The Ethical Burden of Obasanjo's "Blind Trust" And Transcorp

QUOTE from Wikipedia

http://en.wikipedia .org/wiki/ Blind_trust   

A blind trust is a trust in which the executors or those who have been given power of attorney have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust. Blind trusts are generally used when a trustor wishes to keep the beneficiary unaware of the specific assets in the trust, such as to avoid conflict of interest between the beneficiary and the investments. Politicians often place their assets in blind trusts so they cannot be accused of conflict of interest when they direct government funds to the private sector.

UNQUOTE 

The ethical blindness - or sight-challengedness -  with which our Nigerian leadership often approaches various issues can be amazing.   One  reads of heads of regulating agencies accepting car gifts from those they regulate and harrumphing that such gestures will not affect their objectivity; ministries donating public money for birthdays and book launches of their ministers and other high officials; adult brothers and mothers' and concubines' health, hotel and/or other accommodation bills paid for from the public purse, etc.    More befuddling is that when confronted with the clear moral burden at hand, there is amazement exhibited by some protagonists that the issue is raised at all, and you find certain actors, both paid and unpaid, coming out of the woodworks asserting that nothing is wrong, and that the accusations are being made out of envy and/or political pettiness.

With regard to the matter at hand, the president's personal involvement in the running of his Ota Farm [ http://www.obasanjofarms.com/ ], and in Obasanjo Holdings [ http://obasanjoholdings.com/ ] well into his presidency is a well-known fact. For example, back in December 2004, and again in September 2005,  Governor Orji Uzo Kalu of Abia State, in one of his many verbal and written combats with the president over his impounded Slok Airlines and other matters,   indicated that he once sat with the president while he (president Obasanjo) was signing Obasanjo Farm checks of First Bank, Plc, among several accusations. [See http://odili. net/news/ source/2004/ dec/2/303. html ; and http://www.nigerian muse.com/ nigeriawatch/ officialfraud/ Orji_Uzo_ Kalu_accuses_ Obasanjo_ before_EFCC. htm ] That statement has not been controverted.  More importantly, the nation was once told earlier in November 2004 by then presidential aide Remi Fani-Kayode (now Minister of   Culture and Tourism) that since Obasanjo's farm and other business concerns earn approximately N30 million per month, the president was not inclined to steal government money, meaning that the president was benefitting well, thank you, from such proceeds [ http://www.nigerian muse.com/ important_ documents/ Obasanjo_ farm_wealth. htm   ]. 

And now August 2006, and disclosure of a Blind Trust investment in Transnational Corporation of Nigeria (Transcorp http://www.transcorpnigeria.com/ ) , Nigeria 's answer to South Korean "Chaebols",  which was incorporated on November 17, 2004.  When did the Obasanjo Holdings become "blind", if that was the vehicle? Can a "blind trust" have a "sighted" name?    Who are its executors?  Was it registered with Corporate Affairs Commission so as to be able to trade?  And now that the blinded trust is with sight, has the basic legal requirement of its blindness not been violated, in which case it should disgorge itself immediately of the 1, 20, 100 or even 200-600 million share in Transcorp  (out of how many? A total of 1 billion as alleged?) , or more accurately (since no Initial Public Offering IPO has really been made yet) in any Private Placement offering taken up in Transcorp?

These are germane questions which many Nigerians, including yours truly, are raising.   These are questions that demand answers - and quickly too.  

The ethical dilemma which the President has entangled himself with - the multi-billion- naira donations by Corporate Nigeria both to his 2003 Campaign and to the Presidential Library Fund; the establishment of a private University at Bells Technological University in the midst of the declining fortunes of our public universities; and now the allegations of "blind trust" holdings in a highly-favored Transcorp - constitute a really troubling pattern.   One gets the feeling that he is not properly advised by lawyers around him, and/or by his public relations handlers that a person in such a high position can be easily accused - and rightly so - of unrighteous influence peddling.   There is a certain base level in which these activities can be described as strictly "legal", but at another level of public decency and perception, they leave a uncomfortable stink when every spirit of the law has been violated.

The president can do better.  He should indeed speak to the nation on Transcorp and his involvement - and quickly too - and make amends if necessary.

  NigerianMuse. com

Bolaji Aluko

August 19, 2006

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DAILY TRUST EDITORIAL:

August 18, 2006

 Obasanjo, speak on Transcorp

Recently, newspaper reports alleged that President Olusegun Obasanjo holds 200 million paid-up shares in Transnational Corporation Plc (Transcorp). Transcorp, a mega-company that President Olusegun Obasanjo has actively promoted as Nigeria's answer to South Korea 's Chaebols, has somehow emerged as the preferred bidders in the controversial sales of strategic national assets such as the Hilton Hotel, Abuja and the National Telecommunications Plc (NITEL).  

As we write this, the Presidency has not made a formal response to the allegation. Nor has it responded to another newspaper story alleging that the President's holding in Transcorp is 600 million shares, and not 200 million as earlier stated. The President's shares in Transcorp are said to be held in a blind trust "in line with international best practices," and are being run by some prominent Nigerians and a foreign national. The same story has it "that Obasanjo Holdings Blind Trust subscribed to 200 million shares in Transcorp when it was incorporated in November" and that the "shares were fully paid" for.

