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Nigeria’s Elusive K38 Boats and the Stolen Billions

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In a recent investigation done on the military corruption by the PREMIUMTIMES, Ogala Emmanuel writes that Nigerian Military Chiefs, Politicians and Contractors are believed to have stolen more than 3.1 trillion through arms procurement contracts. PowerSteering reporter corroborates with this findings.
The room was dark and cozy. The air conditioner hanging on the wall worked silently to keep the room as cold as London where he returned from earlier in the morning.
Outside, the sun was blazing as the power generator churned out alternating currents to keep the air conditioner alive.
“Alhaji, we have a deal!” the voice on the other end of the line said as Rabiu Hassan pressed the phone against his ear.
“I have spoken with the NSA – National Security Adviser – and he has given his approval. Let’s rally and seal the deal as soon as possible,” the caller said before hanging up.
Mr. Hassan, a shrewd defence contractor, was happy to learn the good news. The exhaustion he had sought to relieve with the afternoon nap, in his Abuja home, didn’t seem to matter anymore.
It was Saturday, November 19, 2011 and his life was about to get merrier.
Earlier that morning, both Mr. Hassan and his caller, Salihu Atawodi – chairman of the Presidential Implementation Committee on Maritime Safety and Security – returned to Abuja from London on a British Airways flight.
A few days earlier, Mr. Hassan, chaperoned by business partners, had escorted Mr. Atawodi’s party, which included friends and colleagues, to go inspect brand new military boats that were up for auction at giveaway prices in Amsterdam, Netherlands.
The boats, known in the military marine hardware market as K38 Catamaran assault crafts, are exceedingly fast and agile attack military boats renowned for powerful performance on shallow waters.
It can execute extremely sharp turns at high speed and decelerate from top speed to sudden stop within the twinkle of an eye. With its twin water jest and lightweight, it can operate at a speed of 74 km/h in shallow waters, like the creeks of the Niger Delta.
With a bank account full of money, Amit Sade left for the Netherlands where he outsourced the contract to TP Marine, a two-man shipyard.
In 2008, during the first rise of militancy in the Niger Delta, one of the earliest problems the Nigerian military faced combating the militants was the lack of assault crafts to navigate the shallow waters of the creeks in the region.
In response, the Umaru Yar’Adua-led Nigerian government contracted Amit Sade, an Israeli contractor and CEO of Doiyatech Nigeria Ltd to supply 20 units of K38 combat boats to the Nigerian Army.
Mr. Sade’s Doiyatech does not make boats neither does he own any other military hardware company. But he was the only handpicked bidder for the contract worth N3.12 billion at the time. There was no bidding process as contemplated by Nigeria’s public procurement law. In the contract, each boat was worth N156 million.
He was immediately advanced 80 per cent of the total cost of the 20 boats with a promise that the balance would be paid once supplies are completed.
With a bank account full of money, Mr. Sade left for the Netherlands where he outsourced the contract to TP Marine, a two-man shipyard.
Mr. Sade was a regular customer of TP Marine as well as the Nigerian government. At his prime as an Abuja contractor, he netted six heavyweight military contracts worth N6.721 billion.
He did not deliver on any of them, a report by the presidential panel which recently investigated military procurements in Nigeria revealed.
The contractor had also fronted for TP Marine to land jobs with the Nigerian Navy and the Dutch had no qualms taking on this new project.
A few months later, he returned to Nigeria with eight boats. The Nigerian military received the few he had and never bothered to ask for the outstanding 12. They seemed to have been impressed that he at least partly delivered on the job.
However, in anticipation that Mr. Sade would return to claim the remaining 12 boats for which he placed order, TP Marine continued production.

But the contractor never returned.
Four years later, Mr. Hassan, the Abuja-based Nigerian contractor was prospecting for military boats when some other Israeli contractors operating out of the Nigerian capital, linked him to TP Marine.
Hours after the introduction, he had his first meeting with Bjorn Neeven and Roland Kraft, owners of TP Marine in Paddington Hotel, London. That meeting was brokered by the new agents.
The boats were selling for N49 million each – a smaller fraction of the huge and overpriced N156 million for which Mr. Sade sold each boat to the Nigerian military.
TP Marine was, however, not willing to sell to a Nigerian company and they opened up to Mr. Hassan why that was so.
The boats, in the first place, originally belonged to Nigeria courtesy of the 2008 contract with Doiyatech.
TP Marine did not also have the authorization to resell these boats to Nigeria.
They were avoiding legal complications with the European Union and Mr. Sade. But they could not also hold on to the boats any longer as they were accruing demurrage and digging a hole in the company’s finances.
TP Marine offered Mr. Hassan a lifeline. They would sell to him if he could get a non-Nigerian company to buy from TP Marine before reselling to him.
“My brother, that was one of the sweetest deals I ever got in my life,” Mr. Hassan told PREMIUM TIMES. “I immediately grabbed the chance and committed myself.”
Half of the 12 outstanding boats were done, but for armoring. The other half lay in casts.
Excited, both parties entered a deal through the Israeli agents before departing London.

