Northern Nigerian Breaking News

How Kano awarded contracts of over N1bn to inactive companies

By Lukman Abdulmalik

In 2020, in a report obtained from the ministry of finance and economic development, Kano state, it was recorded the state government awarded over one billion Naira to 224 contracting companies to execute different projects in the state. However, this investigation will focus on 6 selected contracting companies, who received a total amount of N314, 686,571.821 million.

This reporter commissioned Nasara Professional and Consultancy Services, a Financial Consulting firm to conduct a corporate search on the status of the 224 companies that were awarded various contracts by the Kano state government.

After a series of the company’s status screenings on the Corporate Affairs Commission portal, it was discovered that out of 224 contracting companies, 110 were inactive, 56 were unregistered, and only 5 were active.

The awarded contracts were for school constructions and establishment, classroom and hospital renovations, empowerment, and constituency projects in Kano state.

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The project’s funds were paid to inactive, unregistered, and also personal accounts.

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However, despite most of these projects having been executed, while others were shabbily constructed, the awarded of contracts to inactive companies contravenes the Companies and Allied Matters Act, 2020.

The CAC describes an inactive company as “a registered entity that has not filed its annual returns up to date.” this contravenes sections 417 – 424 of the Companies and Allied Matters Act, 2020, which states that “every company must make and deliver their annual returns to the CAC every year.”

According to the rules and regulations of the Corporate Affairs Commission, inactive companies are legal entities that have failed to comply with sections 417 – 424 of the Companies and Allied Matters Act, 2020, in filing their annual returns with the Commission. Section 417 of the Act requires “every company shall, once at least in every year, make and deliver to the Commission an annual return in the form, and containing the matters specified in sections 418, 419 or 420 as may be applicable.”

This reporter learned that some of the payments made to these inactive and unregistered companies are outstanding payments of the contractors.

An unregistered company delivers equipment, left to decay at Getso Cottage Hospital

In 2020, the sum N73, 830,403.14 million was awarded to SMK project Nigeria Limited, an unregistered company registered on 30 Aug 2007, and was incorporated in Kano, with RC706190, to deliver hospital equipment in Getso Cottage Hospital.

A visit to the facility by our correspondent observed on 30th November 2022, confirmed that equipment was delivered, which include; the theater bed, admission bed, anesthetic machine, ventilator, surgical light, and pressure cooker.

Status of SMK on the CAC Search portal

Equipment delivered by unregistered company PC: Lukman Abdulmalik

But despite the availability of the equipment at Getso Cottage Hospital, there are no professional doctors to operate the equipment as they have been left to decay.

Around 11:00 am, patients were trooping into the hospital with their babies, while others were patients themselves. However, the hospital climate was not as busy with doctors, nurses, and other medical professionals as in other hospitals.

This reporter visited the hospital and observed that only one doctor was attending to patients while another staff was non-medical personnel.

Rufai Muhammad Sani, in charge of Getso Cottage Hospital, bitterly complained that the hospital lacks manpower despite the hospital theater being equipped, but there’re no lab scientists and other paramedical staff to operate them.

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“The hospital lacks proper landscaping; this causes potholes, leading to uneven movement in the hospital environment. We also lack reticulation of water, which is causing challenges, most especially when it comes to its usage on medical grounds; the borehole was dug outside the hospital vicinity,” Sani said.

However, the award of supplying equipment to Getso Cottage Hospital to SMK projects Nigeria Limited,  by the Kano state ministry of education, contravenes section 16 of the Public Procurement Acts under the title: ‘Fundamental principles for procurements’ which spells out these requirements: “All bidders in addition to requirements contained in any solicitation documents shall: have fulfilled all its obligations to pay taxes, pensions, and social security contributions; not have any director who has been convicted in any country for any criminal offense relating to fraud or financial impropriety or criminal misrepresentation or falsification of facts relating to any matter,” section 16 (6) (d) (e) of the act read.

However, the BPP warned that “any false declaration and submission could lead to prosecution, debarment, and disqualification for 10 years from public procurement in line with the provision of section 58 of PPA, 2007.”

GGSIS students suffer learning after contractors executed shabby works

The Government Girls Senior Islamic School (GGSIS) was introduced and established by the former Kano state governor, Rabiu Musa Kwankwaso.

During his administration in 2013, millions of Naira were allocated for the establishment of the SIS schools.

However, the administration also spent a huge amount of money on the upgrading and completion of the schools.

A visit to GGSIS in Bunkure town by this reporter observed that the establishment of the school was not completed as the school lacks electrical appliances, water reticulation, security fence, furniture, and educational instructional materials.

Wide range view of SIS, Bunkure PC: Lukman Abdulmalik

“Lack of these structures has developed unfavorable learning conditions for the students; as for the teachers, the lack of the green boards in the school makes learning difficult for many students,” a school teacher laments.

Amina Mustapha, a student of GGSIS revealed that the project has been abandoned for about a year, “we have been studying on benches, which is uncomfortable to us, causing back aches. The school lacks electrical appliances and also instructional materials, most times our teachers found it hard to illustrate practicals to us, and this has also affected our level of understanding.”

