Controversy Trails the Sale of SAHCOL

The Managing Director of Pan Express Services Limited, Chief Peter Okezie, has expressed dissatisfaction over the sale of what is now known as Skyway Aviation Handling Company Limited (SAHCOL), and  has protested to the  National Assembly on the matter. Okezie has submitted a memo to the House of Representatives Committee on Privatisation and Commercialisation, protesting the sale.

  

It will be recalled that Pan Express was one of the companies that bided for the acquisition of former Skypower Aviation Handling Company Limited (SAHCOL), but lost out when it failed to pay for the company after it was acknowledged as second bidder by the Bureau of Public Enterprises (BPE).

In his petition which he submitted recently to the Chairman of the Committee, Okezie alleged that there was under-hand cutting of his company during the process, and described the  process as a big sham.

House of Representatives Committee on Privatization and Commercialization is currently probing the sale of government's equity in some privatized enterprises in the country.

Although the former management of SAHCOL and BPE have described the sale as transparent and challenged any one that might have contrary opinion to make his position public, the Pan Express Boss who participated in the process said in his memo that the company paid a non-refundable bid fee of USD 10,000, and executed a bid bond of N50 million, “which, in the midst of their (BPE) self-inflicted confusion, they reduced to N5.6 million.”

“We made these commitments on the understanding that the Bureau of Public Enterprises (BPE), and the National Council on Privatisation (NCP) would adhere strictly to due process, and be fair and transparent in implementing the entire process of bidding and sale of SAHCOL and that they would give Pan Express Services Limited, as much opportunity as anyone else to buy SAHCOL.

  

Okezie lamented in the memo that Pan Express was irked and disappointed that secrecy and favoritism “were introduced at some point, which led to SAHCOL being sold at ridiculous price far lower than what every bidder bided, and to some bidders, including our company, being excluded from the competition.”

Although the thinking of the public was that when Eraskorp Consortium failed to pay N13, 458, 000, 000 it bided for the company, it automatically reverted to the reserved bidder, Pan Express, which final bidding was N10, 400, 000, 000, to buy SAHCOL.

This did not happen because the time it was supposed to pay for the company elapsed, and BPE had to take the next step for the sale  of the company, which finally was bought by Skyway. Okezie alleged that due process was not really followed because of prior design to sell the company to a particular organization.

  

At the second round of bidding on June 30, 2009, Eraskorp Consortium came tops with N13.4billion, Pan Express Services Limited N10. 4 billion, Skyway Aviation N9.1 billion, TAK Continental N7.7 billion, Moore Associates N6.2 billion and Aviation Handling Partners N5.5 billion and following this result Pan Express was confirmed reserved bidder.

But according to the Pan Express boss,  on August 31, 2009, BPE 'upgraded us to prefered bidder and asked us to pay N10.4 billion”.  

“We were given only ten working days to pay the first installment of 30 per cent. Unfortunately, this demand came during the turbulent period of sudden financial reforms in the banking industry. As a result of new rules for credit and personnel changes, our bankers, which had all along arranged credit for us to buy SAHCOL, wrote to us asking for 30 working days to provide the money”.

“We promptly wrote to BPE to request for 30 working days, instead of ten, to make payment. We attached the Bank's letter, surprisingly, BPE turned down our request”. 

In other words, BPE taking cognizance of the reform process that was going on in the banking industry should have given Pan Express more time, so that it would secure the necessary funds to acquire the company.

Spokesman of BPE, Chigbo Anachebe  told THISDAY then that the Bureau was not expecting Pan express to bring cash to BPE, because in other parts of the world, the company that was acquiring another company would partner with banks to source for funds to pay for the purchase.

But in that memo, Chief Okezie said, “Towards the end of September, we heard that BPE had secretly conducted another bidding exercise for four of the six contestants whom they have selected. This time, it introduced a benchmark minimum of N5.5 billion, an amount which is far below all the bids in the table above. There was no publicity and no live coverage of this exercise, which they tagged “willing Buyer, Willing Seller Option.”

  

According to him, the last bid exercise lacked merit, fairness and transparency, further describing it as totally contrary to due process.  

He argued that “All six contestants should have been invited to compete since a new element of threshold benchmark was being introduced. Otherwise, the third placed bidder should have been invited to pay their bid amount N9, 160,621, 000.00.” 

He noted that BPE's resort to a new process where they introduced a new element, smacks of a plan, conceived from the beginning to sell SAHCOL to a particular contestant at a predetermined price known only to BPE and that contestant.” 

Okezie alleged that his company had it on good authority that BPE sought NCP's approval to organize a secret bid exercise even before the expiration of the ten working days which he said they gave them to pay the first installment of 30 per cent.

“In actual fact, while our ten working days was to expire on September 15, 2009, BPE had on September 14, 2009 written to NCP and sought for approval to organize a secret bid”.  

He also said, BPE's preference to commence a new process that would yield N5.5 billion for SAHCOL, rather than wait another twenty working days and collect N10.4 billion was self serving and in line with the script to sell SAHCOL for personal gain rather than realize the maximum possible proceeds for government.”

