$55million contract splits NNPC management

The settlement of the $55.3million consent judgment debt against the Nigerian National Petroleum Corporation (NNPC) may have split its management into two interest lines.

NEXT on Sunday gathered that the debt was as a result of a suit by Lutin Investments Limited over an alleged breach of contract, following the July 1993 termination of the contract for the supply of chartered petroleum products vessels under the 1992 NNPC strategic storage reserve project.

Investigations also reveal that while a section of the corporation's hierarchy led by Mohammed Barkindo, the Group Managing Director, opposes the payment, another group, particularly in the company's legal department, is favourably disposed to permanently interring the remains of the over 15 years legal tussle.

But the justification pleaded by the Mr. Barkindo faction, NEXT gathered, is that paying such a huge debt is potentially injurious to the company's finances, contrary to the position of its legal team that the consequence of continued reneging would only lead to the accumulation of more liabilities.

Debt mounts

It was gathered that the controversial debt reportedly consented to by all the parties early last month, rose to about $262million, following several piles of compounded interest on the original award with the continued disobedience of successive managements in NNPC to several court judgments in the case.

Informed sources told NEXT that the Presidency had to wade in after two high-level ministerial negotiation teams, including Michael Aondoakaa, the Attorney General of the Federation and Minister of Justice; Odein Ajumogobia, the Minister of State for Petroleum; Mr. Barkindo and Yinka Omoregbe, NNPC Company Secretary/Legal Counsel, made various recommendations for concessions towards a final negotiated settlement.

The rift widens

NEXT learnt that the debt repayment debacle may have deepened the existing rift in the ranks of the NNPC management, as Ms. Omorogbe,the Company Secretary, and a professor of law was reportedly asked recently to explain why she chose to hold a legal opinion on the issue different from those opposed to the payment of the judgment debt.

Though Ms. Omorogbe refused to answer to the several inquiries about her role in the debt payment debacle, a source close to the NNPC told NEXT last Friday that since her recent disclosure that there were more than one version of the Petroleum Industry Bill (PIB) in circulation, she is being held in suspicion by members of the core group in the company's hierarchy, who see her largely as an outsider that is too independent-minded .

In her response to NEXT request for an interview, Ms Omorogbe said bluntly: "I do not have any explanation to give to anybody over any issue. It is not my style to discuss my job with the media. All I have to say is that my conscience is clear that my integrity is intact. All decisions in the course of my official duties have been professional and in accordance with the directives of appropriate authorities."

NNPC says ‘no comment'

However, when NEXT sought the reaction of the NNPC on the issue, the corporation's General Manager, Group Public Affairs Department, Levi Ajuonuma, not only refused to respond, he was very unfriendly.

After two visits to his office on Monday and Tuesday, apart from a text message to his GSM phone that went unreplied as well as an e-mail that was replied to, the following telephone encounter ensued when the reporter called him last Wednesday morning:

Reporter: Hello, Dr Levi, good morning!

Levi: Bassey, How are you?

Reporter: I am good. I was in your office on Monday, and learnt you travelled. I sent a text message to you over a story we are doing....(cuts in)

Levi: Bassey, That text, just leave that story alone. You are not doing anybody any good with the story.

Reporter: No, the story is an assignment I was given to find out the issues about the... (cuts in)

Levi: Whoever gave you the assignment; just tell them ....Any way, just leave the story.

Reporter: The way NEXT works on stories is different. There must always be the opinion from the other side, whether negative or positive. If I don't get the NNPC's side, it would seem I did not do what I was supposed to do.

Levi: What type of reaction would want me to give you? There is no reaction to give. You are not doing anybody any good. If you insist, I have no comment. That's all.

Reporter: If you have no comment, is it possible that I can talk with the GMD?

Levi: Hmm, Bassey, who are you to talk with the GMD? (sounding sarcastic) I say there is no reaction, and you say you want to talk to GMD. I have told you that you are fishing in an area that wouldn't do you any good. Leave the story alone. I'll talk to you when I come back.

Reporter: Well, I'll take that as your comment.

Levi: No! My comment to you is that I have no comment. I don't say any more.