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These irregularities occurred after awarding the contract of N101,752,235.77 million to ARMTECH Consult Limited, an inactive company to complete the GGSIS project in Bunkure.

Status of ARMTECH Consult Limited

The ARMTECH Consult Limited was registered on 3rd January 2014, with the RC1163006, the physical location was supposed to be at number 206, off Zoo Road by New Standard College, Kano.

Tracking the location, this reporter discovered that no contracting company of such name exists in that location.

Just like SMK projects Nigeria Limited, the award of the contract to ARMTECH Consult Limited, an inactive company, contravenes section 16 (6) (d) (e) of the PPA titled ‘fundamental principles for procurements.’ This also contravenes sections 417 – 424 of the Companies and Allied Matters Act, 2020, titled ‘Annual Returns.’

Not only at Bunkure, but similarly, in Madobi Local Government the upgrade of GGSIS Madobi was awarded to Bukar Makoda and Sons LTD, a private unlimited company and also an inactive company that was incorporated on 20 January 1988.

The status of the company as revealed by CAC displayed Bukar Makoda and Sons Ltd as an inactive company while its status of operations remains unknown.

The company constructed the GGSIS Madobi in an open environment with no security walls. The lack of security fence has led to vandalism of some of the school properties.

Pictorial view of GGSIS, Madobi PC: Lukman Abdulmalik

Just from the outside alone, you can tell that the school environment is conducive to learning. Although it is a public school, the environment looks appealing to the pupils and their teachers.

In Madobi town, it was confirmed by this reporter that the establishment of the GGSIS project was already awarded and completed by the previous government.

Status view of Bukar Makoda and Sons Ltd

In an interview with Alhaji Bukar Makoda, the Director of Bukar Makoda and Sons Ltd, on his company’s status prior to the award of the contract, he revealed that “My Company has been active during the award of the contract. The establishment of GGSIS was awarded to the former governor of Kano state, Rabiu Musa Kwankwaso.

“The contract amounted to over N100 million, which I can’t recall the exact amount. My company has executed the project 100%, but currently, the company is inactive,” he said.

Makoda was awarded the contract for the establishment of GGSIS Madobi by the present government in 2020 to the tune of N38, 835,999.80 million.

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He however said “The amount I received was part of my outstanding balance of the project. However, I still owe the Kano state government about N50 million outstanding balances.”

Although the record at the Corporate Affairs Commission (CAC) described UYK Nigeria Limited, that handled the project of establishing GGSIS in Kunchi LGA, Kano at a sum of 33,335,281.24 million awarded by Kano state Ministry of Education, inactive company, but in actual fact the company is very active and situated at 1B Ungoggo Road, Bompai Rd, GRA, Kano.

The company is one of the leading contractors of TETFund.

This reporter observed that most contractors provided the wrong address to secure contracts from the government.

A contractor executed a shabby project in Kibiya

In 2020, a contract was awarded to Umarawa Nigeria Limited to rehabilitate Kibiya Sharia Court at the cost of N15,746,572.39 million.

While on the cause of this investigation, staff at Kibiya Sharia Court confirmed that the renovation took place.

This reporter observed that despite the renovation of the court, the court wall has started cracking while the roofing is also falling apart.

Current situation of Kibiya Sharia Court after renovation PC: Lukman Abdulmalik.

The address provided by Umarawa Nigeria Limited was No 56/57 Fagge Ta Kudu, Kano state; an effort by this reporter to locate the office was not fruitful as the area is a very busy popular textile market (Kantin Kwari).

A further investigation led to interviewing Dahiru Muhmmad, a businessman and also an elder in the Kantin Kwari market by Fagge Ta Kudu since 1973.

He said: “For over 40 years that I have been in this market, I have never heard of any contractor called Umarawa Nigeria Ltd.”

The status view of Umarawa Nigeria Ltd on the CAC portal remains unregistered

“The major businesses that operate in this market are textiles, shoes, steel, caps, and accessories,” he added.

Mohammad was introduced to this reporter by famous textile traders due to his constant and persistent inquiries to locate Umarawa at Kantin Kwari Market.

Security threats at Technical College Tofa

At Tofa LGA Kano, the establishment of the Technical College was duly executed.

However, some parts of the school’s roofing started uprooting after Bilu Ventures LTD executed the project at a sum of N51,186,079.48 million.

GTC Tofa. PC: Lukman Abdulmalik.

Bilu Venture LTD was incorporated in Kano on 15 July 1988 with registration number 115710.

The current status of the company is inactive.

Tracing the company’s registered office address at No.79, Tafawa Balewa road, Kano was two days of hard work for the reporter, even at that efforts were extended to various social media platforms….yet, no traces of Bilu Venture.

Despite establishing an edifice structure at Government Technical College Tofa, only 4 classrooms were occupied by students.

A background check revealed that Tofa Technical College has over 400 students.

