GEION Defies FIRS, Minister’s Directive To Pay ARCO Group Reconciled Monies Owed - Paul Ukpabio's Blog


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Thursday, 7 November 2019

GEION Defies FIRS, Minister’s Directive To Pay ARCO Group Reconciled Monies Owed

…as PENGASSAN and NUPENG Gets Set For Mother Of All Labour Strike

Buba Ali is dead. He died out of frustration waiting for money he worked for, but was not forthcoming! His family said he slumped one early morning, and gave up the ghost. Musa Hassan is dead too. He died out of the frustration that killed Buba Ali. Both men died broke despite having worked in the prosperous Nigerian oil industry. Their families are aggrieved but embarrassed and do not want us to use their real names in print.

Ali and Musa are victims of a cross fire between an indigenous oil company known as Arco Group and an American company known as General Electric International Operations Nigeria (GEION), both being operators in the oil and Gas industry. Late Ali and Musa Hassan are among the several number of people who are being owed by Arco Group, an organization that was cheated out of a contract deal and forced by circumstances not to be able to make severance payment to exiting staff.

Late Ali and Musa Hassan represent the agony that most of the ex staffers are facing due to General Electric Operations Nigeria (GEION) refusing to pay what is duly owed to Arco Group, despite the intervention of The Federal Ministry of Labour and Employment, the Federal Inland Revenue Service (FIRS) and the Minister of Labour and Employment.

But respite seems to be in sight as the oil industry, is presently boiling. The industry is angry. The labour unions are angry. And the union leaders of PENGASSAN and NUPENG have declared that all hell will be let loose after their 14 day ultimate for GEION to fulfil the payment of arrears due ARCO Group by this weekend.

The general anger has been provoked by the fact that never has a foreign organization been so defiant to the authorities or an agency of the federal government. And the labour unions are peeved and set to go on a sympathetic protest to identify with ARCO Group an organization that is being owed by GEION a foreign company to the tune of ₦1,891,752,214.48, $7,326,125.99 and EUR 328,189.32, inclusive of accrued interests. These being accumulated reconciled monies, said to have been dubiously concealed by the American company.

According to our investigations, the issue dates back between 2006 and 2015, when ARCO General Electric International Operations Nigeria (GEION) had a joint contract for the maintenance of Nigeria Agip Oil Company (NAOC)’s gas plants in some different locations in Delta and Rivers states of Nigeria.

Somehow along the line, GEION is said to have changed ARCO Group’s position to that of a sub-contractor to GEION, reducing its work scope, and making all manner of unjustified deductions from Arco’s invoices.

But the major act of contention was the issue of the deduction of withholding tax (WHT) at the rate of 10% from payments due to Arco, rather than the stipulated statutory rate of 5% which was supposed to be paid to ARCO Group.

ARCO Group reported the illegal deductions when it demanded WHT credit notes from GEION for the sums deducted from its invoices purportedly as tax. Rather than a coherent explanation, GEION could not explain why the credit notes, reluctantly provided it, did not match the volume of monies deducted from its invoices, ostensibly as WHT.

Upon further investigations, the issue became messier when it was found out that it wasn’t ARCO Group alone that short changed in this manner by GEION. And that attracted a further investigation by the Federal Inland Revenue Service, and the obvious was found out that GEION had not been straight in its withholding tax credit notes dealings.

FIRS in 2017 confirmed that the applicable rate of WHT to be 5%, and instructed GEION to furnish ARCO Group with credit notes to match purported WHT deductions from ARCO’s invoices. While in other climes, GEION would have been slammed with stiff penalties for such fraudulent error, GEION instead was given opportunity to attend a reconciliation meeting between FIRS, ARCO Group and itself, where at the end of the meeting, was confirmed that the total amount over deducted from ARCO Naira invoices was ₦446 million and some $3 million had been over-deducted in the Dollar invoices.

The reconciliatory meeting also confirmed that between 2006 and 2008, the sums of ₦74 million and $1.275 million deducted by GEION were not remitted as required by law, and could therefore not be accounted for. Another sum of $563,861.05 deducted from 12 ARCO invoices in 2014 could not be traced!

The matter eventually reached a dead end when on Tuesday 24th September, 2019, the Hon. Minister of Labour reconvened the meeting to deliberate on the FIRS report, and issued final instructions to the parties through a letter dated 4th October, 2019, that GEION should make the payments as agreed upon. But GEION has continued to turn a deaf ear to the all entreaties at all fronts.

It was at this point that the labour leaders in PENGASSAN and NUPENG stood up in one accord and said “no, enough is enough,” that no foreign company should hold its government agencies in such disregard.  It was against this backdrop that the unions gave a 14 day ultimatum to industry stakeholders to call to order General Electric International Operations Nigeria, GEION, and all other authorities, over the non-payment of terminal benefits to its members who were laid off in August 2019 by ARCO Group.

The ultimatum which commenced on last Monday was signed by PENGASSAN General Secretary Lumumba Okungbawa and the General Secretary of NUPENG Afolabi Olawale. The ultimatum was addressed to the Group Managing Director of Nigerian National Petroleum Corporation.

Both the Labour unions said that the ultimatum became necessary after GEION failed to act according to the decisions reached at the reconciliation meeting with the Minister of Labour and Employment held in September. Which among other things agreed that GEION should within 7 days apply to FIRS for the refund of the over-deducted sums paid to FIRS as agreed during the reconciliation exercise with FIRS. That GEION and ARCO should meet afterwards between the following 2 weeks to reconcile the deductions that had not been done and ensure that the workers who were laid off are paid within one week. Tax deductions made by GEION on behalf of ARCO supposed to be remitted to FIRS but which was not done, should be returned to ARCO within 3 weeks.

GEION was also supposed to meet with FIRS within 2 weeks because of the sum confirmed by the Lagos state Inland Revenue Service office as having been remitted by GEION but presently under dispute for further reconciliation. The unions noted that the refusal of GEION to heed to the agreements is a slap on constituted authority and an affront for which they will have no option but to go on an indefinite strike after the expiration of the ultimatum.

A combination of PENGASSAN and NUPENG strike in Nigeria has always been the most feared in the country as it literally means the paralysis of the economy of a nation that largely depends on oil for survival and popularly referred to as the giant of Africa boasting of about 180 million people.
A nation which critics lament is already going through severe hardship due to insecurity, insurgency attacks in the northern part of the country and land border closure that has restricted trade flow in several sectors of the economy. Can the country survive the impending doom of economic stand still in the next one and a half week? Only time will tell. 

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