By Tayo  Odunlami

Forwarded by Omoyele Sowore

In a crowd of the physically endowed, Nasir el-Rufai, erstwhile Director-General of the Bureau of Public Enterprises, BPE, and incumbent Minister of the Federal Capital Territory, will be as conspicuous as the squirrel is in the Animal Kingdom. Barely five foot six and so frail of frame, el-Rufai is, however, adequately compensated upstairs with outstanding intellect and generally, with a constitution so steely it sometimes borders on arrogance.

On 18 March 2003, that latter quality surged to the fore and literally tore to shreds a vital document that could well have saved the nation the sum of N100 billion lost to a most dubious management contract. The message in the document, from Dr. Haliru Bello, then Minister of Communications and titled, “NITEL Management Contract Signing Ceremony,” was terse but instructively frank. “In view of the prevailing circumstances surrounding the Management Contract,” it read, “you are advised to halt the signing ceremony scheduled for today, 18th March 2003, until further notice.” The letter was signed by Engineer G.O Asiegbu, permanent secretary of the Communications Ministry for the minister.

Inside the Congress Hall of the Transcorp Hilton Hotel, Abuja, where the signing ceremony was holding, Dr. Anaze Chinwuba, then chairman of the NITEL Board of Directors, who received the message, drew el-Rufai’s attention to it. But, as Chinwuba told a two-day public hearing organized in February 2005 by the House of Representatives Committee on Communication on the management contract, el-Rufai flew off the handle when he saw the directive to stop the signing. According to Chinwuba, the FCT minister retorted that he would not take directives from permanent secretaries, as he was also one.

With that arrogant disposition and some strokes of the pen, the BPE committed the Nigerian Telecommunications Limited, NITEL, into the hands of a hangman. As el-Rufai himself told the hearing, he was already fixated on giving away the management of NITEL to Pentascope International, an emergency vehicle that was later discovered to be unqualified in all ramifications, to manage the parastatal.

If he would be believed, he was doing it innocently. The Minister’s excuse was his infuriation at the couple of delays that the signing of the contract had suffered, and he was eager to prise the operations of ailing NITEL away from the leprous fingers of the public service and place them in the competent, reliable grasp of a private manager. In his judgement and that of PriceWaterhouseCoopers, PWC, BPE’s Adviser, that manager was Pentascope. 

How competent, honest and reliable Pentascope was would manifest within a year after it sank its teeth into NITEL. Between April 2003 and March 2004, Pentascope had squandered a gain of N15 billion which it inherited to record a loss of N19.15 billion. Turnover had also dropped to N41 billion from N53 billion. Even as revenue generation was taking a flight, el-Rufai’s brilliant managers were redefining prudence, as direct cost and overheads spiralled from N21.3 billion and N19.4 billion respectively, to N26.3 billion and N30 billion.

Pentascope’s performance could not have been otherwise, considering its unimpressive financial, managerial and professional pedigree. The Dutch firm was only three months old when the BPE advertised for Expressions of Interest to manage NITEL. A small consulting company, rather than an active telecoms operator, Pentascope was registered on, of all days, 1 January 2002, which was a public holiday worldwide, with a workforce of only eight persons, including its janitor.

It was not even registered in Nigeria to do business, as required by the Companies and Allied Matters Act. Both Professor Augustine Odinma, internationally renowned telecoms consultant, and the House of Representatives Communications Committee wondered how Pentascope got to be favoured by PWC and the BPE as the management contractor for NITEL, as the firm did not meet any of the criteria the Bureau listed in its advertisement. The pre-qualification criteria demanded that “Interested managers MUST be international telecommunications operators and MUST demonstrate, one, evidence of having installed and managed at least a million telephones; two, a successful track record of expanding a telecommunications network in a developing country; and three, sufficient management resources to grow NITEL and enhance shareholder value.

Unless the advertisement was sheer window dressing, what the BPE set out to do was unambiguous. It was looking for a telecoms operator of international standing, with outstanding track records. From the beginning, the BPE appreciated that “for any telecoms operator to be qualified to manage NITEL, it must demonstrate that it possesses the above mentioned criteria,” as noted by the House committee.

Clearly, Pentascope did not meet any of the requirements. At the hearing, the BPE and PWC engaged in buck-passing on who gave the Dutch firm the clean health bill that secured it the NITEL deal. Under oath at the public hearing, the Managing Director of PWC, Mr. Ken Igbokwe said services of the consulting firm to the BPE were restricted to financial advisory. But el-Rufai clarified that the PWC was involved in the entire selection process. PWC, it was, that assisted the BPE in evaluating and short listing the initial 14 companies that applied to nine. The two bodies subsequently invited the nine companies to submit managerial, technical and financial bids. Of the nine, four were disqualified.

