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Group Title: Report of Coker Commission of Inquiry into the Affairs of certain statutory corporations in Wetern Nigeria, 1962 ...
Title: Report of Coker Commission of Inquiry into the Affairs of certain statutory corporations in Wetern Nigeria, 1962
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 Material Information
Title: Report of Coker Commission of Inquiry into the Affairs of certain statutory corporations in Wetern Nigeria, 1962
Physical Description: 4 v. : ; 33 cm.
Language: English
Creator: Nigeria -- Coker Commission of Inquiry into the Affairs of Certain Statutory Corporations in Western Nigeria
Publisher: Federal Ministry of Information
Place of Publication: Lagos
Publication Date: 1962
 Subjects
Subject: Corporations, Government -- Nigeria   ( lcsh )
Marketing boards -- Nigeria   ( lcsh )
Genre: federal government publication   ( marcgt )
non-fiction   ( marcgt )
 Record Information
Bibliographic ID: UF00072647
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: African Studies Collections in the Department of Special Collections and Area Studies, George A. Smathers Libraries, University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 14248750

Table of Contents
    Title Page
        Title Page 1
        Title Page 2
    National bank of Nigeria limited
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
    Agbonmagbe bank limited
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
    Merchants banks limited
        Page 15
        Page 16
        Page 17
    Part two: Western Nigeria development corporation
        Page 18
        Page 18a
        Western Nigeria development corporation
            Page 19
            Page 20
            Page 21
            Page 22
            Page 23
            Page 24
            Page 25
            Page 26
            Page 27
            Page 28
            Page 29
            Page 30
        Nigersol construction company limited and Nigerian water resources development limited
            Page 31
            Page 32
            Page 33
            Page 34
            Page 35
            Page 36
            Page 37
            Page 38
            Page 39
            Page 40
    Part three: Western region finance corporation
        Page 41
        Page 42
        Western region finance corporation
            Page 43
            Page 44
            Page 45
            Page 46
            Page 47
            Page 48
            Page 49
            Page 50
        Investments
            Page 51
            Page 52
            Page 53
            Page 54
            Page 55
            Page 56
            Page 57
            Page 58
            Page 59
            Page 60
            Page 61
            Page 62
            Page 63
Full Text









FEDERATION OF NIGERIA


Report of


COKER


COMMISSION


OF INQUIRY

into the affairs of
Certain Statutory Corporations in
Western Nigeria

1962


VOLUME II


PRICE: TWENTY SHILLINGS (Four Volumes)


Federal Ministry of Information, Printing Division: Lagos


;: T~I:g';.-~ .T -P~':-~i''


























































































FDP 3225/163(62)/2,000









CHAPTER 3
NATIONAL BANK OF NIGERIA LIMITED
Section 1. Policies and Business Operations


In the speech of Chief Obafemi Awolowo on the
Floor of the Western House of Assembly on the
21st December, 1956,1 reference was made with
considerable detail to some of the activities of the
National Bank of Nigeria Limited with respect to
the Action Group. Chief Awolowo said in outlining
dealings which the Western Region Government and
its Statutory bodies had so far had with the National
Bank that in 1952 the Western Region Production
Development Board started to make deposits in
investments of the National Bank and that four long-
term deposits were made as follows:
1. dated 4th November, 1952-250,000 at
two per cent for two years.
2. dated 14th November, 1952--250,000 at
two per cent for two years.
3. dated 17th June, 1952--500,000 at three per
cent for five years.
4. dated August, 1954-500,000 at two per
cent for five years.
Chief Awolowo pointed out that the first deposits
which matured in November, 1954, were repaid at
maturity. The remaining two deposits totalling 1
million did not mature until June, 1958, and August,
1959, respectively. Besides these long-term deposits,
Chief Awolowo continued, short-term deposits
payable after twenty-one days' notice were made with
the National Bank and on the 31st March, 1955,
these short-term deposits stood at 1,800,000. Chief
Awolowo then continued to say that on the 15th
March, 1955, 'an Agreement was concluded between
the Western Region Government and the National
Bank of Nigeria Limited whereby the Government
undertook to bank about forty-five per cent of its
funds with the Bank and that since the execution of
this Agreement the Bank has fulfilled its obligations
satisfactorily.'2
The National Bank of Nigeria Limited was incor-
porated on the 11lth day of February, 1933 under the
Companies Ordinance as a company limited by shares,
and a copy of the Memorandum and Articles of
Association of the Bank was produced in evidence.3
It appears that at the inception of the Bank the
subscribers to the Memorandum of Association
were:
Dr. Akinola Maja
Akintunde Adeshigbin
Theophilus Adebayo Doherty
Alfred Latunde Johnson
Hamzat Adisa Subair
Isaac Ayoola Ogunlana
Colley Akiremi Holloway
and the Memorandum of Association stated that:
'the share capital of the company is 10,000
divided into 10,0011i ordinary shares of 1 each.'
We know little or nothing about the activities and
affairs of this Bank until considerably later and indeed
this Commission of Inquiry is not directly concerned
with any part of the activities of the Bank until 1954.
We know, however, that in 1955 by virtue of Agree-
ments4 shares described as 'four per cent cumulative
non-participating preference shares in the Bank'
were purchased by the Western Region Marketing
Board in the Bank. With respect to the meaning of
SExhibit AOA. 18
2 Ibid Exhibit AOA. 18.
3 Exhibit AAOD. 12.
Exhibits AAOD. 10 and AAOD. 11.


