In early November, the Senate blew the whistle and launched a probe into the controversial 1.0 per cent charge on Treasury Single Account (TSA) remittances made via Remita, a Federal Government-outsourced e-payment and e-collection platform owned by SystemSpecs. The seemingly valid contract went bad.
In October 2011, after a rigorous evaluation process by the Central Bank of Nigeria (CBN), the Office of the Accountant-General of the Federation (OAGF) with support from their foreign consultants, Remita, an e-payment and e-collection platform owned by SystemSpecs was selected ahead of local and foreign options to provide the electronic payment technology to power the Federal Government’s Treasury Single Account (TSA) initiative.
Emir of Kano, Muhammadu Sanusi II was at the time CBN governor. Former deputy governors of the CBN, Mr Tunde Lemo and Mr John Ayo, signed the contract on behalf of the Inter-Departmental Committee of the central bank.
However, by January 2012, the foreign core accounting software of the government was not ready and three months behind schedule. The foreign developed Real-time Gross Settlement Systems (RTGS) that was initially expected to drive the payment leg was not ready and running about one year late. Even when the RTGS was ready, it was observed that it was not appropriate for retail payments.
SystemSpecs is an indigenous software company founded 24 years ago by John Tani Obaro with Nigerian diplomat and academic, Dr Christopher Kolade as Chairman of the company’s board. Other board members are: Mr Emmanuel Ocholi (Non-Executive Director); Dr Ernest Ndukwe (Non-Execitive Director); Deremi Atanda (Executive Director) and Dr Emmanuel Eze (Executive Director). John Tani Obaro is the company’s Managing Director.
In January, 2012, the indigenously developed Remita empowered the federal government to commence the TSA project despite the listed challenges.
Remita further went ahead to integrate with the Government Integrated Financial Management Information System (GIFMIS) when it became ready in April 2012 for a full end-to-end processing that the country has today.
Remita started to process outward payments in January 2012 with a pilot of 116 Ministries, Departments and Agencies (MDAs) which has increased to over 900 MDAs today.
The second phase of the TSA – Revenue collections and monitoring – commenced with a stakeholders’ meeting in May, 2013, where fees were agreed by all the stakeholders. A committee comprising CBN, Office of the Accountant-General of the Federation (OAGF), the banks and SystemSpecs agreed on a fee of 2.5 percent. This was, however, rejected and reduced to 1 percent by the AGF. CBN thereafter by a letter dated, December 17, 2013 notified all the banks of the 1 percent rate to be shared by all parties and subsequently updated the contract with SystemSpecs accordingly.
The full implementation kicked off in March 2015 and gained traction when President Muhammadu Buhari mandated the closure of all federal government accounts held in commercial banks by September 15, 2015. This led to a massive one time surge especially for September and October as federal government ministries, departments and agencies (MDAs) sought to comply.
As a result of the full implementation of TSA, the Federal Government is now able to electronically track and monitor all government inflows and disbursements including the Nigerian National Petroleum Corporation (NNPC) complex multilayer structure, thereby enhancing transparency in use of government funds.
N8 billion refund
On Wednesday, Mr John Tani Obaro, Managing Director of SystemSpecs, owners of Remita disclosed that SystemSpecs and participating banks took a “business decision” to return to the CBN the N8 billion collected as service charges for TSA remittances on its Remita platform despite a valid contract backing the transaction.
The move followed public outcry and a subsequent CBN order to refund the now-controversy-ridden charges.
The refunded N8 billion represents monies accrued from the one per cent TSA remittance service charge collected by SystemSpecs, participating commercial banks and the CBN from federal government MDAs when transacting on the Remita e-payment and e-collection platform.
Obaro said this during a public hearing on the “Abuse and Mismanagement of Treasury Single Account (TSA) Regime” organised by the Senate Joint Committee on Finance, Banking, Insurance, and other Financial Institutions and Public Accounts. The Chairman, Senate Committee on Finance, John Enoh, doubles as Chair of the joint Senate probe committee.
The Senate had, in early November, blown the whistle on the 1.0 per cent charge on the reported N2.5 trillion moved to the TSA – translating to N25 billion. The Senate consequently ordered a probe.
Obaro told the Senate joint committee that although SystemSpecs was not averse to price renegotiation in view of “emerging realities”, the one per cent fee was discussed by all stakeholders, set by CBN and Office of the Accountant-General of the Federation (OAGF) and communicated to all MDAs by the CBN.
