The House of Representatives on Monday sai the management of Nigerian Communications Satellite (NIGCOMSAT), violated the Public Procurement Act in awarding insurance contracts worth over $500 million.
The House, therefore, invited the former Managing Director of NIGCOMSAT, Alhaji Ahmed Rufai and all former directors of finance to appear before it on Monday.
The Ad hoc Committee probing insurance companies’ pay out to Ministries, Departments and Agencies (MDAs), made the allegation when the Managing Director of NIGCOMSAT, Mrs. Bimbo Alale appeared before its members.
Chairman of the ad hoc committee, Rep. Adekunle Akinlade, said the contracts were not advertised as prescribed by the public procurement act.
According to Akinlade, the contracts were awarded to unlicensed insurance brokers.
In her defense, Alale said until 2016, NIGCOMSAT selected insurance companies based on a list provided by the National Insurance Commission of Nigeria (NAICOM), and also relied on approval from the Presidency.
She said she was unaware that the firms were unlicensed but explained that most indigenous firms refused to give cover due to the high risk involved in insuring a satellite.
“Until 2016, we never advertised. We just call for a meeting of firms given to us by NAICON and organise a workshop for them.
“It is after the workshop we choose which participating firm to award the contracts to.
Most of the local companies refused to take the cover because the risk is high but we have been able to split it into two.
“Before now, it was 80 per cent that goes to foreign underwriters but as of now, we have split the cover to 30 per cent and 70 per cent.
“Seventy per cent is taken by foreign underwriters while 30 per cent is taken by local insurance underwriters”, Alale added.
A member of the committee, Rep. Onyewife Gabriel cited sections 34, 35 and 37 of the Insurance Act, which prohibits the engagement of unlicensed companies and the penalties for contravening the Act.
“The penalty for violating the Act compels you to pay back all the money paid to that unlicensed company and you risk a two year jail term if you are convicted with no option of fine.”
Also, Rep. Prestige Ossy said “if you did not advertise the jobs, it means you brought in people of your choice with your own interest thereby shortchanging the government.”
Alale, who is expected to appear before members of the ad hoc committee on Monday, is to provide all documents covering every transaction from 2013 to date.
The breakdown of the $500 million showed that in 2013, NIGCOMSAT expended $188,883,845 million, $168,135,252 million in 2014 and $143,775,084 million in 2015 on insurance without advertising the jobs.
The grand total is $500,794,181 million.