these shares, the witness Durosola in the course of
his evidence testified as follows:
'The non-participating shareholder has the
privilege of dividends over all other shareholders....
the word 'non-participating' means that the share-
holders are not expected to be represented on the
Board.'1
The position therefore is that although by the
Agreement dated 4th day of October, 1957 (and also
by the Agreement dated 25th October, 1955) the
Western Region Marketing Board possessed 1
million of investments in the National Bank of
Nigeria Limited; by the nature of the investment the
Western Region Marketing Board was not entitled to
representation at the meetings of the Board of
Directors. It appeared that in 1956 some members of
the N.C.N.C., which was the Opposition Party in the
Western House of Assembly, were sceptical of the
steps already taken by the Western Region Marketing
Board in a Government which was controlled by the
Action Group with respect to the affairs of the
National Bank of Nigeria Limited. This is so because
on the 21st December, 1956, a motion standing in the
name of Mr -now Chief-A. M. F. Agbaje to the
effect tht a Commission of Inquiry should investigate
into the circumstances in which about 2 million of
public .pney was diverted to the funds of theNational
:Bink 4ff igeria Limited was tabled for discussion in
the Westkrn House of Assembly. Chief Agbaje in the
course'of his address to the House stated as follows
with 'respect to the membership of the Boards and
Statutory Corporations:
'The Order of the Day is that unless you are a
member of the Action Group you do not come with-
in the contemplation of their schemes, projects and
other activities. We are reliably informed that it is
the laid down policy of the Government that these
bodies should give employment to only approved
members of the Action Group...
As to Paragraph 2 of the text of the Motion the
Government is accused of investing 2 million of
public funds in the National Bank of Nigeria
Limited for the purpose of providing loans and
overdrafts for the members of the Action Group.
'But for the report of the International Bank
Mission we, and for that matter the public at large,
would not have known or heard anything about the
investment of this fabulous sum of 2 million of
public funds in the National Bank of Nigeria
Limited. The channel through which this money
passed into the Bank is dubious...
that is why the public must know the relationship
between:
(a) The National Bank of Nigeria and the
Amalgamated Press Limited.
(b) The National Bank of Nigeria and the Action
Group.
(c) The National Bank of Nigeria and the Mutual
Aid Society Limited.

(d) Amalgamated Press Limited and Chief
Obafemi Awolowo, Premier of the Western
Region, and other persons of note who are
members or supporters of the Action Group.'2
1 Day 20, p. 28.
2 Exhibit AOA. 18, pp. 27-35.





OVERSiZ6


Mr B. Olowofoyeku in support of the Motion made,
expressions similar in tenor to Chief Agbaje and added
that:
'the current belief of the majority of people in
the Western Region is that the public funds
diverted into the National Bank are being used for
three major purposes:
1. To finance the National Bank and its sub-
sidiary, the Mutual Aids Society, both owned
by members of the Action Group.
2. To finance the Amalgamated Press owned by
members of the Action Group.
3. To grant loans and overdrafts to members of
the Action Group.'"
In answer to this statement, the then Premier of the
Western Region, Chief Awolowo, moved an amend-
ment to the Motion in the following terms:
'This House has full confidence in the Govern-
ment of the Western Region and supports its
policy in every respect.'2
Continuing with the Debate, Chief Awolowo stated
as follows:
'I believe that it is generally known that one of
the cardinal policies of this Government is the
studied encouragement of indigenous banking
institutions.... In the course of my speech on a
Motion calling upon this Honourable House to
approve the proposals in the Sessional Paper just
mentioned I said, 'The Government intends to
pursue vigorously its policy of giving financial
assistance to indigenous Banks so that they may be
better able to provide credit facilities to Nigerian
business men and women and others who have
profitable projects on which to invest the funds this
provided them....'
Guided by this principle, therefore, this Govern-
ment always insists that the indigenous bank
seeking assistance:
1. Must be one that is run on lines of sound and
efficient arrangement.

