US embassy cable - 01ABUJA1957

(C) NIGERIA: PRIVATIZATION DIRECTOR TO QUIT JOB OVER GSM EQUIPMENT CONTRACT

Identifier: 01ABUJA1957
Wikileaks: View 01ABUJA1957 at Wikileaks.org
Origin: Embassy Abuja
Created: 2001-08-07 10:36:00
Classification: SECRET//NOFORN
Tags: EINV PGOV ECON PINR NI
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

S E C R E T SECTION 01 OF 02 ABUJA 001957 
 
SIPDIS 
 
 
NOFORN 
 
 
E.O. 12958: DECL: 1.6X6 
TAGS: EINV, PGOV, ECON, PINR, NI 
SUBJECT:  (C) NIGERIA: PRIVATIZATION DIRECTOR TO QUIT JOB 
OVER GSM EQUIPMENT CONTRACT 
 
 
REF: (A) ABUJA 1679 (B) LAGOS 1933 
 
 
Classified by Ambassador Howard F. Jeter for Reasons 1.5 (B) 
and (D). 
 
 
1. (S) Summary.  Ambassador Jeter hosted Nasir El-Rufai, 
Director-General of the Bureau for Public Enterprises (BPE), 
for lunch on August 1 to discuss the current status of the 
NITEL GSM Equipment contract.  EconOff attended as notetaker. 
 El-Rufai was very candid about his relationship with the 
Vice President, the Vice President,s stake in awarding the 
GSM contract to Ericsson, and his own intention to leave his 
position as head of the GON privatization agency.  El-Rufai 
claimed that the Vice President had manipulated the contract 
award in favor of Ericsson and that this case is just one 
example of what is commonly practiced in the Executive 
branch, e.g., cushioning or manipulating contracts for 
personal and political gain.  He stated that because the 
President believes him capable of manipulating the tendering 
process, as alleged by Ericsson, he has no other choice but 
to resign his position at the BPE.  End Summary. 
 
 
2. (C) On August 1, Ambassador hosted a private lunch for 
Nasir El-Rufai to candidly discuss the NITEL GSM Equipment 
contract, valued at approximately USD 40 million.  (See 
reftels for background on this issue.)  In the intimate 
setting of the Ambassador,s residence, El-Rufai stated that 
NITEL/Ministry of Communications was continuing to negotiate 
the contract terms with Ericsson.  According to El-Rufai, the 
GON asked Ericsson to deliver the products and services at 
Motorola's bid price, which was USD 10 million less than 
Ericsson's bid of USD 49 million.  El-Rufai did not believe 
Ericsson could fulfill the contract provisions at that price, 
commenting that conclusion would only be reached if the two 
sides agreed to cut 25 percent of the contract, through, for 
example, reducing the number of proposed base stations.  But, 
El-Rufai said, "that 25 percent would have to be paid for by 
someone." 
 
 
3. (C) When asked whether the President and Vice President 
might reconsider the contract award, El-Rufai replied no, 
despite the difficulties over negotiations, the Vice 
President would "lose face" if Ericsson did not receive the 
contract.  However, El-Rufai did feel that a compromise could 
be found that would allow the Vice President to save face and 
allow Motorola to participate.  He suggested that Ericsson 
and Motorola split the contract: Ericsson could provide the 
switching network and Motorola could provide the base 
stations.  He noted that this would allow each company to 
provide the service in which it specializes.  Because the 
base stations represent a greater portion of the contract, he 
recommended offering Ericsson some of the sub-contracting 
work, such as the air conditioning towers and power 
generation units, where neither company has specific 
expertise.  (Comment.  El-Rufai's suggestions may not carry 
much weight, as he is not currently participating in the 
negotiations with Ericsson.  End Comment.) 
 
 
4. (C) El-Rufai expressed his deep displeasure with events 
immediately preceding the contract award to Ericsson.  In a 
recent meeting with President Obasanjo, the two discussed 
Ericsson's allegations that El-Rufai had manipulated the 
tendering process to ensure Motorola's success.  (Note. 
El-Rufai had written a lengthy letter to President Obasanjo 
on July 8 defending his role in the tendering process and 
pointing to the questionable activities of the Vice 
President's Aide-de-Camp, who acted on behalf of Ericsson. 
At the time of El-Rufai's meeting with Obasanjo, however, the 
President had not read this letter.  End Note.) 
 
