Once in a generation, the fight between David and Goliath reoccurs. This time, it is happening in Nigeria, in Rivers State, and in fact, in Bonny Island.
Now, a dispute that may rock the entire landscape of the Niger Delta has emerged. It is contained in a 500-page document containing outcry over alleged wrongful termination of a contract and demand for over N1Bn as outstanding payment due the aggrieved contractor.
It is David and Goliath, it is Macobarb and NLNG. It is about what often happens to indigenous contractors working for multinationals which many such indigenous companies fear may happen to any of them.
The intriguing part however is that the names of both the CEO of the weeping firm (Macobarb) and the man fingered as the alleged antagonist within the NLNG are both Nigerians, both southerners.
Details:
An indigenous entrepreneur doing business under ‘minor civil contractor’ category with the giant company, Nigeria Liquefied Natural Gas (NLNG), has cried out saying his enterprise has been ruined through alleged acts of vindictiveness, wickedness and total suppression, leading to eventual termination of contract and mounting debts.
The Delta State-born entrepreneur, Shedrack Ogboru, cried to newsmen in Port Harcourt at a press briefing. He said his firm, Macobarb International, is now heavily indebted to a commercial bank due to N68m loan obtained since 2014 to execute the first phase of the job that has turned into a protracted debt with unmentionable interest accumulation all due to the NLNG refusal to release payment.
He said the failure of the NLNG to honour payment schedules without any reason led to his firm being blacklisted by the Central Bank of Nigeria (CBN) for bad debt all because of contract liability of N1.147Bn that the multinational corporation (NLNG) has refused to redress to this moment.
The indigenous contractor wondered if the NLNG would do this to any foreign company that did not do anything wrong, at a time the federal government is striving to assist indigenous businesses to get ahead. His surprise is that no government agency he cried to has been able to go beyond preliminary responses, only to go silent after interacting with those he called NLNG demigods.
Narrating his ordeal to newsmen, Ogboru said his firm, Macobarb, got a job on January 9, 2014, to fabricate and install world class access entry system called ‘Integrated Turnstiles and Vehicle Barriers System” that must be fabricated in Europe for security and seamless entry into the world class facilities of the NLNG. He said this contract worth N95m was to be executed in phases supervised by a team of experts and engineers from the NLNG.
Ogboru said the contract term insisted that there would be no mobilization fee or upfront payment but that each milestone executed and certified by the supervision team that included expatriates would not be delayed in payment so as to move to the next phase.
He said the bitterest part of the agony was that the contract terms insisted that the staff and equipment procured for the project must never be removed from site nor be used to do any other job until completion of project, except with express approval in writing by the NLNG.
Trouble came, he said, when he fabricated the turnstiles in Europe and met the first payment milestone, only for request of about N30m payment be rejected despite endorsement by all the four engineers supervising the project in Bonny, just because a Nigerian that did not want him on the job declined assent without pointing out justification.
He said NLNG nominated foreign experts that must inspect the fabricated equipment abroad and confirm before payment would be made, and that the experts inspected and issued approval letter of correctness, yet, only one man in the NLNG stopped payment.
Ogboru said he went and knelt down and pleaded with the man not to strangulate the project but the oppression and suppression continued. As a result of this, the N68m loan turned into bad debt with accumulated interest. “Important people lost their jobs in the commercial bank that funded the project, the CBN blacklisted us, and the equipment and men trapped in NLNG ran into several hundred millions of naira”.
Tendering volumes of documents, Ogboru said he reported the actions of the man to the management of the NLNG but efforts to resolve the matter proved abortive as the man worked round the system as an insider against all rules and all contract terms until the contract was terminated after several years.
Ogboru lamented thus; “Do you know that the moment this man got this contract terminated, he now got the NLNG to pay the money he refused to approve, which now meant nothing because the trapped equipment and men have attracted loss of over N1Bn at that time. I had written the NLNG to warn them that by continued refusal to pay, and by trapping all equipment and men on site, that liability was piling up hugely”.
He also said the NLNG held several meetings under the former Managing Director, Babs Omotowa, on the matter and even offered him back the contract after seeing how he had been oppressed, but that he was asked to take back the remaining part of the job at the same old contract rate of 2012 evaluation when the Dollar was a mere N150.
