The Senate Public Account Committee has opened an investigation into how the Federal Government allegedly lost N387m withholding tax to a Canadian company, CPCS Transcom Limited, during the privatisation of the defunct Power Holding Company of Nigeria.
The Senate panel is currently scrutinising the various contract details of the 18 companies which succeeded the defunct PHCN as contained in the 2015 report of the Auditor General of the Federation.
Based on the query raised by the OAuGF on the transactions, the Chairman of SPAC, Senator Matthew Urhoghide, has directed the management of the Bureau of Public Enterprises to appear before his panel with relevant documents relating to the pact between the agency and the Canadian firm.
The AuGF report explained that the CPCS Transcom Limited was appointed as sole consultant for the Privatisation Advisory Services of the Distribution and General Company created out of PHCN in December 2010.
The report added that one per cent of the proceeds from the sale of the 51 per cent of Federal Government’s equity holding in the successor companies should be paid as service charge.
It stated that N383bn was received as proceeds from the sales of PHCN Generation and Distribution companies, which represented 99 per cent of the total cost.
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The balance of the one per cent, which amounted to N3.8bn according to the report, was paid as service charge to the Canadian company by the successor companies without accounting for the mandatory 10 per cent withholding tax, totalling N387.7m, contrary to Nigeria’s Financial Regulations.
In its query, the AuGF asked the Director-General of BPE to “explain the circumstances surrounding the payment to consultant the sales proceeds at source without deducting the mandatory 10 per cent WHT.”
It demanded that “the sum of N387m should be recovered from the consultant while particulars of recovery should be forwarded for audit verification.”
Responding to the query, the Director-General of BPE, Alex Okoh had, in a letter dated April 19, 2018, requested the transfer of the N387m withholding tax to the Federal Inland Revenue Services.
However, the CPCS Transcom Limited, in its own defence, said, “CPCS, being a Canadian entity and having paid incomes taxes in Canada for the revenue earned in connection with the project, is not required to pay additional tax in Nigeria.”