2. Must show satisfactory evidence of stability
and good reputation.
3. Must be licensed under the Banking Ordinance
.... So far three indigenous Banks have passed the
tests in different degrees and have been given one
form of assistance or another....

The three Banks in question are the National Bank,
the Merchants Bank and the Agbonmagbe Bank.' 3
Chief Awolowo in the course of the Debate then
discussed the Agreement dated 25th October, 1955,
between the Western Region Marketing Board and
the National Bank of Nigeria Ltd.4

We propose to point out that although two Agree-
ments were signed there was only one investment
made and the reasons for the two Agreements are
contained in the following statement by Alhaji
Duroshola, the Managing Director of the Bank, to the
following effect:

'After the first Agreement 5 was executed, the
L.E.D.B. under the Lagos and Town Planning
Scheme acquired one property called 90/98,
Broad Street. And the National Bank of Nigeria
Limited therefore ceased to be the owner of the
property.'6
I Ibid. p. 43.
2 Exhibit AOA. 18, p. 47.
3 Ibidem pp. 47-53
Exhibit AAOD. 10.
SExhibit AAOD, 10.
Day 21, p. 7.


'Agreements Exhibits AAOD.10 and AAOD.11
show clearly that the investment of the Western
Region Marketing Board in the shares of the Bank
were secured by properties of the Bank which were
listed as a Schedule to the Agreements in question.
We know that between that time and the year 1960 a
considerable amount of activity involving the
National Bank of Nigeria Limited and the Action
Group as a Party or some members of that Party
individually went on and that in fact the National
Bank of Nigeria Limited had utilised substantial
amounts of the monies thus provided for it for the
purpose of making loans and advances either to
directors of the Bank or to institutions in which
directors are jointly or separately interested. 1
Statements of account shown to us 2 exhibit the
names not only of directors of the National Bank of
Nigeria Limited as shown in the Memorandum and
Articles of Association 3 but also of companies
known to be interested in the Action Group like the
Amalgamated Press of Nigeria, National Investment
and Properties Company, Limited, etc. and of
companies which are owned partially or wholly by
acknowledged members of the Action Group like
N. Diamoandis & Company Limited (Alhaji Gbada-
mosi and Allison), J. H. Doherty Limited, Ikorodu
Trading Company (Gbadamosi and Allison), and so
on. The list Exhibit AAOD.14contains also names
of persons or bodies acknowledged to be interested
in the Action Group like:

J. A. Ajao Bros., Ikorodu Trading Company,
Okunowo Bros., Dr J. A. Doherty, A. F.
Odulana, S. O. Awokoya, M. A. Ogun, Action
Group Trust Fund Account and so on.
Suggestions were put to the witness Duroshola by
Counsel to the effect that the Directors alone per-
sonally borrowed a total amount of 219,491 from
the Bank and that a total of 1,856,039 was 'advanced
to companies in which they (meaning the Directors)
were interested.'4 The evidence also revealed that
by the beginning of 1960 the National Bank of
Nigeria Ltd. maintained for the Action Group at
least the following accounts:

1. Suspense Account, or Sundry Persons
Account, National Bank of Nigeria Limited
in Lagos.

2. Action Group Trust Fund Account in
Ibadan.

3. Suspense Persons Account, National Bank of
Nigeria Limited, Ibadan.5

The witness Duroshola in the course of his evidence
testified that the Suspense Account and the Sundry
Persons Account were operated in those names in
order not to disclose the fact that the accounts were
being run by the Action Group. He testified that the
accounts were so maintained in order 'to hide the
name of the Action Group.' It appears that at the
beginning of 1960 the Suspense Account of the
Action Group was overdrawn to the extent of
675,000 and that the Banking Examiners appointed
by the Federal Government were about to inspect
the Bank and examine the books.6 According to the
witness Duroshola the Action Group Trust Account
at Ibadan at that time was about 18,000 odd.7
He testified to the effect that an exercise then took
place which was designed to deceive the Examiners
1 Exhibit AAOD. 13.
SExhibits AAOD. 13 and AAOD. 14.
SExhibit AAOD. 12.
4 Day 21, p. 33.
1 Day 21, p. 30.
SDay 21, pp. 30 and 31.
? Day 21, p. 32.







