The House of Representatives, on Thursday, confirmed the recovery of over N17 billion missing revenue generated by some companies operating in the Free Trade Zone and currently domiciled with the Central Bank of Nigeria (CBN).
Chairman, House Committee on Public Accounts, Hon Oluwole Oke, disclosed this during exhaustive investigative hearing into the audit queries issued by the office of the Auditor General of the Federation (oAuGF) against Nigeria Export Processing Zones Authority (NEPZA) and other companies involved in the collection of statutory and operational fees on behalf of Nigerian Ports Authority (NPA) including Dangote.
While addressing the Acting Managing Director, Dangote Industries Free Zone, Mr Olayinka Akande, Hon Oke frowned at the spate of non-rendition of revenue collected on behalf of NPA into government’s coffers, despite numerous incentives accorded operators at the Free Zone.
He alleged that Dangote Industries Free Zone as a licensee of NEPZA also went ahead and licensed 17 other private Zone operators.
“The Auditor General of the Federation pursuant to section 85 of the Constitution of the Federal Republic of Nigeria laid its report before the parliament both the House and the Senate Committee on Public Accounts and in that report, the Auditor General raised queries on the activities of NEPZA.
“And in the process, this committee ordered status of inquiry based on the disclosure from NEPZA and of course, huge sums of money N17 billion-plus that were allegedly transferred to a company and we tried to lift the veil of incorporation.
“Initially we were told the company does not exist, but after some time the company surfaced. We got the details of the company, but we are happy to say that the N17 billion in question is safe and it’s with the CBN.
“But in the process, we ordered status of inquiry on NEPZA. NEPZA is one of the windows through which we seem to promote investments, grow our economy and attract foreign investors because of the benefits in the zone.
“But we observed that our projected gains are not being met, thus leading to loss of revenue, which the honourable Minister of Finance also attested to.
“That the reasons why we keep borrowing to finance our budget deficit is because we have revenue gap in the country. Auditor General in 2016, 2017 and 2018 had observed that five major bodies that are saddled with the responsibility of collecting funds into the Federation Account are not doing well, that they are not collecting what they are deemed to have collected.
“Specifically, the Auditor General listed Customs, listed FIRS, listed DPR, listed NNPC, listed Mining Cadastral Office; that the Parliament ought to have looked annual yearly projections by these agencies because over years it has dwindled.
“So the essence of this engagement Sir, is to confirm whether truly indeed we have leakages if they exist, how do we block them and if there are culprits that have undermined Nigeria how do we approve the sanctions recommended by the Auditor General? That is the essence of this engagement,” he said.
According to Hon. Oke, other licensees of NEPZA alleged that the payments of registration fees and annual renewal fees paid in dollars were paid to Dangote Industries Development Company which is one of the licensees.
On request for the evidence of payments to NEPZA, the companies disclosed that: “No look, we didn’t pay NEPZA, we paid to Dangote Industries Free Zone Development Authority, so we are worried that, that is what government rely on, haven given you tax holiday, some benefits.
“How come you are now paying another licensee? But because we do not hold exclusive knowledge, we have to invite Dangote Industry Free Zone to tell us their own side of the story,” Hon Oke noted.
He added that some of the companies registered under the Free Zone were discovered to be subsidiaries of some companies operating within the Customs territory and also registered under another scheme – Oil and Gas Free Zone in Onne.
“Is it lawful for a company to double-deal? Is it lawful for a company to enjoy some provisions within NEPZA zone and at the same time under Oil and Gas Free Zone? Is it lawful for a company to exit one scheme and enter another scheme and perpetually not paying a dime in form of taxes to the government as we discovered in the case of ASCON a company registered in 1989 and from 1989 to 2021 they have not paid N1 o the coffers of Federal Government, and Aluminum Smelter Company in Orom in Akwa Ibom State. They appeared and told us they were exiting one scheme and entering another scheme.”
In his presentation, Mr Akande who argued that Dangote Group throughout the years of its existence in Nigeria and elsewhere has never been known for unethical conduct.
