Construction at the propose Kubwa housing estate was terminated in a controversial manner due to vested interests
By Nwachukwu Uzoigwe
When it received the approval of Federal Executive Council FEC, expectations were high that when completed, the propose Kubwa Housing Estate would help reduce the much anticipated growing housing deficit in Abuja, Nigeria’s capital city. But sooner than construction commenced on site, the project was prematurely terminated in controversial circumstances, with only 32 out of the proposed 832 units completed.
The contract was awarded to Sanderton Ventures Limited Company SVLC, at a total cost of N2.3 billion, to construct 832 housing units for different classes of people in Abuja, they include; the construction of 56 blocks of 2-bed room block of 12 flats and 40 blocks of 3-bed room of 4 flats comprising of 672 units of 2 bed rooms and 160 units of 3 bedrooms.
SubNews learnt that the project was to be financed through a bank facility worth N2.1 billion which was secured from Universal Trust Bank UTB, now Union Bank of Nigeria Plc by Abuja Investment and Property Company limited AIPDCL, with the following as security to the facility:
An execution of Promissory Notes by AIPDCL, Execution of Issue and Fiscal Agreement authorizing UTB to be the Sole Placement and Paying Agent of the Note. Deposit of share certificate of 100 million ordinary shares of moribund Lion Bank of Nigeria Plc plus execution of transfer from upfront.
Others are; deposit of share certificate of 795, 000 ordinary shares of First Bank Plc and execution of transfer from upfront; deposit of share certificate of 1, 302, 155 ordinary shares of then AfribankPlc with the execution of transfer from upfront; deposit of AIPDC’s share certificate of its equity holding in Union Bank of Nigeria Plc with the execution of transfer from upfront as well as an equitable Mortgage on the project to be financed in favour of UTB.
The tenure of the facility was 270days including meritorium with equitable mortgage on AIPDC’s headquarters’ building which was then under construction as well as Execution of “Undertaking to give legal Mortgage” on the Properties under equitable mortgage and the domiciliation of all the sales proceeds of the houses in a special account to be opened by AIPDCL with UTB.
According to the contract agreement, the projection was that the project was to be completed in nine months, however, it remained contentious until 2004 when it was terminated.
In a petition which was written the Economic and Financial Crime Commission EFCC, and exclusively obtained by SubNews, Senator Muhammad AdamuAliero, the then minister of Federal Capital Territory FCT said that the contract was awarded in 2000 to SVLC, he explained that up to the time the contract was terminated in 2004, SVLC had only constructed 32 housing units in spite of the fact that it had received N1.4billion of the contract sum. He pointed out that because of the untidy nature of execution of the project and its inability to justify the amount already disbursed, the AIPDC stopped further releases of funds.
However, SVLC denied that it was unable to deliver the project because of the untidy nature of construction as alleged, SVLC also claimed that it discontinued with construction because AIPDCL refused to make funds available to it. The company maintained that while it requested for N1.7 billion as advance payment, it only got N667 million.
OluFagbemi, chairman of Royal Sanderton Group of Companies, whose responsibilities include; making strategic direction of the company, create and manage client relationship said in confessional statement to the EFCC that SVLC requested for the sum of N1.7 billion as advance payment but only N667 million was given to them.
But Muhammad Sani Abdul, the then Managing Director MD and Chief Executive Officer CEO of AIPDC whose responsibilities include; general corporate management, day to day administration and strategic development of the company in his testimony to the EFCC contradicted Fagbemi’s claim. He explained that the then FCT Minister of State, Mr. Solomon Ewugu, sent his special assistant with Fagbemi to brief him on the new building technology called Royal Building System RBS from Canada that was efficient, quick and effective.
He pointed out that the briefing was very convincing. He further explained that they visited Canada to confirm about the RBS and that when they came back, approval was given by the Federal Executive Council to award to Sanderton ventures a contract for the Kubwa housing project at the cost of N2.3 billion.
He claimed that no sooner than the contract was awarded, Fagbemi requested for an advance payment of NI.7billion which was rejected and that became the first problem. He said that after negotiations, the sum came down to about N667 million.
He alleged that upon collection of N667 Fagbemi disappeared, pointing out that for a couple of months, nothing was executed on the site. He further stated that right from onset, the contract was meant to fail because the misunderstanding led to the first internal arbitration under the eyes of the Minister of State FCT, with another arbitration and review of the contract under Arc. John Alkali, who was more friendly with the contractor. The MD accused Sauderton of diverting some of the materials to another project Eric-Moore housing Estate in Lagos. he disclosed that Polon Engineering was a subcontract to supplied roofing materials and was given N105 million advance payment through main contractor of SVLC. he said, at a point, Nasir el-Rufai who became the new minister, pushed him out of the system after which he could not say what remains of the project.
SubNews learnt that Abba Gana set up a panel that eventually resolved the issues and increased the contract sum, but when el-Rufai took over as minister of FCT he was said to have refused to take the recommendation of the panel to Federal Executive Council.
Another panel set up by former President OlusegunObasanjo and headed by the then SGF was also said to have been ignored by the minister. The report it was learnt upheld previous report that indicated that Sanderton was being owed by AIPDC the sum of N1, 573,277,987.98.
In 2004 when the contract was terminated, SubNews learnt that an estimated sum running into billions was said to have been lost.
The EFCC stated in their interim investigation report that during the special foreclosure of the project, government lost the following to Union bank; the $6 million worth of remaining materials on the project site, a 100million unit shares of moribund lion bank PLC, 795, 000 unit shares of First Bank, 1,302,155million unit shares of then Afribankplc as well as the c of o” of Kubwa project site.
In a similar vein, the EFCC report indicated that the prolonged controversies which hampered the stipulated nine months delivery period of the project had led to accumulation of N2 billion interest on the N2.1 billion facility secured from Union Bank to finance the project. EFCC explained that the accumulated interest compounded the loan to the tune of N4.1 billion.
SubNews made several effort to get both the FCT administration and the EFCC to comment on the matter, but our efforts proved abortive.