Ogboru said he has petitioned to the senate, the Rivers State House of Assembly, and several other bodies but that the same forces inside the NLNG suppressed the efforts only for the authorities to ask him to go to court, if he wished.
He said this same official who was even not part of the project team but who held oversight authority over the real supervisors, stepped in and wanted to change the payment terms one and half years into the contract just to hide his repeated payment denials that he fostered on the contract. This action caused crisis and ruined the contract.
On why no one could control this official since the contract terms were straight and simple, Ogboru said some persons are believed in the place to belong to a powerful and dreaded society that is believed to control everything there.
He said the official in the NLNG, after holding down payment for over a year, started canvassing for cancellation of the contract. The management at that point said cancellation was not an option. At last, however, the NLNG ended up doing exactly that, cancellation.
He asked: “Must a citizen be suppressed and maltreated so much? They know that a small firm like Macobarb cannot stand the financial power and wide connections of the NLNG and some evil desks in the place that can reach any authority and suppress any matter”.
He said the NLNG repeatedly avoided all the mediation clauses provided for in the contract only to openly taunt the contractor to go to court. He said, “Why would a world class corporation such as the NLNG boldly breach all clauses of the contract and reject arbitration clauses only to nudge the hapless contractor to go to court. Does this mean that multinationals think that Nigerians courts are not for the ordinary Nigerians?”
Ogboru appealed to all authorities to compel the NLNG to pay his firm the over N1Bn that they owed him so that he could offset the numerous liabilities on Macobarb and begin life afresh. He said he was prepared to go to any length to ensure that justice is done because an indigene has a right to do business in his fatherland. He also wondered why a corporation of world class status has done this without any worry.
He said all documents are intact to show that Macobarb won the job neatly, executed it to the satisfaction of all experts on the project and was entitled to payments when each milestone was reached. He said the contract provided for penalty for any party that defaulted in meeting milestones at the right time and wondered why the NLNG would be guilty and still pass the liability to Macobarb.
$$
14th June 2019
NIGERIA LNG LIMITED
NLNG acknowledges your enquiries on an erstwhile contractor and wishes to clearly state the following:
- That claims by Macobarb International Limited (Macobarb) regarding its dealings with NLNG are false and ludicrous.
- Macobarb was awarded the contract for Access Control to the Central Control Room, Laboratory, Shutdown Village and Gas Plant Area Improvement Project in 2014 after a competitive tender process, based on the company’s technical and commercial submissions as well as possession of financial capability and standing to execute the contract within the stipulated timeframe to the expected standards and stipulations.
- A contract was signed between NLNG and Macobarb and valued N95,479,057.86 with 18 months delivery schedule commencing in January 2014. It was never contemplated, neither was it written into the Contract Documents, that the contractor would take a loan to execute this project. The decision for any contractor to take a loan is purely on its own account and for its independent purposes. In this case, that delineation was prominent as NLNG was not privy to any loan transaction by Macobarb.
- Macobarb was unable to execute the project, thereby incurring protracted delays, despite several interventions by NLNG to help the company overcome its inability to finance the project in line with its obligations.
- It should be stated clearly that it was on this ground of non-performance, not on any act or omission attributable to NLNG or any of its personnel, that the contract was terminated in November 2015, after the date stipulated for its completion. Upon termination, Macobarb was paid N41,261,155.91 for work it was able to accomplish and the materials it elected to handover to NLNG during the close-out process.
- Therefore, there is no truth in Macobarb’ s claims that it was denied any payment.
- Furthermore, NLNG is not liable to Macobarb in the sum of N950 million, or any other sum that MACOBARB has claimed or will claim in different quarters, on the footing of bank charges for a purported loan which NLNG did not authorise, request, or guarantee.
(By Andy Odeh, Manager, Corporate Communications and Public Affairs)
$$
MACOBARB CEO REACTS
These contract pages show NLNG admissions to pay Standing/Down time on contract:
(1) Section of contract, Pg 31 of 48, Article 13, subsection 13.2 Says : “The Contractor shall be responsible for taking due account of the site conditions, climate and incidence of inclement weather on the Site, which may include periods of very heavy rainfall and a high of ground water. The Company shall not make any additional payments, or pay for any standing time for personnel and equipment if the contractor encounters such conditions UNLESS such site conditions are considered as being exceptional and unforeseeable by an experienced Contractor.
