The Nigerian Ports Authority (NPA) on Friday dared former Vice President Atiku Abubakar’s Integrated and Logistics Services (INTELS) to seek legal redress if it considers the revocation of its contract with the government agency as legally unsustainable.
The contract had existed for 17 years, but was terminated by the NPA on October 10,following a September 27, 2017 legal advice by the Attorney General of the Federation and Minister of Justice, Abubakar Malami SAN.
The company had, in reaction, faulted the NPA decision, noting that it was unilateral.
The revocation is largely believed to have political undertones as the former Vice President, a veteran presidential aspirant, is believed to be interested in contesting for the office in 2019, although he is a senior member of the ruling party, the All Progressives Congress (APC).
His political ambition will surely pit him against incumbent President Muhammadu Buhari who is entitled to seek a second term in office.
A statement on Friday by the General Manager, Corporate and Strategic Communications of the NPA, Abdullahi Goje, declared that the revocation was in line with the 1999 Constitution.
Under the contract, INTELS was charged with receiving payments from shipping companies on behalf of the Federal Government for a commission of 28 percent.
The agreement, according to the Justice Minister, is contrary to sections 80 and 162 of the constitution which stipulate that all revenues accruable to the federation should be paid into a federation account.
The ports authority said that its decision was in line with the constitution, adding however that if the company was dissatisfied it could go to court.
The statement, entitled: “INTELS: We acted in accordance with the Constitution,” reads:
“The Nigerian Ports Authority is compelled to issue this statement in reaction to questions raised by the general public on the threat by our erstwhile agents, Intels Nigeria Limited, to fight the recent termination its boats pilotage monitoring and supervision agreement.
“To start with, we must inform our stakeholders and the general public that the Authority relied on the advice of the Attorney General of the Federation (AGF) and Minister of Justice, in arriving at the decision to terminate the contract.
“This legal advice was sought after more than one year of attempts to get Intels to comply with the Federal Government’s directive on the Treasury Single Account (TSA)
The first such correspondence was through a letter written by the former Executive Director, Finance and Administration, Mr. Olumide Oduntan on June 28, 2016 directing the company to pay all revenues collected on behalf of the NPA into the TSA sub account at the CBN.
“All further attempts by the Authority to get the company obey this directive was met with various excuses until the Authority wrote to seek the AGF’s legal advise on how to proceed with the NPA/Intels relationship in a letter dated May 31, 2017.
“The legal advice contained in a September 27, 2017 letter addressed to the Managing Director of the Authority, Hajia Hadiza Bala Usman, by the Attorney General of the Federation (AGF) and Minister of Justice, Mallam Abubakar Malami (SAN) expressly stated as follows : “For the avoidance of doubt, the agreement for the monitoring and supervision of pilotage districts in the Exclusive Economic Zone of Nigeria on terms inter alia that permits Intels to receive revenue generated in each pilotage district from service boat operations in consideration for 28% of total revenue as commission to Intels is void, being a contract ex facie illegal as formed for permitting Intels to receive federal government revenue contrary to the express provisions of Sections 80(1) and 162(1) and (10) of the 1999 Constitution of the Federal Republic of Nigeria (as amended), which mandates that such revenue must be paid into the Federation Account/Consolidated Revenue Fund.
“In the premise of the above, the conflict between the agreement and the TSA policy presents a force majeure event under the agreement, and NPA should forthwith commence the process of issuing the relevant notices to Intels exiting the agreement which indeed was void ab initio.”
“As a responsible agency of the Federal Government, the Authority, therefore proceeded to act as advised, which is to terminate the contract forthwith.
“The Authority has taken note of threats by Intels to withdraw its investment plans in Nigeria and must point that business thrives in favour of everyone involved only when the laws of the country of operation are adhered to. No organisation is above the Nigerian constitution and it is only when all corporate entities obey the laws of the country that everyone benefits. There must be a level playing field for all players in the sector and this is the commitment of the Authority.
“However, the Authority respects the right of Intels and all other corporate entities in Nigeria to explore opportunities presented by the courts to enforce their rights in as much as the Authority is confident of the correctness of the step that it has taken.
“The board and management of the NPA is committed to serving the best interest of Nigeria at all times and this is what has happened in the case under discussion.”