The President ought to know that even before the newspaper publications made the issue of the ownership of Transcorp a matter for national discourse, most Nigerians, in the safety of their homes and places of work, have marveled at Transcorp's extra-ordinarily good fortune. Nigerians have asked whether it is proper that Dr. Ndidi Okereke-Onyiuke, who is the Director-General of the Nigerian Stock Exchange, umpire and regulator of publicly quoted companies, should also be Transcorp chairman. Not a few eye-brows were raised at the absence of transparency in the sale of NICON-HILTON Hotel, a cultural heritage that sits on one of the world's choicest estate, to Transcorp, a company which, because it has zero experience in the hospitality industry, should not in the first place have bidded for it.   

And now NITEL, where the BPE, in a desperate bid to hand over the telecommunication giant to Transcorp, over-reached its own record of dubiety and disingeniousness. Initially, BPE said 51% of NITEL was for sale. After the investors' bids were rejected, BPE decided to have a negotiated sale, only to come out with an announcement that Transcorp has emerged winner of the 71% of NITEL, a substantial remove from the 51% that has been on offer.

The events of the past two weeks justifies the position that Nigerians deserve meaningful clarification on Transcorp and its ownership structure from relevant agencies and persons like the Corporate Affairs Commission, the BPE, the National Council on Privatisation, General Olusegun Obasanjo and the relevant committees of both Houses of the National Assembly. It is noteworthy and commendable that Alhaji Atiku Abubakar, the Vice-President around whose neck the yet-to-be proved allegations of corruption were strung by this administration, had the presence of mind to reject the Transcorp shares when 100 million of them were offered to him. If Transcorp is really in the habit of offering shares to highly placed Nigerians in public service, notwithstanding the clear strictures of the fifth schedule of the 1999 Constitution, could it have made such offers to number two without doing same to number one" Was an offer made to the President, was it accepted or was it refused? In relation to Transcorp, was it the case that at a point, the President was a judge in his own case? If the President really owns shares in Transcorp, how much of a conflict of interest does that pose? And how does this untidy bit fit into the other stories concerning the donations for a Presidential Library?   

So the President needs to speak, directly to Nigerians, on the Transcorp matter. It is clear that the direct route of talking through a sympathetic newspaper publication that attempts to make the transactions look good has failed. For one, the laws of Nigeria and the 1999 Constitution do not know what a "blind trust" is. If blind trust is unknown to our laws, then there can't be "an applicable international best practice of a concept," Obasanjo Holdings Blind Trust "which is unknown to the laws of the Federal Republic of Nigeria. And if a TRUST was really created, for whose benefit was it created, and if a trust was registered, where was it registered?

INDEPENDENT

Obasanjo Holdings and Transcorp Plc: 

http://www.independ entngonline. com/news/ 102/ARTICLE/ 9005/2006- 08-16.html 

16th August

The tepid denial of the Senior Special Assistant to the President on Media Matters, Mrs Remi Oyo, notwithstanding, there is the need for a comprehensive statement directly from the President of the Federal Republic on the nature of his involvement or lack of it with the Transnational Corporation of Nigeria Plc (Transcorp).  

In a recent newspaper report, it was alleged that Obasanjo Holdings, a firm purportedly managing many hitherto unknown companies owned by President Oluseggun Obasanjo, subscribed to 200 million shares when Transcorp was incorporated in November 2004. According to the report, full payment was duly made in respect of the said shares. If the allegation is true, then there is a clear conflict of interest.

A 'blind trust,' in its conventional application, is a special purpose vehicle, which is brought into play when an individual with private stock holdings goes into public office, elective or appointive. By as it were erecting a wall between the owner of the shares and its operations and immediate direct benefit, a 'blind trust' seeks to limit, if not entirely eliminate, potential conflict of interest.   

However, a grey area exists on the moral front about this particular transaction. Can a 'blind trust' be justified when a person has already assumed office? For the presumption in a democracy is that all personal additional business interaction ceases the moment the person assumes high office. Given the nomenclature as well as the raison d'etre for its foundation, a 'blind trust' involving Transcorp Plc is fraught with grave danger.

The company was set up specifically as a "national champion" with the clearly stated intention of capturing the commanding heights of the economy. In this guise, there is clearly no way in which anyone in a position of authority will not be in an invidious position in his dealings with Transcorp, if he also has indirect holdings in the company. There have always been problems of conflict of interest in the promotion of "national champions" and this newspaper has consistently pointed out the landmines.   

This becomes even more poignant in a case where openness is not enshrined through a "Freedom of Information" process. In the case of Transcorp there have been grave allegations of favouritism, granting of special favours and privileges as well as rigging of privatisation deals. All these issues came to the fore during the recent sale of the country's first telecommunication national carrier – NITEL.

The absence of anti-monopoly, pro-competition and fair trading frameworks within the country clearly breeds a situation of distrust. Such frameworks ought to have preceded the privatisation programme. In the absence of these, there will always be allegations of unfairness. The issue here brings up a wonderful opportunity to set the parameters in which a democratic structure and culture can evolve.   

Office, as Lord Acton has famously observed, "does not sanctify the man." In a democracy office-holders are in a position of trust and there must be clear rules and regulations to minimise conflicts of interest and distortions. These rules must apply across the board at every level of public office holding.

We should initiate a Parliamentary Standards Commission headed preferably by a respected retired judicial officer to oversee the entire gamut of behaviour and decide on issues of propriety. There must be a register in which public office-holders have to declare direct and indirect interests in private and public companies including those of their immediate family members. The register must be made public, sworn to on oath and regularly updated. We must have a clear National Democratic Agreement on the issue of acceptable gifts and gratification for public office-holders.

Finally, since apart from NITEL, Transcorp Plc is known to have made bids for other public companies as well as oil blocks, it is absolutely vital, in the interest of fair play, open competition and probity, that the matter is speedily clarified and the shareholding structure of the company opened up for public scrutiny.