The Outreach
When Mr. Hassan committed to buying these boats in London, he had no customer waiting to buy from him. He was only confident he would find one.
In Abuja, he was faced with two immediate challenges. First, he needed a non-Nigerian company to pose as the direct buyer from TP Marine. Secondly, he needed someone to buy the boats from him so he can make a huge profit.
To solve his first challenge, Mr. Hassan turned to Mustapha Mohammed, a much younger business associate.
Mr. Mohammed stepped forward with his defunct UK Registered company, Hypertech UK limited.
With his first challenge resolved, Mr. Hassan began marketing his boats.
His first point of call, he said, was Bello Haliru Mohammed, the defence minister at the time.
“I gave him a verbatim account of my London meeting with the owners of TP Marine,” the contractor said.
After describing how notorious Mr. Sade was in the defence contracting industry, the defence minister handed Mr. Hassan a five-page document containing a list of 31 failed defence contracts.
Mr. Sade’s companies – Doiyatech and D.Y.I Global Services Limited – dominated the list of defaulting contractors accused of not delivering for jobs they were paid.
The defence minister sounded helpless and powerless in checking Mr. Sade’s alleged antics, Mr. Hassan recalled.
When contacted, the minister, now facing trial for allegedly stealing public funds ahead of the 2015 general elections, texted a PREMIUM TIMES reporter saying he could not remember the meeting.
He could also not remember the five-paged document despite the fact that the defence ministry, in that same document and during his leadership, described the K38 military boat contract as having been “stepped down”.
When confronted with the documents, he dismissed them as Tenders Board document.
“Ministers were not members of the board during my time,” he said.
At about the same time that the minister had that initial conversation with Mr. Hassan, the defence ministry also received a letter from TP Marine intimating it of the 12 boats abandoned in the Netherlands by Mr. Sade.
Neither the defence minister nor the ministry acted to recover either the boats or monies paid out to Mr. Sade.
Mr. Hassan capitalised on the ineptitude and financial recklessness of officials at the defence ministry. He continued marketing the boats around government security agencies in Abuja.
Salihu Atawodi offered to buy the K38 rather than use his position to pursue justice for Nigeria.
In response to rising banditry by sea pirates in the Gulf of Guinea and intense pressure by the International Maritime Organization on him to act decisively, former President Olusegun Obasanjo established the Presidential Implementation Committee on Maritime Safety (PICOMSS) on July 1, 2004.
The idea was a short-term solution to sustain economically beneficial maritime activities in the gulf as security agencies charged with securing the waterways kept failing in their responsibilities.
Somehow, what was conceived as an ad hoc committee remained alive almost a decade later.
Its loosely defined job description meant that it almost often strayed into the responsibilities of the over a dozen other government agencies securing the maritime sector.
In 2012, facing stiff opposition from some maritime security agencies in the country, its chairman, Mr. Atawodi, launched an aggressive push to make PICOMSS a permanent government agency backed by law.
At the time Mr. Hassan marketed the boats to him, the PICOMSS boss was lobbying members of the National Assembly to pass a law making the agency a standing government parastatal.
Acquiring these boats fitted into his grand plan to establish authority in the sector and win over more undecided lawmakers, Mr. Hassan quoted Mr. Atawodi as telling him at the time.
He was eager to buy them. All six.
In his private office in Abuja, he had made 2D models of the boats with PICOMSS boldly printed on its shells.
Mr. Atawodi was neither interested in calling out Mr. Sade for disappearing with the initial contract funds nor fascinated about making any move to recover the boats already paid for.
In fact, he told our source the boats “technically” didn’t belong to Nigeria, after arguing he was initially ignorant of the boats’ history.
Months after learning about the boats, he assembled a team and they flew to the Netherlands, via London, to inspect them. On November 18, 2011, TP Marine gave the delegation a two-hour on-sea performance tour with the boats.
On the spot, they decided to buy. A sales contract was drafted immediately but there was a little problem.