Okezie therefore alleged that the entire bidding process, which was widely advertised and publicized in the media, according to him,  was a bogus smokescreen to give the impression of adherence to due process and the principle of fairness and equity, regretting that they were misled into committing huge resources to a grand deception.  

He also said that prior to the privatization of SAHCOL, “our understanding of government's purpose for privatising its enterprises was to get private sector experts to run these businesses to deliver quality services and sustain the development of indigenous professionalism in those sectors as well as to return to government, as much as possible, good price for its investment”. 

Director-General of BPE, Dr. Chris Anyanwu had  defended the agency's sale of Skypower Aviation Handling Company (SAHCOL) privatization transactions, saying that the bureau did not breach any process. 

Testifying at the sitting of the House of Representatives Committee on Privatization and Commercialization probing the sale of government's equity in some privatized enterprises in the country, defended his role of the privatization agency in the sale of SAHCOL, insisting that it was transparently done.

He noted that the sale of SAHCOL was the first enterprise BPE had to superintend during his tenure, “I had to put in my best and in line with my guiding principle of transparency and accountability, ensured that the best practices were adopted and followed. It is absurd and unfortunate that someone could fault the entire process and cause a petition to the effect”.  

  

He said apart from following due process and in accordance with the rules, “the entire process was under the watchful eyes of the Technical Committee (TC) of   the National Council on Privatization (NCP) and NCP.” 

The DG stated that after the mandatory period, the petitioner was given a grace period to  pay the required  30 percent of the total sum but he failed, necessitating BPE to knock off the first and preferred bidder,  and adopted  the willing buyer-willing- seller approach.  

Chairman of the committee, Abbas Braimoh said the members would deliberate on their findings and table their recommendations before plenary for action to be taken in the best interest of the nation. 

Braimoh who gave the order on behalf of other members, reiterated that as parliamentarians, “We will not fold our hands and watch any government agency frustrated in the discharge of its mandate.

In a speech he made at the handover of SAHCOL to Skyway, Anyanwu  said that BPE sold the company to an organization that has the competence to effectively manage it and stressed that the Bureau expected the best from Skyway.

  

“Nothing short of excellence will be expected from them because this will be a signal of what is to come in the privatization process superintended by us. So I expect that they will bring in new equipment and run it up to the highest possible standard... I am an apostle of...revocation or reversal; so that will happen if you don't do your best because the purpose of privatisation is to get infrastructure, to be the best.

He also said, “We want businessmen who know their onions to come and take over businesses formerly run by government and run them well. That is what we expect Skyway to do in this case and also all Nigerian investors are challenged to take their destiny into their hands,” he declared.

According to BPE before it finally sold SAHCOL to Skyway, it went through another process that was outlined below.

The National Council on Privatisation (NCP) has approved that Skypower Aviation Handling Company (SAHCOL) be offered to the four remaining bidders on the basis of 'willing-buyer, willing-seller', following the failure of both the preferred bidder, Eraskorp Consortium and the reserve bidder, Pan Express Services, to make payment at the deadline as stipulated in the terms of sale made to them.

The four bidders are: Skyway Aviation Handling Company; AK Continental Limited; Moore Associates Limited; and Aviation Handling Partners Limited.

The bidders were invited to re-validate their earlier bids or make a fresh bid based on the new reserve price of N5.522billion. Following an all-party meeting with the four prospective bidders on 29th September 2009, the following bids were submitted as follows:

Skyway Aviation Handling Company    N5.5221 billion

TAK Continental Limited                   N5.5230 billion

Moore Associates Limited; and          N5.5230 billion

Aviation Handling Partners Limited      N5.5220 billion

The Chairman of the occasion, Mr. Babington Ashaye, told the bidders that “whoever pays first will be the winner and the preferred bidder,” adding that the total acceptable amount for the enterprise must be fully paid within 30 days from the date of offer. However, 30% of the bid amount must be paid within 15 days of the offer.

“It would be recalled that Eraskorp Consortium emerged the preferred bidder while Pan Express Services Limited emerged the reserve bidder at the opening of financial bids submitted by six pre-qualified prospective core investors for 100% government's equity in Skypower Aviation Handling Company (SAHCOL). The event took place on June 30, 2009 at Transcorp Hilton Hotel.  Both companies have since failed to meet the payment deadline.

The Federal Government of Nigeria (FGN) is divesting 100% of its controlling shares with the intention that after a few years from take-over, 49% interest will be divested to the Nigerian public under the supervision of BPE at a time that will be mutually agreed upon in the Share Sales Purchase Agreement (SSPA).” On the face value every part of the process was transparent as BPE argues, but why did it not extend the time for Pan Express in cognizance of the crises that befell the banking industry at the time Pan Express was expected to pay for the handling company.

Although SAHCOL management then agreed that the company was valued at N2 billion, which meant that selling it for N5. 5221 billion was still a good price for the Federal Government, but observers strongly believe that selling it  at over N10 billion would have been a better bargain for government.

(Source:ThisDay)