The Kwara State Government has accused former governors Bukola Saraki and Abdulfatah Ahmed of fraudulently negotiating the state into underwriting debts they incurred in the name of Shonga Farm.
In a swift reaction, however, Mr Ahmed denied any wrongdoing and described the claims that his administration and that of his predecessor, Bukola Saraki, guaranteed bank loans for the farm. He said such claims are “uninformed and false.”
Shonga Farm was established in 2004 by Mr Saraki, who was then the state governor, and some white farmers he brought from Zimbabwe.
At a press briefing on Thursday in Ilorin, the state government lamented that the controversial venture was “funded 100 per cent at inception with taxpayers money without any gains accruing to the people of the state under whatever guise.”
The government held the briefing to explain the recent takeover of two Kwara properties by the Assets Management Corporation of Nigeria (AMCON) owing to about N1.7 billion debts of the farm.
The press briefing was jointly addressed by the Attorney-General and Commissioner of Justice, Salman Jawondo; Commissioner for Communication, Bode Towoju; Special Adviser to the Governor on Political Matters, Lateef Alakawa; Special Adviser to the Governor on Political Communication, Bashir Adigun; and Group Managing Director of Harmony Holdings, Abdullahi AbdulMajeed.
The officials said “more than a cumulative sum of N5 billion of public funds and loans secured with the government as guarantor have been sunk into the agricultural project with no traces of any dividends to the people of the state.
“Out of the 13 autonomous farms set up with public funds, nine had been sold out with no kobo paid into the public coffers, even when the government is supposed to hold a paltry 10 per cent equity in each of the farms.”
“The reason AMCON took over the Kwara properties in Abuja is to recover the bad loans that the Farm owes a consortium of banks that invested in it dating back to 2007 because the Shonga Farm Holdings could not pay back on the agreed timeline.
“AMCON had to hold the state responsible because it is listed among the shareholders of Shonga Farms Holdings Ltd, even though its share — allocated to it only after public noise in the early 2000s — is not anywhere commensurate with its huge investments in the project.”
On why the government has not taken legal action against the perpetrators of the alleged fraud, Mr Jawondo said crimes perpetrated through fronts and companies take years to unravel.
However, he said the government would take action once it had gathered the documents necessary to do so, “including files and transactions tucked away by previous officials.
“For instance, the sale of nine farms – in which the government ought to have 10 per cent equity shares – was done secretly without any document left for the government to trace how the transaction was done, at what amount they were sold, the billions of naira proceeds of the sale, and who the buyers were, while no board resolution existed to show that shareholders consented to the divestment process in line with the law.
“When such mind boggling frauds are committed using companies and fronts, it may take many years to unravel the web of conspiracy. It is not enough to prosecute for the sake of mere prosecution. But rest assured that we will prosecute everyone involved when we get all the evidences,” Mr Jawondo said.
“By section 61 of AMCON Act, a debtor or a debtor’s company is defined to include directors or shareholders. That is where Kwara State properties came in. As a shareholder in Shonga Farm Holdings (however little these afterthought shares are, compared to our investment), we are liable for the failures of the farm. What happened was that three out of the five banks who later invested in the Shonga Farm sold their debts to AMCON. So, AMCON inherited these debts and started pursuing Shonga Farm Holdings (which included Kwara government) to come and pay.
“At a point they negotiated and they were allowed to pay a little less than a billion naira within a time frame. They were left with N283 million. They could not pay within the time limit. Don’t forget I said that this loan went to small small farms, not even Shonga Holdings. In fact, this Shonga Holdings was just a body established without anything doing other than managing these small farms. Then, they now exited (after fraudulently activating Clause 17) which means that Shonga Farm Holdings has nothing in these small farms again. The 60% even given to Kwara is already gone. You can see the scam.
“So, as far as AMCON is concerned Kwara is still a shareholder in Shonga Farm Holdings, even though it is doing nothing. It was on this basis that AMCON approached the Federal High Court and sought an attachment of Kwara properties. This basically means we are responsible for the woes of Shonga Farm even when no dime or dividends have come to the people of Kwara State despite its huge investments there.
“And you know why they did that? I have read online of people asking why they picked Kwara and not other debtors. The Kwara state government is the big elephant in this matter. Kwara State government is the most vulnerable in these circumstances. So if you people are claiming they had not used the kwara state property to secure the loan, yes, directly; but indirectly, they have siphoned Kwara State government money. They practically have negotiated Kwara state into debt.”
We didn’t guarantee loans for Shonga farms -Ex-Governor Ahmed
However, in his reaction, the immediate past governor, Mr Ahmed, said the claims that his administration and that of Bukola Saraki guaranteed bank loans for Shonga Farm Holdings (SFH) are uninformed and false.
In a statement by Wahab Oba, his media aide, Mr Ahmed, who was Commissioner of Finance when Shonga Farms was established and whose administration created Harmony Holdings Limited, SFH’s supervisory company, said Shonga Farms is a public-private partnership (PPP) funded under a debt-equity structure and owned by the state government, a consortium of banks and the Zimbabwean farmers.
The former governor said their administrations invested in the project through infrastructure for the farms and its communities such as roads, electricity, water and security infrastructure that are still intact.
SFH, he said, secured bank loans for expansion using its assets as collateral, adding a state government can only guarantee a loan through its federal allocation, which was never pledged.
Mr Ahmed agreed that not all the businesses are thriving, stressing that while the poultry business remains viable, the dairy syndicate stagnated when a global milk company cancelled its off-taker arrangement with SFH. The mixed crop section, he said, stalled due to irrigation problems as a result of federal governnent’s renege on its promise to assist with irrigation.
Mr Ahmed said some of the farms secured new investment to pay off their loans to the banks through SFH, which has paid over N600 million out of an outstanding N900 million to AMCON.
The former governor exonerated the previous two administrations of any wrongdoing in exploiting a business opportunity that attracted investments into the state, developed the local community and placed Kwara State on the global map.
According to Mr Ahmed, SFH attracted foreign and local investments above $100 million and has created over 4000 direct and indirect local jobs besides knowledge transfer to the local community.
He maintained that his and the Saraki administration followed due process in all transactions relating to SFH, “a quality that earned the state government a high ranking from the global rating agency, Fitch. ”
While acknowledging that the SFH financing model was innovative, Mr Ahmed urged the state government to seek clarifications from professionals rather than indulging in theatrics capable of discouraging investment in the state.
The former governor urged the state government to focus on surpassing investment inflows recorded during the previous administrations, including Dangote Industries and BUA Sugar Company.
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