Note: NLNG say they will pay for standing time for contractor personnel and equipment if an exceptional and unforeseeable condition occurs not the fault of a contractor – even if it is exceptional and unforeseeable RAINFALL.
Then, can you imagine them now turning round to say they will not pay for a deliberate repeated payment denials?
(2). Same Section 7, Article 5.0 (Representatives).
Subsection 5.11; page 28 of 48 Says: If, by reason of any failure or inability of the engineer, the Company’s Representative and/or the Company to issue within a time reasonable in all the circumstances any drawing, instruction, approval ( such as failure to approve payments as in this case) or the like for which notice has been given by the Contractor, the Contractor suffers delay and/or incurs costs, then the time for the execution of the Works shall be extended accordingly and the amount of such costs shall be added to the Contract Sum.
The conditions above are mandatory…. It shall be added not may be added.
These are conditions NLNG enshrined in their contract by themselves as the basis for execution of contract. These conditions were not put into the contract by Macobarb.
Another demand Macobarb met in warning NLNG of the cost implications of delay on the contract is found in Section Ii, page 5 of 23 of GCC (Gen. Conditions of Contract For NLNG -15 October 2012).
Programme:
Article 3, subsection (vi) Says: “Immediately the Contractor determines that there is a likelihood of a delay to the programme the Contractor shall notify the Contract Holder in writing of the circumstances that have led or will lead to the likelihood of delay and the actual or estimated duration of the delay and what remedial actions the contractor has taken or will take to avoid or minimise the delay.
We did this notification as demanded by the contract on 30th July 2014, which NLNG ignored till 10th February 2016 (559day).
So, why would NLNG not want to obey these mandatory clauses in the contract terms?
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CRITICAL QUESTIONS FOR NLNG REGARDING Contract B130142PPI
Anyone studying this matter would have volumes to read; such as below;
(i). How has Macobarb gone wrong in the Contract B.130142PPI to warrant termination of Contract?
(ii). Who is the NLNG Representative on Contract & What are his Roles in Contract? NLNG to show anywhere he held Macobarb guilty on contract.
(iii).Did the NLNG Contract say anybody and all NLNG staff members can write or give instructions to Macobarb on Contract? Did the Contract also say anybody or everybody in Macobarb can also write or give instructions to NLNG regarding Contract?
(iv). What is the Complain against Macobarb by the NLNG Representative (Dweller Francis), who NLNG assigned to manage all aspects of the Contract on behalf of Company? When did NLNG notice the alleged defaults in its Notice of default and Termination on Contract? How did NLNG address the repeated payment denials Macobarb documented since 30th July 2014?
(v). Did Contract say NLNG should support Contractor financially on Contract with Advance Payment? Why is NLNG suggesting giving Macobarb Advance Payment on 2nd June 2016 (One & half years into Contract to avoid the Standby Claim) after Macobarb had complained of persistent payment denials since June 2014? In over 10 years of Macobarb Contract HISTORY of over 62 meritoriously executed Contracts for NLNG, has NLNG ever assisted Contractor financially other than paying Contractor as stipulated in a contract? But the NLNG Contract says there shall be no Advance Payment on page 39 of 48, clause 4.3 or is it the usual practice in NLNG to change Contract terms it crafted any time it liked to suit its purposes and at the expense of Contractors?
(vi). When Macobarb notified the NLNG on the 30th of July 2014 that it was no longer able to fund Contract as a result of Mr. xxx refusal to sign his portion of payment Certificate to facilitate Macobarb payment, signaling Downtime/Standing time of its Equipment and Personnel on contract, what did NLNG do? Why didn’t NLNG suggest Advance Payment to Macobarb then or at the beginning of contract?