who had then come to the Bank. He testified that a
cheque was signed by Chief Awolowo and Chief
Lanlehin drawn on the Action Group Trust Fund
Account, Ibadan, and paid in to cover the Suspense
Account overdraft in Lagos.1 He further testified
that the cheque Exhibit AAOD.15 was brought to the
Bank by Chief Lanlehin and that thereafter the Bank
slips dated 6th February, 19622 for 670,000 and
5,000 respectively, were created. In actual fact
cash was never paid as shown in Exhibit AAOD.16
and the witness Duroshola stated that the exercise
was embarked upon because the National Bank of
Nigeria Limited had no alternative as this account
was operated as a Suspense Account.

The witness Chief Lanlehin in the course of his
evidence testified that on a day in February, 1960,
when the cheque was issued he went to the office of
Chief Obafemi Awolowo for lodgment in the Bank
account of the Party in Lagos, and that he thereafter
took the cheque to the National Bank of Nigeria
Limited in Lagos and handed it over to the witness
Duroshola who then prepared or gave instructions
for the preparation of the bank tellers dated 6th
February, 1960. It is significant that at the time that
this cheque for 675,000 was issued on the Action
Group Trust Account in Ibadan the balance on that
Account was 18,000.

Quite apart from these events, however, we allude
again to the point on which evidence was adduced
before us to the effect that the Action Group was
maintaining several accounts with the National
Bank of Nigeria in several different names3 and
that in fact a cheque for 660,498. 14s. 2d. which was
appropriated to the payment of the accounts listed
in Exhibit AAOD.20 was drawn by the National
Investment and Properties Company, Limited in
order to clear these accounts. That was in 1958.
We were not sure of the circumstances giving rise to
the pressure to have these accounts cleared at that
time but Dr. Maja in the course of his evidence
testified to the effect that Alhaji Gbadamosi in
particular was pressing for the payment of this
money and that indeed:

'Alhaji Gbadamosi who was supposed to be one
of the men was wild about the account being settled
and to see that the ban be removed.'4

This was not the earliest transaction between the
Western Nigeria Government or the Marketing
Board or the Action Group and the National Bank
of Nigeria Limited. We are aware that in August,
1956, and indeed by letter dated 15th August, 19565
the National Bank of Nigeria Limited approached the
Western Region Marketing Board for financial
assistance to enable the Bank to execute some building
projects which were then contemplated by it, and it is
significant that some of the properties which were
supposed to be developed by the Bank at that time
were included in the Schedule to the Agreement of
share investment6. We know, however, that in the
events that happened, one of which was the passing of
the Banking Ordinance at the Federal Legislature,
the National Bank of Nigeria Limited was not in a
position to proceed with the execution of that scheme.
Quite apart from the Banking Ordinance, however,
we were told that the officials of the Ministries both
of Trade and Industry and Finance including Chief
Adebo opposed the execution of the scheme by the
National Bank of Nigeria Limited as a Bank. The

1 Day 21, p. 31.
2 Exhibits AAOD. 16 and AAOD. 16A.
3 See pp. 2-3 ante.
SDay 78, p. 32.
Exhibit SLD. 22.
Exhibit AAOD. 10.


eventual outcome of this is that on the 6th January,
19581, the National Bank of Nigeria Limited advised
the Western Region Marketing Board that its func-
tions in respect of those building projects had been
transferred to the National Investment and Proper-
ties Company, Limited and enclosed a copy of the
Agreement executed between the Parties. We point
out at this stage that no mention whatsoever was
made in these arrangements of the titles to the
properties which were then in equity vested in the
Western Region Marketing Board and in Law in the
National Bank of Nigeria Limited. We know that in
the course of that year one of the properties, i.e.
Nos. 15/20, Broad Street, Lagos, was in fact sold by
the National Investment and Properties Company,
Limited to the National Bank of Nigeria Limited.
at a price of 770,000, i.e. a profit of about 270,000
on the aggregate of the building loan amount of
500,000. No mention whatsoever was made of the
fact that the title originally belonged to the National
Bank of Nigeria Limited and that it still does so
belong. Reliance was placed for the amount at which
the property was sold and bought on the valuation by
Messrs. Gleave and Fox2 of that property. That
valuation however assumes that the National Invest-
ment and Properties Company Limited had a free-
hold unencumbered title to the land.

