfer.
The same cannot be said of CBU, because completely finished products are brought in to be sold in Nigeria without duty payment and with the waiver going to France, in this case, to prevent job loss over there.
Moreover, quantities were not specified in the Peugeot waiver as the CKD and CBU were lumped together. This meant the beneficiary could choose to import 95 per cent CBU and only five per cent CKD.
The same Peugeot the following year received another waiver to bring in 1,134 units of CKD and CBU Peugeot Vehicle. The sum of N974.8 million in duties was not paid on account of the waiver.
The waivers given in 2011 to boost agriculture was even more disturbing for a nation that repeatedly mouthed diversification of its economy. A paltry N2 million was waived for the Federal Ministry of Agriculture and Rural Development to import one Hilux Toyota vehicle and 10 Yamaha motorcycles.
Meanwhile a whopping N21 billion was given to a private business, McSally Investment Limited, mentioned earlier, to import 250,000 metric tons of vegetable oil without paying duties, all to the detriment of local manufactures.
Only McSally and the Ministry of Agriculture received waivers that year in that sector.
Exasperated by the brazen abuses of the exemption regime and the emergence of what was obviously a waiver cartel, Finance Minister at the time, Ngozi Okonjo-Iweala played the unwitting whistleblower, denouncing in a moment of fit the activities of waiver seekers who usually come in the night to visit the President.
On September 22, 2011, Mrs. Okonjo Iweala said: “Those who usually go to see the President at night will no longer be allowed to do so. If they have any (waiver) proposal, it must be presented to the Economic Team.”
Waivers for private jets, helicopters and luxury automobiles
Nothing in the waiver list of the following year showed that the words of Okonjo Iweala, who was the head of the Economic Team, counted. The waiver for 2012 was higher than that of 2011 by about N7 Billion. A total of N68.8billion was granted as waivers.
The sum of N1.4 billion in waiver value went to beneficiaries in the agric sector; N1.6 billion to aviation; and N18.1 billion to the gas sector. The health sector received N5.9 billion; Mines & Steel got N36.6 million; Water Resources received N96.5 million while the Power sector received N3.1 billion. Sports and Other Sectors received the largest waiver, N24.3 billion.
The 2012 waiver list shows that the Akwa Ibom State government, under Mr. Godswill Akpabio who is now a serving Senator, received waiver to purchase a G450 5N 4241 Aircraft. The economic necessity for the aircraft was not stated. This particular acquisition attracted an import duty of N271.3million but was not paid in view of the waiver.
Similarly, the Taraba State government received waiver to buy a Bell 407 Helicopter. The import duty on the helicopter was N13.1million. In October of the same year, Mr. Suntai unfortunately was involved with another aircraft owned by the Taraba State government, this time a Cessna 208 5N-BMJ which crashed on a flight from Jalingo to Yola.
In 2013 former governor of Rivers State, Rotimi Amaechi, now Minister of Transport, got waivers to buy one Bombardier aircraft Global Vision 5,000 series and two Bell 412 Axis Helicopters. The three items attracted a total import duties of N2.2billion but this was waived off by Customs.
Year after year, virtually everyone with access to the corridor of power did their best to take advantage of the waiver regime of the President Jonathan government. Like the fuel subsidy scandal and the rice import quota bazaar, duty waivers became a byword for easy money.
In June 2016, the Senate Ad hoc Committee on Import Duty Waivers, Concessions and Grants announced it had uncovered fraud in the administration of import duty waivers on rice, sugar, other foods items and automobiles.
The committee in its report named frontline companies including Dangote Limited, Kersuk Farms, Bua Group, Elephant Group, Milan Group and Golden Penny. It also named specific government agencies such as the Ministry of Finance, Nigeria Customs Service (NCS), Ministry of Industry, Trade and Investment, Nigeria Export Promotion Council (NPC), Ministry of Agriculture and Rural Development and Federal Inland Revenue Service as complicit in waiver racketeering.
Waivers for personal cars and effects
The Customs and Excise Management Act prescribes that some imported goods could be granted duty exemptions if they are meant to boost local manufacturing of goods for export. To this end agricultural implements, and machineries for key sectors like Water Resources, Steel, Gas and Aviation are usually exempted from duty. It remains puzzling how this Act was interpreted to justify waivers granted government officials to import cars and personal effects.
Just like those for 2014, waivers granted between 2011 and 2013 were littered with cars and personal effects imported at zero-duty by unnamed officials of the Ministry of Aviation and Ministry of Foreign Affairs. These personal imports were different from those made specifically by Ministries, Departments or Agencies. Individual officials curiously obtained waivers to import “Mercedes Benz and personal effects”, “Honda car and personal effects”, “Toyota Verso and personal effects”, “Hyundai Tuscan and personal effects” and “Toyota RAV4 and personal effects”.
Also listed as personal items imported by government officials were “Nissan Car and personal effects”, 4 Runner Toyota car, Nissan Pathfinder, Mitsubishi Car, Toyota Camry, Furniture, Toyota Corolla, Mercedes Benz GL 450 and personal effects, Mercedes Benz A170, Honda Accord, Toyota Sienna and personal effects, and Ford Edge vehicle. None of these were specified as official use.
The Lagos State government, under Babatunde Fashola, soon joined the fray, importing in 2012 300 units of BMW, Ford, Land Rover, Range Rover, Lexus, Mercedes and Jaguar. For Lagos State however, it was explained that the automobiles were for the 18th National Sports Festival. A total of N772 million in duty was waived.
The Budget Office data show that in 2013 a total of N64.9billion was conceded as waivers by the federal government. N3.5 billion was exemptions in the agriculture sector, N2.5 billion to aviation, N18.5 billion to the gas sector and N12.4 billion to health.
The mines sector received N595.4 million, water sector NN457.3 million while the power sector got N4.4 billion. A total of N22.7 billion went to “other sectors”.
In addition to the regular items in all the sectors imported every year, the waivers for 2013 were distinguished by the importations of 6,069 metric tonnes of rice seeds from Kenya, Burkina Faso and Congo by the federal ministry of agriculture and rural development; pineapple seedlings by the Enugu State government; 2 Bell 206 LIV Helicopters by the Nigeria College of Aviation, Zaria; Air Shuttle2006B Model Eurocoper AS-355N by OAS Helicopters Lagos; plastic drums by the Nigeria National Petroleum Cooperation (NNPC); 26-foot Mobile Clinic by the Abia State government; 404,656 pieces of CKD furniture for primary schools in Imo State; and banknotes, substrates, coins, minting coins, and machineries for banknotes and coin production by the Nigeria Security & Printing Plc.
Although available records show that waivers were issued in 2014 for only five months between January and May, the frequency of the concessions were such that the waiver value swelled to a sizeable N25.8billion.