Reporter: But, what do you mean by: Who am I to speak with the GMD? That is my problem. When a reporter comes to you, even with wrong information, it is your duty to tell him what the right information is, and not to be dismissive, as if he does not have any reason to talk to the GMD. I was given an assignment to do, just as you also have a job to do.

Levi: No, listen to me as a friend, all I am saying as official reaction is: "Tell your people that you spoke to me and I said: No comment. That's all.

Reporter: But, you are not talking as a friend to tell me: Who am I to speak with GMD? What's the big deal about speaking with the GMD over an issue?

Levi: No, you don't understand. The issue is that this story has been over-flogged. Officially, I am saying no comment. That's all.

Reporter: Okay

Genesis of the row

Following the termination of the December 1992 contract barely after six months into its life, the contractor raised objections, alleging a breach of the agreement by the NNPC, which provided for an initial period of three years, with the option of yearly renewal, subject to the right by either party to determination after a six month notice.

Failure to reach a compromise consequently resulted in a December 15, 1993 notice of arbitration by Lutin, claiming over $97.2million in losses.

But the then NNPC management reportedly justified the action by the then Secretary of Petroleum Resources, Philip Asiodu, on the grounds that Lutin failed to deliver on the contract for the supply of 500,000 to one million metric tons of contracted vessels, as well as the non-storage of petroleum products.

At the commencement of arbitration under a sole arbitrator (Justice Uche Omo (Rtd) agreed to by all parties, the NNPC allegedly instituted suit No. FHC/L/CS/1181/94 at the Federal High Court, Abuja, challenging the proceedings. But that did not hinder the case from running its course, with a December 1998 verdict in favour of the contractor.

Though a senior management committee later constituted by the Dalhatu Bayero-led NNPC to review the consequence of the judgment; it recommended an out-of-court settlement after the payment of $6.4million to Lutin as "full and final settlement within a reasonable time". The company reportedly reneged, opting to continue its appeal alleging bias against the sole arbitrator.

Based on the recommendation of the then Minster of Justice, Kanu Agabi, on June 6, 2000, President Olusegun Obasanjo was said to have been sympathetic to a negotiated resolution based on the committee's advice.

After the outcome of another unfavourable appeal late 2001, further investigations revealed that the NNPC proceeded to the Supreme Court in 2002, with a commitment to abide by the ruling of a panel of three arbitrators "of impeccable characters."

At the end of a protracted arbitration, the Supreme Court in a unanimous judgment delivered January in 2006 by Justice Umaru Kalgo, and supported by Idris Kutigi, Dahiru Musdapher, Walter Onnoghen and Ikechi Ogbuagu, dismissed suit No. SC.57/2002, with a N10,000 cost.

A suit by the NNPC in Suit No. FHC/M/ABJ/476/2007 at the Federal High Court, Abuja seeking to set aside the final award also faltered, May 7, 2007, in favour of Lutin.

Consent judgment

Following the Presidency's intervention, in October 2007, Lutin was prevailed upon to accept the initial award and forgo the over $207million on accumulated compound interest.

Negotiations continued from November 2007, till October 6, 2009 when a final agreement was reached. The agreement stated that the NNPC would defray the debt within seven business days from the date of filing of the terms of settlement at the Federal High Court, Abuja.

The terms of the agreement signed by all the parties were witnessed by the Minister of Petroleum, Rilwanu Lukman and his Justice Ministry counterpart, Michael Aondakaa.

On September 7, a Presidential seal to the agreement was given, vide memo No. SH/PSP/24/18/880, to provide the foundation for a legal consent through the consolidation of suits No FHC/ABU/M/476/07 by NNPC and FHC/ABJ/M/266/08 by Lutin in the Federal High Court, Abuja, to accommodate the terms of settlement.

Consequently, the consent judgment of October 20, 2009 birthed, giving the NNPC till October 26, 2009 to comply by paying the $55.3million as full and final settlement.

However, while other parties were awaiting the execution of the terms of the judgment, the NNPC, on October 27, a day after the expiration of the deadline, filed a counter suit at the Federal High Court, Abuja, asking the court to set it aside, claiming a directive from the Presidency based on an October 14, 2009 petition by a senior Presidential aide, who exhumed issues that were already addressed, either in the course of court litigation or during negotiations with the parties.