(vi).Where in the Contract is Mr. xxx empowered to supervise Contract and in What Capacity? If NLNG claims he is Contract Owner as they did in a mail to Senator Akpan, Senate committee chairman on Gas, where is it stated in Contract and if not, by what mail did they introduce or nominate Mr. Bayo to Macobarb as stipulated in Contract? Then who is Mr. Schouten Jan the Contract introduced on page 25 0f 48 as Contract Owner?
(vii). If Mr. xxxx is contract owner, as being claimed by NLNG even though not stated anywhere in Contract, he appointed Contract Holder – Dweller Francis as defined in Contract Section 2, page 5 of 48. Is he not bound by any and all decisions taken by his appointee, who is to manage all aspects of the Contract on behalf of NLNG? Then why is he working at cross purposes against decisions ofContract Holder whose decisions are in complete agreement with Contract Provisions? Mr. xxx’s premeditated decisions of repeated payment failures, on the other hand, are at variance with the Contract provisions as crafted by NLNG.
(viii). When another opportunity to progress the Project with the arrival of NLNG requested Material, it was delivered and received by NLNG February 2015, another N33m certificate was raised for signatures and all else signed, why did Mr. XXX refuse to sign his portion again, knowing Macobarb and the Contract were hurting financially by his 1st refusal to pay the N27m certificate of 1st Milestone valuation in June 2014? Is there any doubt at this point that Macobarb Complaint about Mr. xxx deliberate intention to cripple Contract financially to canvass termination, is true?
(ix).Where in the Contract is Mr. XXX mandated to counter the decision of the Contract Holder, Dweller Francis? Has he ever held any Bi-weekly Contract progress review Meetings with Macobarb on the project, as directed by Contract? Therefore, how is he in position to interfere on administering Contract only when it comes to Macobarb’s payment and with no regards to other NLNG Staff members who are in daily contract relationship with Macobarb on project, as the Project Engineer/Contract Holder, Senior Construction supervisor, etc?
(x). When Contractor did the whistle-blowing job on Mr. XXX’s intention to derail his Contract by repeated payment denials (Protest Mail to NLNG MD of 2nd June, 2015), NLNG Executive Management, by Minutes of Meeting No.17 of 09/07/2015 prepared and signed by NLNG Representative and Contractor, NLNG Executive Management directed that Contractor should be paid immediately for Materials delivered to NLNG and project Team to discuss with Macobarb on Progress options for the Work. Where is the Minutes of Meeting where the NLNG project Team discussed with Macobarb as directed by NLNG Executive Management?
But Contractor, Macobarb claims that other NLNG staffs different from the Contract Team came with an Agenda on the 28th July, 2015 Meeting to change Contract Payment Terms one and half years into Contract and thereby hide NLNG Payment denials because Contractor has requested that the remedy (NGN646,101,360.00) Contract gave to it in Standby of its Equipment and Personnel be applied. (Encl. No.21). Why was the project team not made to discuss with Macobarb as directed by NLNG Executive Management? Why is NLNG changing the payment terms of its Contract 18 Months into Contract Execution when Contractor had complained of repeated payment denials? Can the NLNG MD even do this in a Contract at his whims with imposition of conditions to Contractor? Who constitute Executive Management in NLNG and why are their instructions on Contract not obeyed?
(xi). What are the NLNG Contract payment Conditions? Did the Contract say Macobarb should be paid a one-off payment at the end of Contract as being alleged or claimed in NLNG mails? The Contract Document did make provision for Progress Payments based on the value of work done which are the basis for the two interim certificates raised that Mr. xxx refused to honour?
· The Contract says Macobarb shall submit invoices on page 38 of 48 of GCC (General Conditions of the NLNG Contract) and not just One Invoice.
(xib). Did the Contract say that Macobarb shall submit only one invoice for payment at completion of the entire project after one and a half years?
(xii).What are the NLNG Contract Payment Terms?
· The Contract says on page 39 of 48, Clause 4.3 that: There shall be no advance payment, part payment or payment for part Completed Job.
(xiii). Why was Macobarb part-paid N8m for work done that the NLNG Representative valued for NGN27 Million?
(xiiib). Macobarb was given instruction by Minutes of Meeting No.04 of 26th March 2014. Why was NGN19,161,894.80 not included in his 1st payment certificate?
· Contract on page 28 of 48 that Contract Shall be Administered by Meetings which shall be Minuted & signed off by both Parties.