How Much Will You Buy?
As customary with procurements within the Nigerian security industry, the cost is neither driven by economics or any known pricing mechanism. It is rather driven by how much the buyer – the government guy – is willing to pay without hurting the profit margin of the contractor. A consideration will also be made for the different levels of bribes to be paid to facilitators.
TP Marine offered the boats to Mr. Hassan at N49million each – at the prevailing Naira/Euro exchange rate in 2012.
The total cost for the six boats came to N294million.
With armoring upgrades, logistic and profits, Mr. Hassan said he initially set the total price at approximately N600million.
In the contract drafted in Amsterdam on the day of the inspection, the Atawodi team excessively inflated the contract to approximately N3.1 billion.
PICOMSS had limited funding. Mr. Atawodi was, therefore, unable to funnel the entire N3.1 billion from PICOMSS. He needed to draw from a special funding pipeline he had with the then National Security Adviser, Andrew Azazi.
The call to Mr. Hassan after the team’s arrival from the inspection trip was to inform him the NSA has been co-opted into the deal.
In an interview with this newspaper, Mr. Hassan blamed Mr. Atawodi for this astronomical contract inflation which would have seen collaborators sharing over N2.5billion
“There was nothing to hide,” he said. “I was supposed to deduct my own and give them the rest. With the National Security Adviser involved, I was fine with it. He is after all the chief accounting officer of Nigeria’s national security. If wants to buy it for (Euros)100 billion, who am I to say no?”
Mr. Atawodi did not deny inflating the contract but he claimed the excess N2.5 billion was for amouring of the boats.
“These things are expensive, you know,” the former PICOMSS boss said.
He also argued that he believed the boats were selling at non-auction retail prices.

The Looting Regime
Ten days after the inspection trip, even before his team submitted a report of the trip, Mr. Atawodi credited Mr. Hassan’s newly established Eco Bank account with N620.918 million from PICOMSS’ commercial bank account.
The payment was not immediately invoiced or documented in any other form. It had no logical correlation with the N2.5billion he and his collaborators planned to pocket. It was also higher than the original N600billion Mr. Hassan demanded.
Mr. Hassan said Mr. Atawodi followed up the curious fund transfer to him with a telephone call requesting him to hurriedly convert the money to United States dollars and hand over to the PICOMSS chairman that same day.
He claims he complied and delivered the first tranche to Mr. Atawodi in a Ghana-Must-Go bag. Meeting point that night was IBB Golf Club at the upscale Asokoro District of Abuja.
Mr. Atawodi denied this narrative, saying it never happened.
In 2015, the EFCC charged both men to an Abuja court for defrauding Nigeria of the same N620 million.
In court, Mr. Atawodi claimed the transfer was an upfront payment for the boats. Mid 2017, another Abuja court acquitted him.
Mr. Hassan’s bank statement, however, showed clearly that the controversial fund transfer happened between the two men.

A Conman’s Death
In the Nigerian defence contracting industry, double-dealing is perhaps the only commodity that can be considered more abundant than public monies to steal, insiders say.
After that first payment, Mr. Atawodi wrote a memo to the National Security Adviser, Mr. Azazi, requesting the release of N3.1 billion for the purchase of the boats.
The National Security Adviser unexpectedly foot-dragged. At the time, he favoured giving more maritime security control to an ex-militant warlord, Tompolo. In fact, the NSA had prepared a memo to the president demanding the scrapping of PICOMSS.
But the defining moment for this contract came after Mr. Hassan had a meeting with the NSA to market the boats.
It turned out that the PICOMSS chairman was trying to outsmart the NSA.
“The National Security Adviser was told a completely different thing and was never a party to fixing that amount,” Mr. Hassan told our source.
The steps taken by the NSA after learning of the price variation are what defines government contracting in Nigeria.