We know of the tussle that arose after the pur-
ported agreement for the sale of the property by the
National Investment and Properties Company Limi-
ted to the National Bank of Nigeria Limited. Messrs.
Gleave and Fox had valued the property at 770,000
and according to the witness Durosaro, at that
time the Managing Director of the National Bank of
Nigeria Limited his first reaction to the valuation
was that it was too high because the National Bank
had taken over the expenses of 'reconstructing the
area to suit the needs of the Bank' as well as the
fact that the entire premises were developed with a
loan of 500,000 from the Bank.3 A meeting was
arranged between Chief Shonibare and the witness
Durosaro with the Premier, Chief Akintola, but for
one reason or another the meeting could not be held,
one of the principal reasons being that Chief Shonibare
was anxious to go to England and could not spare the
time. Anyway Chief Shonibare met the Premier,
Chief Akintola, alone and settled with him at 770,000
for the price of the property. Chief Akintola confir-
med to Durosaro that that was his decision. As Chief
Shonibare was leaving on the following day, a series
of letters were therefore exchanged between the
parties.4 Exhibit SLD. 46 gave directions to the
National Bank of Nigeria Limited as to how the
770,000 should be paid and requests for a con-
firmation of the points discussed between Chief
Durosaro and Chief Shonibare with respect to the
property. The reply to the letter5 states inter alia
as follows:

'I hereby confirm that it reflects all points
discussed and agreed with me in your office this
morning except the point relating to the mortgage
on the section occupied by the firm of J. H.
Doherty Limited. I trust you will advise them that
all your interests in the above property have been
transferred to the National Bank of Nigeria
Limited.'

After that letter another letter was received by the
witness which was a copy of a letter addressed to
Messrs. J. H. Doherty Limited concerning their

1 Exhibit SLD. 29; also see Vol. 1
SExhibit SLD. 45.
3 Day 6, p. 19.
SExhibits SLD. 46 to SLD. 49.
SExhibit SLD. 47.








interests in the property Nos. 15/17, Broad Street, and
attaching a statement of account of the mortgage
debt. The witness Durosaro, after receiving that
letter, became completely nonplussed as he dis-
covered for the first time the exact value and indeed
the extent of the mortgage interests of Messrs. J. H.
Doherty Limited in the premises for which the
National Bank of Nigeria Limited had paid a total
of 770,000. He reacted in this way:
'Well after receiving this particular letter, I
got the right picture about the mortgage interest
which was being passed on to the Bank and I found
that in effect we would be accommodating J. H.
Doherty again for a loan of 150,000 to bring an
interest of 49,000 at the end of ten years which
would be a total of 199,000. Then I was astounded
and started calculating and I found that in effect
we would be paying on the basis of that valuation
well over 300,000 to acquire an interest which was
slightly under 200,000 in ten years and which was
worth just about 250,000 at the material time.
So I promptly called the attention of the Premier
to the fact that I had just received a document to
the effect that we would be paying 200,000 for
something which was not even worth 200,000
then but would be worth 200,000 in ten years'
time. He told me that, well, Chief Shonibare was
anxious to go to England and that final adjustment
should be made eventually.
'Then on the second day I told him that I was
not happy that you are taking over the property that
is worth only 150,000 now and also that would be
less than 200,000 in ten years. Then he grew
annoyed but eventually he agreed that after all I
still have '200,000 remaining with you. If we are
not taking Banuso together with the building then
we could return the 200,000 already standing to
your accounts until September 30th. Then he
went away to England.
'But in my discussion with the Premier I also
pointed out that it would not be right to give an
additional accommodation indirectly through the
National Investment and Properties Company,
Limited to J. H. Doherty that has been heavily
committed to the National Bank.'"
In the meantime Chief Shonibare had left for England
and in view of the discussions which thereupon took
place between him and the Premier he decided to
make some notes for the Premier to take along with
him to the United Kingdom for discussion with
Chief Shonibare.2 It turned out, however, that
Chief Durosaro himself had to go to England and in
England he met Chief Shonibare at a London clinic.
When he met him he testified:

'I got there and he started to browbeat me and
he asked what I meant by giving instructions to
Gleave & Fox. .'