(xiv). Why does NLNG not respect its Minutes of Meeting in this Contract as represented by Minutes of Meetings showing Macobarb level of Works Done on Contract (Minutes of Meetings No. 04/03/2014 where parties agreed on Payments Schedule for Turnstiles & Vehicle barriers requested by NLNG; Minutes of Meeting No.08 of 26/06/2014 Showing Excellent Progress on Engineering Design, Procurement & Construction having accomplished all mobilisation of Equipment, Personnel and Materials for project and Minutes of Meeting No.17 of 09/07/2015 where Executive Management of NLNG instructed that NLNG should Pay Contractor immediately for Materials delivered to Sight, and that Cancellation of the Macobarb Contract was not an option for NLNG?
· The NLNG Contract in page 28 of 48 says “If, by reason of any failure or inability of the Engineer, the Company’s Representative and or the Company to issue within a time reasonable in all the circumstances any drawing, instruction, approval or the like for which notice has been given by the contractor, the contractor suffers delay and or incurs costs, then the time for the execution for the Works shall be extended accordingly and the amount of such costs shall be added to the Contract Sum”.
This provision of the Contract is mandatory and not discretional. It did not say NLNG may extend the Contract execution period or that the cost incurred by Contract may discretionary be added to the Contract Sum.
Combine the provision of the NLNG Contract in page 5 of 23, Section II (Execution of Works), Article 3, clause (vi) which says
· “Immediately the Contractor determines that there is likelihood of delay to the programme the Contractor Shall notify the Contract Holder in Writing of the circumstances that have lead or will lead to the likelihood of delay and the actual or estimated duration of the delay and what remedial action the contractor has taken or will take to avoid or minimise the delay”.
Contractor informed NLNG through Contract Holder on 30th July 2014 (Encl. No.12) of NLNG derailing its carefully laid out financial cash flow plan on Contract and how NLNG intended NGN8 Million naira part-payment will lead to Contractor Equipment and Personnel being idle and on Standby till date.
(xv).WHY IS NLNG REFUSING OR PRETENDING NOT TO BE RESPONSIBLE FOR CONTRACTOR EQUIPMENT AND PERSONNEL STANDING BY ON CONTRACT TILL DATE?
Note: In different sections of Contract as quoted below, the NLNG Contract forbids Macobarb from removing its Equipment (Encl. No.4a and or Personnel-Encl. No.4b) from the Contract/Site.
Plant and Materials on Site (Page 7 of 23 of GCC), Article 8 (i) says: “Unless otherwise agreed in writing by the Company (NLNG), all Plant, Materials or Temporary Works owned by the Contractor (Macobarb) or the Contractor subcontractor or by any firm or corporation in which the Contractor has a controlling interest shall for the duration of the contract when upon the site be used solely and exclusively for the purpose of the Works. Such Plant, Materials and Temporary Works shall not be removed from the Site without the consent in writing of the Contract Holder, which Consent shall not unreasonably be withheld”.
Key Personnel: Section 7(GCC), Page 27 of 48.
Key Personnel shall be employed solely for this Contract, and the Contractor shall not reassign or reclassify or remove or replace any key personnel without the consent of the Engineer.
NLNG, against clear contract provisions poached on Contractor’s key personnel (Encl. No.22 & 23) deliberately.
· Construction: Page 31 of 48 Article 13.0, Clause 13.2 says: “The Contractor shall be responsible for taking due account of the Site Conditions, climate and incidence of inclement weather on Site, which may include periods of very heavy rainfall and a high level of ground water. The Company (NLNG) shall not make any additional payments, or pay for any standing time for personnel and Equipment if the Contractor encounters such conditions unless such site conditions are considered as being exceptional and unforeseeable by an experienced Contractor.
(xvi).Why would NLNG pay for Standing time for Equipment and Personnel for an unforeseeable and exceptional weather conditions and not pay for Macobarb standing time for Equipment and Personnel when NLNG subjected Macobarb to exceptional and unforeseeable payment denials which consequences of accruing bank interest on loan taken to realise Contract has lasted to date?