How Nigerian Generals Clashed over Billions Meant for Military Equipment
The National Security Adviser, Andrew Azazi, was visiting some friends and government colleagues in Abuja that night in early 2012.
He was shocked to learn from one of his hosts that his Nigerian Defence Academy classmate and a junior colleague had dropped his name in a alleged plan to steal billions from government coffers without his consent.
He was understandably furious. And he immediately decided to block the deal and then deal with the man at the centre of the deal.
“He just decided on the spot to cancel the entire transaction and forbid anybody from it (buying the K38 boats),” Mr. Hassan, who was closed to Mr. Azazi at the time, recalled.
A shrewd and desperate contractor that he is, Mr. Hassan frantically begged the NSA to shift ground.
After prolonged appeal by the contractor, Mr. Azazi softened. A new plan was immediately hatched.
Rather than have Mr. Atawodi and PICOMSS buy the boats, Mr. Azazi offered to use his position as NSA to purchase the boats for the Nigerian army as “his contribution” to an organisation he served for decades and only recently retired from.
“This was a very good ending for me and very neat for Azazi who was no saint,” Mr. Hassan said.

Who’s the boss?
Mr. Azazi died in December 2012. We were, therefore, unable to interview him for this story. Rather, we rely on the documented actions he took and stories his associates told us about the matter.
As NSA, Mr. Azazi did not radiate much honesty and transparency while in office.
In fact, shortly after leaving that office, he acquired properties running into billions of Naira, way above his total earnings as a military general combined with his national security adviser legal emoluments.
One of the strategies the then administration adopted in pacifying militants from the country’s troubled Niger Delta was the arbitrary awards of lucrative waterways security contracts worth billions of Naira to so-called repented warlords from the region.
Mr. Azazi, was directly in charge of implementing this programme.
In March 2012, one of such deals was signed – a vaguely worded $103 million (minimum value) contract to Global West Vessel Specialist Agency in which former Niger Delta militant warlord, Chief Government Ekpemukpolo (aka Tompolo), was believed to have interest.
Tompolo was to invest $103 million in expertise, platform infrastructure, security boats, and waterways surveillance.
His reward? Fifty (50) per cent of whatever revenue he collects after recouping his $103 million investment.
Some sources who spoke to PREMIUM TIMES on this story believe that perhaps if Mr. Atawodi had taken Mr. Azazi into confidence about the alleged plot to corner billions from the K38 deal, he perhaps would not object to the arrangement.
Like every other high-ranking government security official who transacted with Mr. Hassan on these boats, the NSA was also not interested in questioning the Israeli contractor, Mr. Sade over the initial failed contract, despite being the highest ranking security officer in the country at the time.
On June 6, 2012, Mr. Azazi released a first tranche payment of N118.2 million to Mr. Hassan for the boats.

Cold Feet, Hot Trouble
In 2012, after firming a new deal with the NSA, Mr. Hassan, the contractor, began to avoid Mr. Atawodi, his first prospect. He believed Mr. Azazi had access to more cash, and that he was even powerful enough to block the PICOMSS boss’ access to funds.
To keep his new deal with the NSA under wraps, he set up a clone of Hypertech UK Limited – the company he had earlier pushed forward in the deal with PICOMSS and TP Marine. He called it Hypertech (MR) Ltd. He also opened a new EcoBank account to receive funds.
The N118.2 million he received from Mr. Azazi was paid into that account.
But as hard as Mr. Hassan tried to conceal his new dalliance with Mr. Azazi, Mr. Atawodi soon found out. He felt betrayed and tried to fight back.
However, faced with an unfriendly higher authority, Mr. Atawodi’s fightback options were limited.
There were three loopholes in Mr. Hassan’s strategy which the PICOMSS officials tried to explore.
He did not own the company (Hypertech UK) he used in the contract with both TP Marine and PICOMSS.
He did not even sign the contract with PICOMSS. Mr. Mustapha, the Hypertech owner, did.
Secondly, the Israelis who introduced him to TP Marine had loaned him $500,000 which he said he used in securing his partnership with the boat manufacturing firm.
Thirdly, Mr. Hassan had misrepresented his relationship with Mr. Mustapha to some parties in the deal. He had described Mr. Mustapha as his “boy”, suggesting he was an employee, rather than the “owner” of the primary company in the deal.
Mr. Atawodi connected these dots and called for a meeting with the middlemen in Mr. Mustapha’s office.
At the meeting, Mr. Mustapha was told how Mr. Hassan had misrepresented him.
“When I got in touch with Rabiu (Mr. Hassan), Rabiu exploded,” Mr. Mustapha recalled. “He was mad at me, mad at them, mad at everyone. Then I just knew something was wrong.”
Participants at the meeting agreed to deal decisively with Mr. Hassan for double-dealing. Soon, the contractor was dealt blows from several directions, and events began to spin out of his control.
Mr. Mustapha was first to open fire.
His first line of action was to establish authority over his company.
“I had to write officially to the NSA’s office with clear clarifications and attaching all my certificates,” he said.
Mr. Mustapha followed up with a letter to TP Marine stating that he remained the sole owner of the transacting company and demanding that the boats be supplied to him directly.
He also wrote officially to the Israeli middlemen demanding that they cease communication with Mr. Hassan.
Eventually, he reactivated Hypertech UK in London and changed the name to UK Hypertech Ltd.
M15 Consultants, the Israeli middlemen, followed with a lawsuit against Mr. Hassan in the Netherlands.
They claimed they had a significant interest in the boats through the $500,000 they loaned the contractor for down payment to TP Marine.
They, therefore, asked the court to place a lien on the boats until Mr. Hassan repays the loan.