But Intels, in a statement on Wednesday, disclosed that following the letter from the Mr. Malami, directing NPA to terminate the pilotage agreement, NPA promptly ended the contract on October 10, without inviting it as the other party to the agreement for negotiation.
It also alleged that the NPA acted without due recourse to the terms of the agreement that specify conditions precedent before a party can exit the contract.
Based on the directive, Intels stands to lose several millions of dollars in commissions for the monitoring and supervision pilotage services it handles on behalf of NPA on Nigerian coastal waters.
Mr. Malami, in the letter, made it expressly clear that the agreement violated Sections 80(1) and 162(1) and (10) of the constitution, and wondered that both NPA and Intels did not avert their minds to the relevant provisions when they were negotiating the agreement in 2010.
But in its reaction last week, Intels described the NPA action as “clearly preposterous and the consequences highly injurious” to the interests of Nigeria.
In a letter signed by one of its Directors, Silvano Bellinato, INTELS said that the action by NPA would force it to reconsider its multi-billion dollar investment at the Badagry deep seaport in Lagos, adding that the investment would have created thousands of direct and indirect jobs for Nigerians.
It explained that it had invested too much in the country and if the Nigerian government was not prepared to respect the sanctity of its contract, it would resort to the courts to challenge NPA’s action.
According to the company, the NPA’s failure to address its concern shall lead to arbitration.
The company also alleged that the NPA was indebted to it to the tune of hundreds of millions of dollars.
“Nigerian Ports Authority (NPA) acknowledged a debt towards Intels Nigeria Limited (INL) in the sum of 674,767,415.00 US$ (in addition to the interests accrued in the meantime),” it said.
“NPA communicated the need to reconcile the sum of 109,000,000.00 US$ for the additional works carried out; NPA informed INL about the implementation to be discussed in respect of a ‘transit account’ called NPA service boat revenue collection account domiciled at one of the banks indicated by you and the related standard operating procedures (SOP); NPA confirmed 28% agency commission to INL and the 72% balance to be shared between NPA and INL in the ratio 30:70.
It stated further: “On March 27th 2017, we replied to every point in your letter of 15th March as stated below: INL took note of NPA’s acknowledgement of debt; INL declared availability to meet NPA in order to discuss the details for the certification of the 109,000,000.00 US$ for the additional works carried out.
“INL requested for postponement of the SOP application. On April 19th 2017, NPA acknowledged our acceptance of NPA’s proposal in respect of 28% agency commission (already included in the existing running Agency Agreement) and in particular to the 30% – 70% split, respectively to NPA and INL, related to the 72% balance. This would imply that the 30% is to be remitted on a monthly basis to NPA while the 70% is to be applied towards reducing the indebtedness to INL.
“Regarding the TSA application, NPA reiterated the strategic importance of such a request. However it is noted that TSA was not part of the existing agency agreement between the parties.”
Meanwhile, the company said that on May 5, it replied NPA’s letter of April 19 proposing the opening of a jointly signed account between INL and NPA in which the boat service revenues would have been directed.
Bellinato explained that: “Afterwards the account holders, with relative proxies, would remit the respective portions due to the parties, being 30% in favour of NPA and 70% in favour of INL.
“In the same letter we indicated our availability to identify the bank, from among the ones indicated by NPA; regarding the reasons of our proposal we firmly reiterated the precariousness of our financial status, mainly attributable to the credits towards NPA and heavily financed by various credit institutions.
“Clearly, deduction of entitlements due to INL from collections under the Agreement, and payment of the balance into the designated NPA account for TSA purposes, would be in compliance with the TSA policy.”
The logistic firm also maintained that the decision by NPA to terminate the Agency Agreement, which was totally unexpected in consideration of the meetings held by the parties and exchange of letters, was clearly preposterous and the consequences highly injurious to the interests of the company.
“Hence, in compliance with the Article 12 of the Agency Agreement between the NPA and INL, we hereby request you to schedule a meeting within seven days from the date of this letter, in order to analyse the residual critical areas of our relationship and to agree, to the possible extent, on a common solution.
“Should this not happen, we hereby notify you that, in accordance with Article 13 of the Agreement, we will refer the matters to arbitration, in order to safeguard our company from the significant damages and other adverse consequences that may result from this rather unbecoming decision,” it said.