NOTE:
Macobarb Stands by Notification of 30th July 2014 ends 13th July 2017 with involvement of NASS (Local Content Committee) to intervene between the parties- NLNG & Macobarb.
Administration Procedure-GCC: Article 3.0, Pg 25 of 48,
· Clause 3.1 Says: “The Contract Owner in connection with this Work is Schouten, Jan Ref. Ind PP, Tel.08039055904. However, the Company may nominate other Company Personnel to act on behalf of the Contract Owner. The Contract Holder in connection with the Works is Dweller Francis PPI/1 (Telephone 0803 905 5815)
· Clause 3.2.2 (Page 25 of 48) says “Oral Communication of instructions or information in connection with the Contract shall not be binding until confirmed in writing. Minutes of Meeting may comprise a written instruction”.
· All Correspondence to the Company (NLNG) shall be addressed and delivered to the Contract Holder and all correspondence to the Contractor shall be addressed and delivered to the Contractor Representative nominated by the Contractor for this.
Macobarb insists thus:
NLNG TERMINATION OF CONTRACT IS A NULITY AND DEAD ON ARRIVAL WITH REASONS BELOW:
· REPRESENTATIVES: Page 27 of 48 GCC, Article 5.0, Clause 5.1 Says “Each party to the Contract shall have a Representative formally notified to the other party, to act as the respective party’s focal point with responsibility for overseeing performance of the Contract and resolving disputes on a day-to-day working level basis. Other than where issued or subsequently endorsed by the Engineer or Contractor, no notice or instruction from one party to the other shall be binding, whether that notice or instruction is issued verbally or in writing”.
· Clause 5.9, Page 27 of 48 GCC further states “The Engineer (and any Nominee) shall be the counterpart of the contractor’s Representative and shall have day-to-day responsibility for the Company in the performance of its obligations under the contract. Unless otherwise directed, a requirement for approval, or any notification or direction to be issued by the Company shall be issued by the Engineer or his nominee.
The NLNG mail Subject: Notice of Default and Termination of 20th Nov. 2015 (Encl. No.26) as issued by Emeka Ohiri- Head Strategy & Vendor Management Unit is not known to the contract; neither nominated by the Contract Principal Project Engineer/Contract Holder, Dweller Francis, nor was never formally introduced to the Contractor. Therefore, the stated letter of default and termination and the subsequent termination notification dated 27th Nov. 2015 were based on faulty 3 days of grace to rectify alleged breaches is in law deemed null and void. Till date Contractor never received the notification which was sent to Macobarb office in Warri on a Friday, and by which Contract was terminated on Monday, November 23rd 2015, conveniently forgetting that by Nigeria Constitution, Sundays are not working days. Macobarb Representative (Mr. Shedrack Ogboru) never endorsed the Termination notification.
Also, by the Contract terms, the rejection of Macobarb Equipment and personnel standing time of 14thJuly, 2015 by Mr. Chima Isilebo (Encl. No. 45) is not known to the Contract and as such a nullity. This has accounted for Macobarb periodic upward reviews of it Standing time Claim to date.
(Xvii).How does NLNG justify issuance of these mails to Macobarb by Contract provisions?
(Xviii) Did NLNG threaten Macobarb:
a. To have it de-listed from NLNG List of Contractors & the IOCs (International Oil Companies)?
b. Not to pay for Materials delivered to NLNG if it fails to proceed to perform Contract Close-out and ‘pack’ his Equipment and Personnel out of NLNG and remediate the Site provided it for the Contract? (Encl. No.29)
c. Surrender letter to abandon the remedy provided in Contract (Claim) as way to hide NLNG abuse of its Contract?
NLNG claims to have performed Contract Close-Out, how?
d. Has Macobarb been paid its Complete Mobilisation Money as contained in its ‘Bill of Quantities’?
e. De-mobilisation Money as Contained in Contract?
f. What is the rationale behind NLNG failure to discuss Macobarb Standing time on Equipment/Personnel to date as demanded by Contract in spite of obvious evidence of NLNG breach of Contract, Diamond Bank spiraling interest on Macobarb facility to realise the NLNG Contract it truncated by itself? Yet Macobarb notified NLNG of its travails on Contract since 30th July 2014.
