Elephant Group, one of Nigeria’s biggest commodity traders, is enmeshed in a fresh scandal following a near clandestine recent import last week of a vessel-load of rice using expired import papers.

In what would amount to a double exploitation of the already weak Nigerian economy, the company used questionable documents to by-pass approval for $5.52 million in foreign exchange from the Central Bank to import a commodity clearly listed by the Federal Government as unqualified for forex approval.

Under the current fiscal policy of the President MuhammaduBuhari government, aimed at conserving scarce foreign currencies and at relaxing pressure on the already weak Naira, rice is one of the 41 import items on the exclusion list of the Federal government and as such is excluded from forex approval.

Documents show that the name of the vessel that brought in the rice imported by Elephant Group is Auckland Spirit. The import which came in through Apapa Port was for 30,650 metric tonnes of rice.

The Rice Racketeering

Disturbed by the nation’s huge import bill, the President Goodluck Jonathan administration in 2014 came up with a new rice policy to fast-track national self-sufficiency in rice production.

The policy specified that owners of existing rice mills and new investors with verifiable backward integration in the rice value chain will be allowed to import rice at 10 per cent duty and 20 per cent levy (30 per cent); while merchants who have nothing to contribute to local production in the form of rice farms or mills will be charged 10 per cent duty and 60 per cent levy (70 per cent). Technically, it was a subsidy aimed at building local capacity in rice production.

In an investigation published in December 2015, Premium Timeshad detailed the corruption that plagued the 2014 Rice Import Quota Allocations. It reported that 26 companies were involved in the N117 Billion rice subsidy. Not all of the 26 companies selected for the scheme made the list on merit.

Elephant Group was among those not deemed qualified for the subsidy at the time. It, however, found a smart way to benefit from the programme by soliciting and obtaining a quota originally given for “donated foodstuff” to a religious organization, the Jama’tulNasril Islam (JNI).

Some industry players had at the time cried out that the bulk of the rice imported by Elephant using the quota was sold in the open market. The company denied any wrongdoing.

The 2014 rice import quota expired in December of the same year. A botched attempt to obtain new import quota was made in April 13, 2015 when a list of 22 beneficiary companies was released by the Federal Ministry of Agriculture after what was supposed to have been a laborious due process.

However the joy of the new beneficiaries were short-lived when nine days later, on April 22, the same Agric Ministry reversed itself and cancelled and withdrew all allocations.

Permanent Secretary of the ministry, S. T Echono, had hinged the cancellation on a new information reaching the ministry to the effect that some Nigerian rice farmers were unable to sell their paddy to local rice millers due to a flooding of the market with imported rice, which he said was threatening the objectives of the quota policy.

It was also reported that a few hours to the expiration of President Goodluck Jonathan’s tenure, papers for a huge rice import quota worth billions of Naira were rushed in for the president’s accent, ostensibly as parting gifts to cronies and businessmen close to the power corridor. That import quota was signed by the President on his last day in office. However, the new government of President MuhammaduBuhari failed to recognize the quota and thus Customs refused to honour it.

Because the two quotas issued in 2015 were both cancelled, the Central Bank had since the advent of the Buhari administration not opened Form M for any company to import rice. But that did not stop the Elephant Group from testing the resolve of the new government.

Shipping documents show that in late November 2015, weeks before Christmas when rice is usually in high demand, the Elephant Group made its first attempt to discharge 33,000 MT of rice import using an expired import quota.

The company met a brick wall in the form of the new Comptroller General of Customs, Retired Colonel Hameed Ali, who turned down Elephant’s request to clear the import by paying 31.5 per cent duty instead of 71.5.

Had the Customs boss compromised, the Elephant Group would have succeeded in getting a cash-strapped Federal Government to subsidize its private business by 40 percent.

Buzz in Apapa Port

Since the recent berth of the vessel Auckland Spirit, tongues have been wagging inside and outside the Apapa Port. With the throwing away of the two rice import quotas issued in 2015 by President Jonathan, the Buhari government has so far not announced any new quota.

Indeed the government has placed a technical ban on rice import.

Barely one month after the new government came in, the Central Bank of Nigeria (CBN) announced in June 2015 that it would no longer approve forex for rice imports. For importers, this meant an indirect ban on rice. Since import of rice from overseas has to be paid for in foreign currency, usually the US dollar, the pronouncement from the CBN was seen as a technical embargo.

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