After a purported due diligence process and review of the five bids, PWC narrowed the list down to three. These are African Access/Lucent, which demanded $230 million to turn NITEL around and was awarded 56.8 points; BNSL/TCIL, which charged $35 million to do the job for three years and was scored 71.5 points; and Pentascope, which charged $45 million to execute the contract over the same period and was given 75.5 points. Pentascope’s high scores were hinged mainly on one factor: It claimed a working agreement with KPN, the Netherlands leading telecoms company. During evaluation, PWC and the BPE would be expected to have conducted extensive investigations of Pentascope’s claims and verification of the documents it submitted. To hoodwink stakeholders, especially the NITEL board of directors and the National Council on Privatization, NCP, before the management contract was signed, the two buddies (BPE and PWC) submitted that Pentascope was, until 2002, owned by KPN. “Pentascope,” PWC and BPE told the NITEL board and the NCP, “had provided evidence of KPN’s commitment to continue to provide them with support and technical assistance as required.”

However, as was later exposed, these claims were gross misrepresentations willfully fabricated to mislead the NITEL board, the NCP, the federal government and inquisitive stakeholders. Pentascope was never owned by KPN. On the contrary, the former was only a supplier to the latter. Odinma, who consults for the House Communication Committee and whose dogged probing unearthed some of the malpractices that attended the Pentascope scam, explained that the firm, being a “type II consultant, is a stand-alone company, with limited consultancy skills and liability.” Interpreted, Pentascope is unsuitable for full-scale management of large telecommunication companies like NITEL.

How PWC and the BPE did not knock off Pentascope’s claim at the evaluation stage, only officials of the two bodies can explain. At the public hearing in February last year, the House committee members and participants drilled PWC’s Igbokwe and

Nick Allen, one of the company’s directors, on the criteria that informed the choice of Pentascope as the preferred management contractor and on the authenticity of the documents it submitted for the evaluation. A member asked Igbokwe whether Pentascope, which PWC recommended, had ever installed a million lines in any developing country or has any track record of financial ability as strictly demanded by the PBE advert.

The PWC chief responded that applications were considered on the basis of consortium or technical partnership, rather than solo qualifications. PWC, Igbokwe said, believed that Pentascope was affiliated with KPN. Not satisfied with Igbokwe’s response, chairman of the hearing, Hon. Yemi Akodare, requested for clarification. He told Igbokwe: “Let me try and simplify this issue. The issue is that Pentascope International, which won the bid, is not a telecoms operator. It is a consulting firm. The first point that we actually wanted you to clear here is this. In this publication, we were looking for an International Telecommunications Operator, and when you talk of an International Telecommunications Operator, a consulting firm is here bidding. Do you see that consulting firm qualifying in the bid?” A flummoxed Igbokwe, rather than answer the question himself, beckoned on Allen to confront the legislators.

The PWC director stated that organizations that undertake telecommunications management contracts, whether in Africa or elsewhere, only need to be associated with large telecoms companies. He cited Pentascope as an example. “What we expected was the kind of organization that came forward. But we were looking for who was behind them, who they were affiliated with and also the capabilities of the people that they were putting forward,” Allen said. The legislators further stretched Igbokwe and Allen in the question-and-answer session.

Robot  # 1 | 13.03.2006 10:35

Here are the details of how former Director-General of the Bureau of Public Enterprises and Minister of the Federal Capital Territory, Mallam Nasir el-Rufai and PricewaterhouseCooper dubiously awarded the contract to manage NITEL to Pentascope International and made Nigeria to lose over N100 billion....Read the full article.

emj  # 2 | 13.03.2006 17:31

The Association of Telecommunication Companies of Nigeria under the leadership of late Engr Charles Alaba Joseph had at various forum proferred ways and means of managing Nitel by privatization. We have so many local private telecom operators who would have helped to save Nitel, the BPE refused to listen, el-rufai whether due to arrogance or impatience handed over the running of Nitel to an inexperienced dutch company. Nitel is a Telecommunication parastatal not a supermarket. We are not talking of bidding for a telecom license here. We are talking of a telecom organization that is in urgent need of re-engineering by experienced not necessarily large telecom carrier. Nitel can still function properly if we do away with a lot of the bureacratic crap that stunted growth.

Omo Eko  # 3 | 14.03.2006 03:40

Just as in the Jimmy Lawal's case, this guy El Rufai strikes me as a reckless individual and lacks compassion. Why are we being subtle, this guy has caused Nigeria 100 billion naira by his actions, in an ideal society he will be facing the grand jury. The other day, he gathered Abuja local government chairmen and tongue lashed them, my question is; is he their boss? of course not, but this is Nigeria, anything goes. As an appointee of the President, he does not have the constitutional mandate to behave the way he does. Abuja is not a state and El Rufai is not an elected governor, he can not even query a councillor, how much more remove an Abuja monarch. But the people concerned does not know this. My fear is that in our quest for change, we should be careful what we ask for, if El Rufai is the hidden protege that Obasanjo wants to foister on Nigeria, I dare say that our worst days are indeed ahead of us.

Odinaka  # 4 | 16.03.2006 12:31

Can someone educate me on the scope of EFCC's activities? Can they investigate/wade into this scam as well or...?

jimyus  # 5 | 18.03.2006 10:52

I personally do not know the scope of EFCC but i do know that they get there job description from the presidency. The EFCC in conjunction with El Ruffai have so much power now that they are most feared in Nigeria. As far as the presidency is concern he (ie Rufai) is a no nonsense person that can deal with situations without fear or favour , regardless of who you are or what possition you have held before or currently.