Sinking Sand
In the peak of this titanic battle, then President Jonathan fired the NSA, Mr. Azazi.
Mr. Hassan did not cower in the face of the raging storm. Backed by the highest ranking security authority in the country, he was confident of victory.
He got an attorney in the Netherlands to defend himself while he began paying back the loans.
Mr. Hassan also made a second clone of Mustapha’s company and named it Hypertech (UK) Ltd.
In Mr. Hassan’s support, Mr. Azazi, the NSA, continued to lobby then President Jonathan to disband PICOMSS, a move aimed at knocking Mr. Atawodi out of contention for the boats, and out of employment. It was also conceived to yield an immediate victory for himself and Mr. Hassan.
In the peak of this titanic battle, then President Jonathan fired the NSA, Mr. Azazi.

Influence Peddling
The removal of General Azazi was a huge setback for Mr. Hassan. But he did not give up. He quickly started lobbying the new NSA, Sambo Dasuki.
An especially brilliant and articulate man, Mr. Hassan is capable of sweet-talking anyone into submission.
By less than three weeks after he assumed duties, Mr. Sambo had bowed to Mr. Hassan’s rhetorics and had, on July 19, 2012, paid him an additional N174.15 million for the boats.
It is not exactly clear why Mr. Dasuki paid Mr. Hassan for the contract without conducting due diligence.
However, things soon fell apart between the two men. What exactly led to that remained unclear. But in some correspondences with the contractor seen by this newspaper, the then NSA accused Mr. Hassan of influence-peddling and name-dropping.
In the Nigerian security contracting industry, it is commonplace for huge contracts to be awarded to companies backed by notable former or serving high-ranking government official or politicians.
In some cases, a call from the wife of the president or any other influential individual is enough to persuade a public servant to wave all due processes or amend the processes to unjustly favour even an unqualified contractor.
In this case, Mr. Hassan dropped the name of Aliyu Gusau, a retired army general. He claimed Mr. Gusau was a member of the board of his company.
Mr. Gusau was director-general of the defunct Nigeria Security Organization, now known as State Security Service. Between 1999 and 2006, he served as National Security Adviser. He was former President Jonathan’s last defence minister.
Even though a simple company search with the Corporate Affairs Commission could have helped Mr. Dasuki confirm the board structure of Mr. Hassan’s company, he opted to dole out cash first, and perhaps confirm later.
As indicated above, the appointment of Mr. Dasuki as NSA began as a good omen for Mr. Hassan.
But what started as an upswing soon turned sour after Mr. Atawodi launched a counter-lobby at Mr. Dasuki.
First, Mr. Dasuki slowed down his predecessor’s bid to wind down PICOMSS and began to show support for Mr. Atawodi group’s inflated contract.
TP Marine also began withdrawing support for Mr. Hassan, even though at this point, he had almost completed payments for the boats.
In no time, Mr. Hassan was fighting alone.
Mr. Hassan damned all consequences and broke an industry cardinal rule when he began blogging about the contract inflation.
He also petitioned the president and the Economic and Financial Crimes Commission.
The NSA did not like this. He responded aggressively.
Mr. Dasuki left office in 2015 after President Goodluck Jonathan lost the 2015 election. He has remained in illegal detention since December 2015, and is being prosecuted by the Economic and Financial Crimes Corruption for alleged mismanagement of billions meant for the purchase of arms.

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