Durosimi-Etti (MD Skye Bank).
Though Rivers state has seen increased IGR levels, Skye bank’s total failure to pay the guranteed monthly revenue for almost three years has resulted in a short fall of over a hundred billion naira in revenue accruable to Rivers state. This has cast a shadow of suspicion and scandal over the whole deal.
Governor Chibuike Rotimi Amaechi of Rivers State was one of the first governors to seek out ways and means of bolstering his state’s IGR. After much soul searching, River State summed up its need ‘to institute an efficient and effective system for the monitoring, collection and remittance of internally generated revenue…’ To avoid the mistake of its predecessors which led to the loss of huge sums on ill-fated government operated tax schemes, the Chibuike Rotimi Amaechi administration decided to partner with the banking sector in the bid to generate greater revenue. On December 31, 2008, the Rivers State Government (RVSG) represented by the governor, Rt. Hon. Chibuike Rotimi Amaechi, signed a Memorandum of Agreement (MOA) with Skye Bank PLC, already a major player in the state’s developmental sector to partner with RVSG in instituting an efficient and effective system for monitoring, collection and remittance of internally generated revenue(IGR) payable to Rivers State from within and outside the state. The agreement would also cover the provision of E-bursary, auto-registration and enumeration services.
N8 BILLION TARGET Under the terms agreed with the Rivers State Government, Skye Bank PLC. guaranteed that in the first quarter of 2009, RVSG would realize the sum of N18 billion at N6 billion a month. From the second quarter till the expiration of the MOA, Skye Bank would realize for the RVSG, the Monthly Revenue Target of N8 billion a month. Skye Bank also guaranteed to pay RVSG the shortfall whenever RVSG was unable to collect the monthly revenue target.
Prior to this partnership with Skye Bank, RVSG could only raise N2.5 billion per month as internally generated revenue (IGR) due to corruption and poor management. This became, therefore, the benchmark in evaluating Skye Bank’s performance under this project. The RVSG agreed therefore to pay Skye Bank PLC 15 percent commission on the total sum of IGR collected above the sum of N2.5 billion per month. The project would last for a period of three years, starting from the date of execution of the MOA.
During the three year period of this agreement, Skye Bank would enjoy ‘exclusivity’. The government would not permit any of its officers or agents to enter into any discussion or accept any proposals from any other bank, company or persons with respect to any of the functions set out in the MOA to be undertaken by Skye Bank. At the end of the ‘exclusivity’ period, Skye Bank shall be given the right of first refusal in any negotiations relating to the engagement of the services of consultants, financial institutions or any company for Internally Generated Revenue Business.
Accordingly Skye Bank was also appointed by RVSG as the lead bank to undertake receipt of tax collections made by other collecting banks such as Bank PHB and remit all tax collections to the RVSG IGR Consolidated Account as well as reconciliation of accounts with RVSG and collecting banks. From the month of January 2009 when the MOA came into force to the present Skye Bank has failed consistently to come up with the guaranteed monthly target of N8 billion and not for one single month has the bank ever come up with the shortfall. By so failing, the bank owes Rivers State an amount in the region of a hundred billion naira. The outrageous angle to this is that the state governor who hammered out this deal with Skye Bank has shown no interest in getting Skye Bank to pay up what it owes the state. This has led to all kinds of speculation. At many fora, this year the governor had announced that he was getting between four and five billion naira from Skye as monthly IGR collections, making people suspicious and wondering why after hammering out a deal with Skye Bank which put Rivers IGR under their control in return for a guaranteed monthly pay of N8 billion, why would Gov. Amaechi then be content to accept much less without any explanation to Rivers people on whose behalf he signed the MOA. Amaechi and Skye Bank have carried on as if the deal was a private business matter. In a recent interview with Chamberlain Peterside the Rivers State commissioner for finance, the commissioner revealed that people from the credit rating agencies Standard and Poors and Fitch had also wanted to know why Skye Bank was not paying the shortfall as guaranteed. Did they not do their due diligence before making a guarantee to the Rivers State Government ? Peterside also revealed that Skye Bank and Governor Amaechi had recently agreed to reduce the guaranteed monthly sum to N6 billion. The books also show that Skye Bank declared a total IGR receipt of N5.7 billion in the month of July. The state’s finance commissioner however confessed that issues regarding the money owed Rivers State in the IGR deal were not his ‘call’. (Interview with Chamberlain Peterside appears on this blog under ‘Rotimi Amaechi’s Issues’) Despite the recent addendum to the agreement, it is left to be seen whether Gov. Amaechi would be bound by the rule of law and the accountability expected of his office with regards to the huge shortfall which Skye Bank owes Rivers State as the IGR deal comes up for renewal this December. Chamberlain Peterside has been quick to dispel the notion that renewal of the deal for Skye Bank is guaranteed. The former Merrill Lynch financial manager is of the view that negotiations will be decisive, pointing out that the deal with Skye Bank is not like a marriage till death do part. Whatever that means, there will be considerable public interest in the next Rivers IGR deal, unlike three years ago.
IGR COLLECTION FIGURES – JANUARY 2009 – JUNE 2010