He disclosed that the company submitted 237-page document including the Dangote Refinery Petrochemical Free Zone Enterprise’s audited account from inception (2017-2020).
According to him, the Dangote Industries Free Zone Enterprise in the document submitted to the Committee disclosed that it has 96 companies registered FZDs operating in the area, play one role or the other into the Refinery.
“Summarising the views from that page, we found out that our expenditure has been in line with our projections. You will remember that this national asset is meant for commissioning (mechanical completion) this year. All our expenditures have been in line with that and I’m delighted to state that,” he said.
He however noted that the company up till now is exempted from payment of tax because it operates under the NEPZA Act, adding that the company did not apply for Pioneer Status nor obtain the same.
Mr Akande who argued that the company has no dealing with the Bureau of Public Enterprises (BPE) nor the Federal Inland Revenue Service (FIRS), however, observed that the company will comply with the Finance Act 2020 as soon as it commences operations.
While responding to question about the company given the approval to operate the Jetty, Mr Akande disclosed that Dangote Quays was licensed by NPA.
In a swift response to his submission, Hon Oke observed that NPA licensed Dangote Oil Refining Limited, stressing that “if you have a company and a shareholder has 99 per cent of the equity, it should be considered as subsidiary.
“That is why Dangote Industries Free Zone company is owned by Dangote Oil Refining company Limited, hence both of them should file Transfer Pricing Return. Look at what is happening here, ordinarily, the Jetty you operate, one would have thought it was given to Dangote Free Zone Development company as an FT zone.
“But from the records here, the company that is licensed is Dangote Oil Refining Company Limited. Sir these are avoidance schemes, nothing more.
“They are avoidance schemes. And the line between avoidance and evasion is so thin. You can see it down here.
“Similarly sir, give us proof of payment to the Nigerian Ports Authority. What’s the relationship between these companies and its implications for our economy? They are all single ownership, single shareholder and single director,” he explained.
He also alleged that the Dangote’s Oil Company also “registered at Free Zone Company under its own baby. The point I’m making is that Dangote Oil Refining Company Limited registered a Free Zone Company called Dangote Oil Free Zone Development Company.
“The company that acquired the majority share ownership, which acquired almost 99 per cent of the shares out of the 1 million USD share capital.
“It was acquired by Dangote Oil Refinery Company Limited meaning that, that company own the zone licensed by NEPZA.
“Though it has powers to also register other companies, the same company now came to register under the Zone again,” he said.
But in his response, the Consultant to Dangote Group, Mr Agboluaje argued that the companies are not the same. One is Oil Refinery, one is Petrochemical, they are different nomenclature.”
He added that Dangote Refinery Limited Liability Company is registered under CAMA (Companies and Allied Matters Act), while Dangote Petrochemical Free Zone Enterprise is a different entity, under NEPZA.
Worried by the disparity in the documents submitted by the affected companies, the Committee directed NEPZA authorities to provide details of revenue remitted to the Consolidated Federation Account within the period under review.
While ruling, Hon Oke demanded for records of all statutory fees collected from the 96 registered companies on behalf of NEPZA and evidence of rendition while frowning at the spate of irregularities in the presentation of the stakeholders and the outcome of the status of Inquiry on NEPZA’s activities, he harped on the need for further investigation to ascertain the actual amount remitted.
“The Parliament in the cause of crosschecking revenue accrued to NEMZA, payment of operating surplus into the consolidated fund, the parliament discovered that a licensee of NEPZA, with the name Dangote Free Zone Development Company also licensed another 96 other companies.
“Rather than making returns directly to NEPZA, made returns through Dangote Free Zone Development Company.
“To ascertain the actual amount paid and remitted to the government, this committee ruled that Dangote Free Zone Development Company should furnish this committee with records of remittances made to the coffers of the government through NEPZA.
“The committee further invites the 96 sub-Licensees of payments they made which auth to have gone into the coffers of government,” he said.