“We did not charge above the agreed rate,” he insisted. “On September 14, 2015, the OAGF had expressed concern at a project review meeting about the fees considering the enlarged scope of the project. SystemSpecs was not averse to price renegotiation. We wrote to the CBN that we are open to renegotiation and that an all-stakeholders’ meeting be convened.
“Three weeks later, on October 7, we wrote again that an all-stakeholders’ meeting should be convened to review processing fees.
“Two weeks later, on October 27, we were instructed by CBN to refund all fees that had accrued to us in accordance with the contract. We strategically chose to comply within 24 hours of receipt of their letter as we did not want to allow the issue of fees in the heat of the moment to becloud the work we had done in the delivery of TSA for Nigeria. While refunding our own portion of the fees as demanded by the CBN, however, we accompanied the refund with a fairly worded letter stating why the fees legitimately earned in line with our contract should be refunded to us.
“On November 11, two weeks after refunding all fees and operating zero fees at the risk of a legal battle with other stakeholders, without hearing our own side of the story, we were erroneously accused of fraud, abuse and mismanagement of the TSA in the hallowed chambers of this highly respected Senate.”
Obaro further said that the firm felt unfairly treated in the whole episode.
“To say the least, sir, we feel used, abused, unappreciated and abandoned by the country for which we stuck out our necks and faith to deliver the platform that made the TSA possible, which in other climes, all citizens would be proud of, acclaimed, encouraged and motivated to further the frontiers of greater technological breakthroughs and innovation,” he said, just as he wondered how enforcing the terms of a validly signed and subsisting contract amounted to fraud.
Syndicated attacks
In what Obaro described as an “unfortunate syndicated attempt” to discredit Remita, he said the Senate was misled into believing that N25 billion was paid out to SystemSpecs in one day for doing nothing. “Nothing can be further from the truth and, by now, it is obvious to the world that the Senate was misled,” he said.
According to him, the objective of the detractors was to paint Remita black in order to achieve a set goal – to disrupt the technology platform and force government to abandon the TSA policy.
“Our consolation is that despite this barrage of syndicated attacks, many Nigerians and international observers believe that this TSA way is the way to go. We are proud that our indigenous Remita kick-started this project at a time when CBN had written to OAGF in 2011 to delay the commencement of the project because the technology was not yet in place.”
Obaro reminded the Federal Government of the importance of contract sanctity. “I need to reiterate the fact that we have a valid contract to provide the Payment Gateway for TSA,” he said. “Many are beginning to question the worth of any agreement with the government if the rules can simply be changed in the middle of the game without warning or reason.
Unreconciled remittances
Meanwhile, the CBN governor Godwin Emefiele, and the Accountant-General of the Federation (AGF) Ahmed Idris, at the Senate joint hearing differed on the size of the TSA remittances.
While the CBN governor told the Senate joint committee that TSA remittances by December 8 was N2.038 trillion, the AGF said it was N1.8 trillion.
According to the CBN governor, remittances through Remita was N1.419 trillion; Real-time Gross Settlement’ Systems (RTGS) N233 billion, and CBN direct payments, N269.7 billion.
Emefiele confessed that he was not aware of the 1.0 per cent charge until the Senate blew the whistle early November. He described the charge as “too high” and “exorbitant”.
“The truth is that I would like to confess that I did not really know (because I have to say what I know) that there is one per cent charge being taken on that account until the Senate and the House of Representatives raised it when we were summoned to the office of the Senate President and I sounded very surprised at that session and I promised that I was going to look into it.
“Indeed, I asked, who is Mr Obaro and what is this N25 billion about? I was very surprised because I didn’t know anything about it. It was immediately after that, that I swung into action and I discovered that the issue raised in the office of the Senate president was right and I immediately called the MD of Remita to find out who he was, and I insisted that the money had to be reversed. Immediately after that, it was reversed,” the CBN boss explained.
The accountant-general, Ahmed Idris told the Senate joint committee that, by his records, there was no signed agreement by his office on TSA remitting service.
Idris: “As far as I am concerned, there is no agreement between the CBN and our office that is duly signed. As far as I am concerned, my office has not made any payment to any service provider with respect to moving TSA. We have not made any payment. We have not engaged anybody and therefore we have not paid anybody. I don’t have any reason to hide any information, what I told you is what I know.”
Emefiele and Idris nonetheless told the Senate joint committee that the Remita arrangement was a “stop-gap” necessitated by CBN’s inability to internally manage the TSA regime at the time the agreement was signed.
For now, the Senate probe continues.
-Leadership
