Multi-Million Fraud’: Suspects Arrested In Israel As Nigeria Fails To Act

On Sunday, March 18 this year, the Israeli police arrested three senior officials of Israel Shipyard Limited on charges of bribing government officials in Nigeria. 

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 police in connection with the same bribery case.

Both Mr. Kastav and Mr. Breier were later released to house arrest, and parts of Israel Shipyard’s bank accounts frozen, Gold Bond Group, their parent company announced shortly after the raid.

The arrests followed investigations by the Israeli police and tax authorities as well as other international financial crime busting organisations into a 2010 contract with the Nigerian government to supply two Shaldags – military boats.

The Israeli police and tax authorities are confident the suspects won the contract after paying bribes to government officials in Nigeria.

The suspects have been charged.

The Nigerian Collaborators

As has been the case with crimes involving high-ranking government officials, no one has been charged in Nigeria. It is unclear what the Economic and Financial Crimes Commission (EFCC), Nigeria’s financial crimes unit, is doing about the case.

A source told this newspaper the EFCC was ignored by the Israeli police during the investigation. The EFCC’s efficiency appears to be on the decline, evident in its inability to convict many of the politically exposed suspects it has been prosecuting for years.

Both the commission’s chairman, Ibrahim Magu, and spokesperson, Wilson Uwujaren, declined to comment for this story.

EFCC operatives used to illustrate the story.

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 to 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 payment (believed to have been added to corruptly enrich some officials) was shared between everyone involved.

But the Israeli police have established that the middleman, Amit Sade, received $1.47 million in a suspicious ‘brokerage fee’.

Mr. Sade is believed to be one of the suspects arrested by the Israeli police, although has been unable to independently verify that claim. Prolonged efforts by PREMIUM TIMES to track him down for an interview was largely unsuccessful. Calls to a telephone number known to be associated with him failed to connect while he is yet to reply to emails sent to him. He was for a long time resident in Nigeria. But his latest whereabouts remain unknown.

In Nigeria, Mr. Sade remains wanted too. Last year, he was recommended for “further investigation” after a committee probing defence equipment procurements 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 major defence contracts valued at N6.7 billion. He also brokered many others, including the Shaldags deal.

Insiders say the kleptocratic defence contract gang that emerged in Nigeria in 2007 involved a network of roles grouped into three segments.

The Government Guys make up the first group, our sources say. This gang includes 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.

In addition to being the source of money flow into the network, they come with authority and protect the entire network from the law. In fact, they are the physical manifestation of law and their involvement keeps the crime largely unaddressed, leaving Nigeria weakened against aggressors like Boko Haram and militants in the Niger Delta.

The Shaldag deal was passed down to former President Goodluck Jonathan from his predecessor, Umaru Musa Yar’Adua.

Anatomy Of Nigerian Defence Contracting Gang

The contract was signed with the Nigerian Navy, headed around that time by Ishaya Iko Ibrahim, a vice admiral, and later by Ola Sa`ad Ibrahim, also a vice admiral.

Vice Admiral Ola Sa`ad Ibrahim. [Photo credit: Official Facebook Page of Ola Sa`ad Ibrahim]

The Middlemen: This node is made up 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.

In a typical deal, the contractor receives funds, usually the announced value of the contract, keeps his brokerage fee, returns a chunk to the Government Guys, pays every other participant on his level before paying the actual manufacturer, if needed.

It is still unclear who else joined Mr. Sade in the Shaldag contract from this node.

The Manufacturer. This group is made up of 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 became a crime in Israel in 2008 as part of Israel’s accession to the Organization for Economic Cooperation and Development and the United Nations Convention against Corruption.

Never-ending Crime Cycle

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 and 2017.

Although President Muhammdu Buhari was elected after he promised to aggressively fight corruption, the government appears to be having hard times securing convictions against members of the defence contracting network.

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 from the Middlemen Gang. The report suggested further investigation and prosecution of the indicted individuals.

The committee did not mention the Shaldag contracts. However, the committee mentioned few others directly handled by Mr. Sade’s companies.

Outstanding contracts in Mr. Sade’s bucket are two he received on October 6, 2008. On that day, Mr. Sade won contracts to deliver “assorted ammunition” at the cost of N2.1 billion and supply “20 units of K-38 twin hull boats” at the cost of N3.1 billion

He was paid 95 per cent for the ammunition. He delivered 63 per cent worth, the committee noted. On the K38 boats, he was paid 80 per cent; he delivered only 40 per cent.

Although the EFCC claims Mr. Sade and others identified by the presidential committee on arms procurement are ”under investigation,” none of the individuals recommended for trial have been convicted.