25th May, 2018
Economic and Financial Crimes Commission
DEMAND FOR THE URGENT INVESTIGATION AND ACTION ON THE MULTI-MILLION DOLLAR DEFENCE CONTRACT FRAUD (SHALDAG BRIBERY) BEING CURRENTLY PROSECUTED BY THE ISRAELI GOVERNMENT
The Civil Society Network Against Corruption is a coalition of over One Hundred and Fifty anti-corruption organizations, whose primary aim is to constructively combat corruption vigorously and to ensure the effective monitoring of the various Anti-graft agencies in its activities in the fight against corruption and to enthrone transparency, accountability, probity and total commitment in the fight to eradicate corruption in Nigeria.
We hereby demand for the urgent investigation of the multi-million defence contract fraud with respect to the Nigerian Navy’s procurement of two Shaldags (military boats) which the Israeli government is currently prosecuting some of its government officials for.
According o a report on the Premium Times Newspaper published on the 16th day of May, 2018, the Israeli police arrested three senior officials of Israel Shipyard on charges of bribing government officials in Nigeria on Sunday, March 18, 2018.
The company’s Vice President for Marketing, Oded Breier, was one of the suspects arrested. The next day, Samy Katsav, another senior Israeli defence businessman, was questioned by the police in connection with the same bribery case. Both Mr. Kastav and Mr. Breier were later released to house arrest, and parts of Israel Shipyards’ bank accounts frozen, Gold Bond Group, their parent company announced shortly after the event.
The arrests followed investigations by the Israeli police and tax authority as well as other international financial crime-busting organizations into a 2010 contract with the Nigerian government o supply two Shaldags-military boats.
The Israeli police and tax authorities are confident the suspects won the contracts after paying bribes to government officials in Nigeria, and as such the suspects have been charged.
Confirming the existence of the deal, Defence Web, a leading defence news portal, reported in 2012 that the Nigerian Navy is believed to be the buyer of three (3) Shaldag fast patrol boats. The report revealed that Israel Shipyards has sold three (3) Shaldag fast patrol boats to an African country,which is believed to be Nigeria. The West African nation is in the midst of expanding its Navy in order to combat maritime insecurity such as piracy and oil theft.
Israel Shipyards on July 17 said that it had agreed upon a deal for the sale of three (3) Shaldag (Kingfisher) vessels for 80 millions shekels (US$19 million). The Gold Bond Group, which owns 20% of the company, said it expected to make a profit of 16 million shekels (US$3.9 million) out of the deal.
It was reported that the fast patrol boats would be delivered to an African country, which has already paid a deposit for them. This country is almost certainly Nigeria- its 2012 Defence Budget Proposal makes provision for three Shaldag Mk III fast patrol craft, according to Budget Office documents.
It is however surprising that the Nigerian government and its security agencies have been silent on the said monumental fraud, which is the reason for our indicating interest in same and bringing this to the attention of the commission.
Experts believe the Shaldag contract is one of the deals that paved the way for a regime of kleptocracy in the Nigerian defence sector and the emergence of a gang that has grown o be one of the most powerful in the country.
The 2010 deal saw the Israeli shipbuilder win a $25 million contract to supply the Nigerian Navy with two fast assault boats. Their market value at the time was estimated to be $5 million each. Nigeria, therefore, lost $15 million in the deal. It is unclear how the $15 million excess was shared by everyone involved, but the Israeli police have established that the middleman, Amit Sade, received $1.47 million in what is now termed brokerage fee. Mr. Sade is believed o be one of the suspects arrested by the Israeli police. He was for a long time resident in Nigeria; but his latest whereabouts remain unknown.
Mr. Sade remains wanted in Nigeria. As at last year, he was recommended for ‘further investigation” after a committee investigating defence equipment pronouncements between 2007 and 2015 found a number of irregularities in contracts for which his companies were paid public funds. Within this period, Mr. Sade’s companies, Doiyatec Comms Ltd and DYI Global Services, won six (6) major defence contracts valued at N6.7 billion. He also brokered many others, including the Shaldags deal.
According to a Transparency International report, Nigerian military chiefs, politicians, and contractors worked together to steal $15 billion through arms procurement contracts- including the Shaldags-between 2008-2017. Also, in July 2016, an investigative committee released a report that indicted 18 senior military officials, 12 retired and serving government officials, as well as 24 CEOs. The report suggested further investigation and prosecution of indicted individuals.
The Nigerian Defence Contracting gang which emerged in 2007 according to sources, is said o involved a network of government guys, middlemen and manufacturers. The Government guys allegedly are made up of government officials leading various defence units and committees, the defence minister and permanent secretaries, Secretary to the Government of the Federation, the National Security Adviser, and the President. This gang makes up the most important node in the network.
Then, there are also middlemen, they consist of contractors, former and current government officials, politicians, family, and friends of members of the Government Guys gang. They are the link between authority figures and the third group. Within this group, contractors serve as the face of each deal, cloaking each contract with the legality the public is later presented with. While the Government Guys serve as the source of funds, the contractors are the conduit. They receive legal payments and redistribute to every other member of the expanded gang. Others in this node mostly serve as ideators and influencers.
The manufacturers are established defence manufacturing factories outside Nigeria. In an ideal situation, the purchasing units of Nigerian government agencies should be dealing directly with the sales departments of manufacturers. However, they outsource sales and marketing to members of the Middlemen gang, considered as “Africa experts” in the industry.
In Israel, the trial of Israeli Shipyard for involvement in the Shaldag bribery continued on March 30. Bribing a foreign official is a crime in Israel, especially after Israel joined the Organization for Economic Cooperation and Development and the United Nations Convention against Corruption in 2008.
It is on the basis of the foregoing that we hereby make a case for the urgent need to put an end to this never-ending crime cycle without fear or favour and regardless of whose ox is gored. Similar cases of corruption with international connections of this nature, wherein other countries take active measures while Nigeria feigns ignorance or do very little in the face of exact same circumstance is fast becoming an international embarrassments.
We look forward to your usual prompt response and action.