In 2005 Doyin Motors won a N1.7 billion contract to operate and maintain Shell’s Light Fleet Vehicles at its Western Division in Warri, Delta State. Its functions included servicing of vehicles and equipment, the purchase of spare parts and the salary payment of its almost 500 staff.
To mobilise, Doyin Motors on February 3, 2006 secured an N80 million facility from Access bank. In return, it irrevocably domiciled its monthly contract proceeds from Shell, estimated at N55 million, as security. It also opened staff salary accounts with the bank.
Doyin Motors presents its invoice to Shell at the end of each month, Shell initiates payment upon the 45th day of receiving the invoice by instructing its bankers - First Bank Nigeria Plc. - to pay the funds into Doyin Motors’ account in Access Bank, and Doyin Motors then pays its staff, at the same time servicing its loan with the bank.
But five months into the contract, something went wrong.
Doyin explains
According to Doyin, Shell’s failure to pay as and when due, began to tell on the contractor who was faced with rising interest rates on a principal that was already exhausted.
On August 20, 2008, Ayo Adedoyin, the Managing Director of Doyin Motors, wrote a petition to the Economic and Finance Crimes Commission (EFCC) for assistance to recover his money.
“This we signed and communicated to Shell from acknowledgement. All payments received went into this account and any disbursement needed to be approved by us. In July, all payments stopped, with no claims of funds, unbeknownst to us, this was a ploy by Shell in collusion with the financial institutions to commence fund diversion,” Mr. Adedoyin stated.
“We have good reason to believe that Shell staff has colluded with both Access Bank and First Bank Plc to divert funds meant for our accounts into personal accounts of persons unknown to us, under the guise of paying our own staff salaries,” he added.According to a manager with Doyin Motors, Niyi Adekoya, loopholes in the Shell contract No. S14866 manifested at a pre-mobilisation meeting on December 19, 2005, when Shell’s representatives, Sam Olofin and one Mr. Kwam, presented a non-comprehensive one-page contract. Amongst other things, Shell imposed on them who to hire as contract staff.
“The one-page contract just said you have been awarded this contract to manage and maintain light fleet vehicles for western division. There were no scales or measurement, no scope of work, nothing. What we bid was to pay a minimum wage of N35,000 for 235 drivers but at the meeting they said they had decided to pay them a gross salary of N66,000,” Mr. Adekoya said.
“When we started work on January 5, 2006, we were not the ones who picked the staff. We kept sending Shell letters asking who are these staff? Then at about February 2, we got this big spreadsheet of names and all of a sudden 235 became 265 of just the drivers. At the end of the day, including other staff, we had a total of about 445 staff to pay.”
Shell also told Doyin Motors to bear the liability of the previous year’s contractor, Mandilas Enterprises Ltd, by asking them to pay end-of-the-year bonuses to their staff - now Doyin Motors staff.
More surprises followed with death threats from various communities in the region who came with agreements they entered with Shell, saying a number of staff must come from their communities.
According to Mr. Adedoyin, “Shell would say we should manage them and it will form part of reimbursable that they will pay us back with a percentage after we use our own money.”
But five months into the contract, Shell owed Doyin Motors over N125 million for its services. With threats of downing tools, Shell finally produced a full contract which both parties signed on the June 2, 2006. The contract, under Article 18.5, indicted Shell of defaulting in its payment.
“We submit our invoice at the end of the month and Shell is to pay within 45 days. But for the first five months since we started work, Shell never paid us. It was on May 23, 2006 when Shell made its first payment for only the month of January,” Mr. Adekoya said.
The full contract revealed that Shell had been penalising Doyin Motors on performance indexes that they said they never knew about.
“For these five months, they were penalising us on performance indexes we had no clue about because we were operating on a one-page contract. But remember that for five months of this contract we were not paid one kobo and they (Shell) were not penalised,” said Mr. Adekoya.
Mr. Adedoyin further faulted Shell’s criteria for assessing contractors’ performance, berating its integrity and transparency. “Shell always leaves room for corruption to work in their system because who really determines whether you’ve worked very well or not? It’s Shell staff! And it’s either you are friendly with the man that marks your paper or not,” Mr. Adedoyin said.
He said Shell’s disregard for local contractors has remained a bane to the Nigerian oil and gas industry.
The Banks’ side of the story
Access bank
Mr. Edoja-Peters explained that Shell had a right to issue orders on the domiciliation account opened by Doyin Motors, stating that Shell is the owner of the domiciliation account. He gave his understanding of diversion of funds to mean if the utilisation of the funds was not used for the purpose for which it was intended and that means that the money cannot even be traced.
“Shell has a domiciliary with them (Doyin Motors); they are the ones that can issue instructions. Has he said that the people that benefitted were not his staff? If you can say that he is not your staff, then you have a case! There is no substance to the matter other than trying to embarrass us,” Mr. Edoja-Peters said.
He further explained that it is not the bank’s practice to credit any person’s salary account without any domiciliation agreement being provided. Mr. Edoja-Peters also accused NEXT of giving Doyin Motors undue media attention and curiously insinuated that NEXT was giving more credibility to First Bank’s account of the transaction, although it is difficult to see how he came by that conclusion.
However, Access Bank’s general manager, commercial banking group, South South, Innocent Ike, who subsequently spoke to NEXT insisted his bank was adhering to instructions in doing what they did.
He said, “From day one, Shell would write a cheque to First Bank, pay Access Bank and say credit Doyin Motors’ account and then get directions to credit (Doyin) drivers’ account. What used to happen was that it is after the money goes into Doyin Motors’ account before their drivers are paid, then the balance is left for Doyin Motors.”
Mr. Ike said Access Bank suddenly started receiving a contrary instruction for payments to be made directly into the salary accounts of Doyin Motors’ drivers with a schedule of the people to be paid endorsed with First Bank stamp.
“And the very first time this had happened, I personally called Ayo and said Ayo, see what’s happening ooo, He said yes, we should go ahead and pay the drivers,” Mr. Ike said.
First Bank
In a communiqué issued exclusively to NEXT, First Bank explained that Shell ordered it to pay the salary of Doyin contract staff, which they said was a usual directive, and not the payments of the shell contract.
The communiqué titled “Brief explanation on the issue of payment between Doyin Motors/Shell Petroleum Company Limited/Access Bank Plc” reads: “Doyin Motors who maintained a facility account with Access Bank Plc was a labour contractor to Shell (supplied contract drivers and other jobs). The contract drivers also maintained their individual salary accounts with Access Bank. Shell usually issues us their cheques and a schedule of Doyin contract drivers for their salaries. On receipt, we would issue drafts to Access Bank attaching the salary schedules of these drivers. Doyin Motors were mistakenly taking the drivers’ payments for payment of their other contract and accused us of conspiracy with Shell Company for diverting payment of their contracts to payment of the contract drivers.”
These are allegations Mr. Adedoyin denies, saying why would Shell pay his drivers directly, when the drivers are his staff.
“I am their employer not Shell. Look at it well. How will I agree for Shell to pay my staff directly yet leave me in debt to my bankers? How would I then pay off my loan with Access Bank? Shell, in connivance with (the) banks reasoned that as long as they pay my staff, work would go on whether they paid me or not,” Mr. Adedoyin said.
Shells’ response
Shell’s corporate media relations manager, Tony Okonedo, said: “The SPDC is in court with Doyin Motors in respect of non-performance of a logistics contract. We are also aware that the allegations made by the petitioner are being investigated by the relevant government authorities. In the light of this, it would be inappropriate to comment further on the issue. SPDC will continue to conduct its business in line with the principles of honesty, transparency and respect for people.”
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