EXCLUSIVE: How Sanwo-Olu violated procurement law, imposed PAYTECH on Lagos schools

Facts have emerged on how Babajide Sanwo-Olu, the governor of Lagos State, jettisoned the state’s procurement law to select Payment Technology Limited (PAYTECH) to collect revenues such as school fees, consultancy charges, rent on behalf of all the state-owned tertiary institutions.

PREMIUM TIMES gathered from reliable sources and proposals submitted to the individual schools that only grants paid either by the Tertiary Education Trust Fund (TETFund) or any other grantors are exempted from the new charges.

This newspaper had in September exclusively reported the imposition of PAYTECH on the institutions with an arbitrary 10 per cent commission payable to the private firm on each transaction.

However, apart from boycotting competitive bidding processes as mandated by the state’s procurement law, as revised in 2015, the governor has also violated a key section of the law which places the procurement responsibility on the chief executive officers of each of the agencies and departments of government.

What the law says

The governing rules on public procurement as specified under section 22, subsection 1, paragraphs (a)-(g) of the law clearly recommend open competitive bidding “using clearly defined criteria and offering to every interested bidder equal information and opportunities to offer the works, goods and services needed.”

However, Section 59 of the law permits restricted tendering but with a caveat as specified under subsection 1, paragraphs (a)-(c), that “subject to the approval of the state’s procurement agency, a procuring entity may by reasons of economy, efficiency, special skills, experience and proven track record of a contractor or service provider over a period of time, initiate procurement by means of restricted procurement if:

“(a) the goods, works or services are available only from a limited number of suppliers or contractors; or (b) the time and cost required to examine and evaluate a large number of tenders are disproportionate to the value of the goods, works or services to be procured, or (c) the procedure is used as an exception rather than the norm.”

The provisions of section 30, subsection 1 and 2, paragraphs (a)-(g) also clarify whose responsibility it is to account for the procurement processes.

Subsection 1 states that; “The accounting officer of a procuring entity shall be the person charged with line supervision of the conduct of all procurement processes; in the case of ministries the permanent secretary and in the case of extra-ministerial departments and corporations the director general or officer of coordinate responsibility.”

And for failure to abide by the law, subsection 2 (a) of section 30 spells out who should be held responsible by saying that an accounting officer must; “(a) ensure compliance with the provisions of this Law by his entity and liable in person for the breach or contravention of this Law or any regulation made hereunder, whether or not the act or omission was carried out by him personally or any of his subordinates and it shall not be material that he had delegated any function, duty or power to any person or group of persons.”

The violations

Without evidence of competitive bidding processes such as placement of advertorials in dailies, subjecting bidders to open processes, among others, the unilateral selection of PAYTECH by the administration of Mr Sanwo-Olu has clearly contravened the provisions of the state’s procurement law.

The choice of PAYTECH has also clearly fallen short of the requirements for restricted tendering as stipulated by the law since the firm is not only relatively new to the financial technology system but does not also possess exceptional qualities that cannot be provided by other firms.

Also, the selection of the company on behalf of the institutions is a clear violation of section 30 of the law which assigns such responsibility to a tenders’ board to be coordinated by the accounting officers for each of the institutions.

For instance, the rector of the Lagos State Polytechnic (LASPOTECH), Ikorodu, is the institution’s accounting officer while a vice-chancellor serves as the accounting officer for the university. Provosts of the Adeniran Ogunsanya College of Education (AOCOED), Ijanikin, and Michael Otedola College of Primary Education (MOCPED), Epe, Idowu Okuneye and Nasiru Onibon respectively, are the accounting officers for the educational colleges.

For the school of nursing and the college of health technologies, their principals are statutorily the heads of the tenders’ boards and should be accountable for the procurement processes.


About the new deal

The new deal, which is at variance with the existing revenue collection models across the various affected institutions, will, according to some officials, further deplete the revenues accruable to the schools.