Carrying out further investigation, this reporter spotted some students sitting on the bare floor, others on furniture provided by UBE, and some learning under hazardous roofing with stems of guinea corn.

Some students of GTC Tofa learn in unhealthy classrooms. PC: Lukman Abdulmalik.

While interacting with some staff of the school, they were quick to reveal that the lack of fencing in the school is causing a big security threat to them.

“The community members usually occupied some parts of the school land, claiming it’s their fatherland. Also, the school lacks motorized water, and due to that our toilets are non-functional. Some of the classroom roofing have been uprooted by a thunder strike, therefore we seek government intervention,” one of the staff said.

Giving an expert opinion on why roofing gets uprooted, Alhassan Sani, a civil engineer at ASAD Construction Company, Kumbotso said: “Most times bad roofing results due to low-quality materials or shabby works.

“Conditions that lead to roof uprooting include critters downspouts/gutters, improper installations, improper base flashing, improper roof design, and others.

“Such buildings are uninhabitable for students because dust can penetrate through the open roofs, which is detrimental to the pupils’ health.

“Also, at any time if there’s an occurrence of a wind storm it can extirpate and cause serious injuries to the students learning under those classrooms.”

Legally, awarding a contract to Bilu Ventures Ltd is a violation of the BPP under section 16 and also sections 417 – 424 of the Companies and Allied Matters Act, 2020 in filing its annual returns with the commission.

The Kano State Public Procurement Bureau reacted that “we don’t ask for contractors’ annual returns, our agency only requires contractor’s CAC number and Tax identification number for clearance, in order to secure contracts.”

CAC Position

Under the Corporate Affairs Commission (CAC), an inactive company is a legal entity that has not complied with sections 417 – 424 of the Companies and Allied Matters Act, 2020 in filing its annual returns with the commission. Section 417 of the Act dictates that every company must make and deliver its annual returns to the CAC every year.

However, lawyers have made the point that the CAC does fail to update the status of some companies that are up to date with their filings and that such entities cannot be held liable for the commission’s inadequacy.

The Public Procurement Act, 2007 states that: “A bidder may have its bid or tender excluded if the bidder is in arrears regarding payment of due taxes, charges, pensions or social insurance contributions unless such bidders have obtained a lawful permit in respect to allowance, the difference of such outstanding payments or payment thereof in installments.”

Therefore, awarding contracts to ARMTECH Consult Limited, SMK projects Nigeria Limited, Bilu Ventures LTD, UYK Nigeria Limited, Bukar Makoda and Sons Ltd, and Umarawa Nigeria Ltd, is a contravention of the Public Procurement Act 2007. Section 58 of the PPA makes it an offense with offenders liable to five or 10 years imprisonment for awarding contracts without due process and in line with the law.

CAC Directive to erring members

The Registrar General of the Corporate Affairs Commission (CAC), Alhaji Garba Abubakar, said the Companies and Allied Matters Act [CAMA 2020] permits the commission to deregister companies that have been inactive for 10 years.

The Registrar disclosed that many registered companies have been declared inactive for their failure to abide by the Commission’s directives.

He said CAC has provided the operational status of all registered companies on its website, whether active or inactive. Inactive companies that wish to delist themselves from the CAC website shall be free to do so. All inactive companies will be deregistered after 10 years. See Daily Trust of 18 Jan. 2021

Implication for Kano State

Awarding contracts to unverified, inactive, and unregistered companies negates Section 16 of the Public Procurement Act 2007.

Apart from violating procurement laws, the shoddy handling of projects by inactive or unregistered companies may undermine and wipe out gains recorded toward achieving Goals 3 and 4 of the Sustainable Development Goals (SDG) of the United Nations.

Goal 3 stipulates that, by 2030, nations should ensure access to healthy lives and promote well-being for all at all ages. Ensuring healthy lives and promoting well-being at all ages is essential to sustainable development.

According to UNICEF, poor access to good health in Nigeria is still alarming and contributes to mortality and morbidity in children.

While Goal 4, is to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all. According to UNICEF, no fewer than 70 percent of Nigerian children are suffering from learning poverty.

The ambition to achieve SDG 3 and 4 by 2030 for Nigeria is a high one, and the World Bank has estimated that the country needs a 1.7 percent allocation from its Gross Domestic Product to meet the target. Awarding contracts to unknown companies may forfeit the little funding currently committed to achieving these goals.

Ministries keep mum on FoI Act

On 7th December 2022, a Freedom of Information (FoI) request was sent to the Kano Ministry of Education and the State Ministry of Health seeking clarification concerning this investigation.

Kano Ministry of health and education PC: Lukman Abdulmalik

However, despite waiting for feedback from the ministries as provided by the FoI ACT under sections 2(3) and (4), the ministries are yet to respond.

Acknowledged copies of the FoI requests sent to the Ministries

This publication is produced with support from the Wole Soyinka Centre for Investigative Journalism (WSCIJ) under the Collaborative Media Engagement for Development Inclusivity and Accountability Project (CMEDIA) funded by the MacArthur Foundation.

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