 
5. (C) El-Rufai commented that he would have preferred to 
wait until the President had read his letter before 
discussing it with him.  During the meeting, President 
Obasanjo told El-Rufai that he had total confidence in the 
BPE Director-General, but that he believed El-Rufai was 
clever enough to have manipulated the tendering process from 
the outset to ensure Motorola's success.  The President then 
said that El-Rufai had three problems: first, that there was 
a popular perception that El-Rufai is "too clever"; second, 
in fact, he is "too clever"; and third, his attitude towards 
Ministers and the Vice President is not sufficiently 
respectful or deferential. 
 
 
6. (C) El-Rufai asked the President for permission to sue 
Ericsson for defamation.  Obasanjo reportedly refused this 
request because of the negative political repercussions on 
the Presidency.  The President then asked El-Rufai what else 
he could do for him.  El-Rufai requested permission to leave 
his position as Director-General of the BPE.  El-Rufai argued 
with the President that he could not oversee the country's 
privatization program if Obasanjo believed that El-Rufai was 
capable of manipulating the tendering process.  However, 
El-Rufai said, the President refused to allow him to quit. 
7. (C) El-Rufai confided to the Ambassador that despite the 
President's refusal, he still intended to leave the BPE after 
a 2-3 month period.  He said that he would not leave too soon 
after the GSM Equipment tendering in order to avoid 
speculation over the causes for his departure.  El-Rufai 
added that over the next few months he would expose his 
deputy, Tijjani Abdullahi, and the Legal Department Head, to 
his contacts at the Presidency in hopes that the President 
would choose one of them as his successor.  However, he 
admitted that neither of them had political connections or a 
close relationship with the Presidency.  El-Rufai asked for 
the support of the donor community in advocating for the new 
BPE Director-General to come from within the agency's ranks. 
 
 
8. (C) Ambassador Jeter expressed sincere regret that 
El-Rufai had decided to leave public service.  The Ambassador 
believed that the privatization program would severely suffer 
and so would Nigeria.  While El-Rufai seemed to appreciate 
these sentiments, he did not soften his position on leaving 
the job. 
 
 
9. (C) El-Rufai also showed a great deal of resentment toward 
Ericsson and promised to "get them" at a later time.  He said 
that "time is on my side" and that he was sure that sometime 
in the future Ericsson would need his help and he would be 
able to refuse them. 
 
 
10. (S) The Ambassador asked about the quality of El-Rufai's 
personal relationship with the Vice President, noting that in 
public their relationship had always appeared close. 
El-Rufai replied that, yes, he had believed their 
relationship was good.  He commented that the Vice President 
had never asked him to do anything unsavory or to "bring him 
deals."  He said, however that a friend heard from former 
Senate President Chuba Okadigabo, who is close with the Vice 
President and helps him to "raise money" for the campaign war 
chest, that the Vice President was unhappy with El-Rufai's 
performance because El-Rufai had never brought him a single 
"deal" (read kickbacks). 
 
 
11. (S) El-Rufai explained that the Vice President worked 
through the Ministers, particularly the Minister of Works and 
Housing, to manipulate public contracts for both building the 
campaign war chest for the 2003 Presidential elections and, 
he assumed, for personal gain.  El-Rufai said that the 
President was not a wealthy man and would not likely receive 
campaign support from his supporters during the last 
election.  (Comment.  The PDP party itself is barely solvent 
and would not be able to offer the President much financial 
support.  End Comment.)  Therefore, El-Rufai said, the 
President was tacitly complicit in the Vice President's "fund 
raising" activities, but never involved himself directly so 
as to "stay clean."  El-Rufai commented that the Vice 
President came from a "dirty" background in the Customs 
Service and had continued these practices in the Villa. 
El-Rufai implied that the NITEL GSM Equipment contract was an 
example of such activities. 
 
 
12. (S) Comment.  Many in the international community respect 
Nasir El-Rufai for his integrity and forthrightness. 
El-Rufai's departure from public service would be a 
devastating blow to the GON's image of transparency and good 
economic governance.  Embassy officers have heard many times 
from many sources that the Vice President is directly 
involved in corrupt activities.  El-Rufai's testimony 
provides more anecdotal evidence supporting these sources. 
With El-Rufai gone, the Vice President will be more able to 
manipulate the country's privatization process for personal 
and political gain.  End Comment. 
Jeter 

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