On the other hand, the concerned government officials, who do not want to be named for fear of being victimised, said the new system was only targeted at enriching a private company.

For instance, the officials noted that if the Lagos State University (LASU) is forced to enrol on the PAYTECH platform as being pursued by the Sanwo-Olu-led administration, instead of N320 and N415 flat rates currently charged per transaction by Paystack Payments Limited and Systepecs Limited respectively, the university will now have to pay 10 percent on each transaction regardless of the amount involved.

A reliable source, who is privy to the new arrangement, told PREMIUM TIMES that on each N150,000 paid by any of LASU’s stream two students, the university will be paying PAYTECH N7,500 as commission.

“That is why the company has proposed to allow the institutions to pay the commissions instead of charging the payers directly. So, if any individual or institution will pay N1 million to any of the affected institutions, then PAYTECH will collect N100,000 as charges,” the source added.

The possible implication of this is that the institutions could raise their fees and charges to make up for the commissions to be paid the company.

“So the decision to make the institutions pay for every penny received is to avoid protests by the students. But directly or indirectly, the students are the victims of this fraudulent policy,” one of the sources within the treasury unit of one of the institutions told our reporter on the phone.

Government keeps mute

Many government officials including commissioners and spokespersons for the administration declined to comment on the matter.

But on his part, the special adviser to the governor on education, Tokunbo Wahab, said he would make details of the procurement processes available to our reporter.

However, many weeks after the pledge, Mr Wahab is yet to respond.

He, however, claimed during one of the telephone conversations with our reporter that he was sure the contract complied with the relevant procurement law.

“I will get you the details of the procurement processes followed on this subject. But I hope you know the government is also empowered to make a case for special situations,” Mr. Wahab said on the phone.

Meanwhile, when confronted with the fact of the failure of the contract to meet the exceptional cases cited by the state’s law, Mr Wahab promised to revert on the matter.

He, however, did not fulfil his promise as of the time of filing this report.

Assembly committee suspends contract with PAYTECH

Following a series of inquiries on the matter, the state’s House of Assembly committee on education on September 28 held a meeting with the representatives of the tertiary institutions and the PAYTECH management.

But findings by PREMIUM TIMES revealed that following the absence of a representative from the office of Mr Wahab, the chairperson of the assembly’s committee on education, Yinka Ogundimu, said the committee directed that actions be put on hold pending the conclusions of the intervention of the committee.

Another member of the assembly, who does not want to be named, said any contract entered with any of the higher institutions would be regarded as nonexistent by the state’s legislature.

“Based on our conclusions when we met the concerned parties, the fact is that there is no agreement in place and as of now, there is no contract awarded to PAYTECH by any tertiary institution that we are aware of in this state,” the source said.

The source said the special adviser as the official in charge of the tertiary institutions, and being responsible for the implementation of the policy, must appear before the committee for explanations.

But since September 28 when it met, there has been no other meeting held by the committee on the matter.

Government forges ahead as AOCOED enrols

Despite the hues and cries over the development, the government, through the office of the special adviser, has insisted that schools must enrol on the PAYTECH platform, failure of which defaulters are threatened with sanctions.

Mr Wahab has consistently insisted that the PAYTECH platform would ensure that relevant authorities, including the governor, offices of the state’s accountant general and auditor-general and the heads of various institutions are able to, “monitor, real-time, how monies are being paid into the various institutions’ accounts.”

Meanwhile, the provost of AOCOED, Mrs Okuneye, has confirmed that her institution has enrolled on the platform.

She, however, failed to give details of the contract entered with the company and whether the 10 percent proposed by the company was approved.

In her response to this newspaper’s inquiry on the subject, Mrs Okuneye, a professor of education, only tersely said via a short message that; “Yes we have enrolled. Thanks.”

But the governing council chairperson of LASPOTECH, Rasheed Ojikutu, told our reporter on the phone that the institution is yet to enrol on the platform.

He could not speak further on the phone citing his preference for physical conversations.