We were told that in the meantime the witness
Durosaro had received a brief 4 from Messrs Gleave
and Fox with respect to the affairs of the property
Nos. 15/20, Broad Street, Lagos, which contains
inter alia the following:
'Secondly, the only interest possessed by NIPC
arises from its document with the National Bank.
This document does not appear to have created an
estate in land, and cannot therefore be assigned
but must be surrendered to the grantor by the
grantee, i.e. surrendered by NIPC to the National
Bank.'6
x Day 6, pp. 28-29.
SExhibit SLD. 49.
SDay 6, p. 32.
4 Exhibit SLD.50.
6 Day 6, p. 37.


At the London Clinic the witness testified that
Chief Shonibare was hostile and angry and the
following dialogue ensued between the two parties:1
'Why do you want to be so meticulous about
thing? You want your own side of the story to be
clean every time.'
I said, 'Of course, yes.' He said:
'You are not supposed to make your own side
clean when it was a matter of course when you are
dealing with the general public, yes, but when you
are dealing with Party Members, you are not
supposed to make your own side of the story clean.'
I said:
'Dealing with the Party (he did not say Party
Member, sorry) I would not know about that, I am
not dealing with the Party.
Q. When dealing with the Party, you are not to
make your own side clean?
A. Then he went further.
'What do you mean? Where do you think the
money comes from?'
I said:
'I would not know about that either.'
Then he said:
'Do you want us to break the Central Bank?'
I said:
'By all means, if it is your assignment to break
the Central Bank and if Mr Fenton would allow
you to break the Central Bank, you may do so.'
Then he went further and said:
'That position you occupy now was to be
occupied by Rewane.'
'I said:
'But Rewane is not occupying that position
today and for your information, neither Chief
Awolowo nor Chief Akintola would say that they
put me in any position to pander to their whims
and caprices.'
Q. After this quite eloquent exchange, what
happened?
A. He calmed down and said:
'Well, it was not your fault, everything should
have to be handled by Akintola. It was Akintola's
fault anyway because he knew better and that he
would have to go and meet the Leader when we
get to Nigeria.2
It appears, however, that Chief Shonibare would not
yield his ground and that eventually by letter dated
15th February, 1962,3 he pointed out that:
'On the two occasions referred to by me when
we discussed this matter I made it quite clear that
there could be no question of going back on the
Agreement already reached unless, of course, our
two organizations were going to refer it back to
their respective original positions ever before the
matter was discussed.'
Further pressure for adjustment by the National
Bank of Nigeria Limited produced no results,
although the Premier, Chief Akintola, promised to
intervene and save the situation. We know that the
situation deteriorated considerably giving rise ulti-
mately to the publication in the papers concerning
the sale of J. H. Doherty's interest in the premises
'Day 6, pp. 41-42.
2 For further studies about this matter see Exhibits SLD
51 and SLD. 52.
3 Exhibit SLD. 52.







and the newspaper advertisements which were
produced in evidence before us.1
The witness Durosaro told us that some time in
October, 1961, the Premier, Chief Akintola, called
him and informed him that the Federal Government:
'had requested on the recommendation of a
firm of Chartered Accountants that the Marketing
Board should make more money available to take
majority shares in the National Bank and take
over the control.'2
At this time Chief Durosaro was the Chairman of the
Western Region Marketing Board. Immediately
after this discussion with the Premier the letter of
request came from the National Bank Limited in
respect of the loan assistance. The letter was
addressed by the Bank to the Western Region
Marketing Board, asking for certain adjustments of
their position with a view to assisting the Bank in
its operations.3 Alhaji Duroshola in the course of his
evidence testified as follows:
'As I said before my bank would like sufficient
money to enable it to cope with the competition
which was prevailing then between expatriate
banks and indigenous banks, as a result of which
it applied to the Western Region Marketing
Board.4
The letter of application dated 18th October, 1960,
reads as follows:
'For some time we have been seriously consi-
dering the progress of our Bank. We have now
come to the conclusion that it is imperative for
the continued existence of the Bank under the
prevailing competition from the expatriate banks,
both old and new, to approach you for assistance
along the following lines:
(a) The conversion of your 1,000,000 pre-
ference shares to be converted to equity
shares.

(b) To take additional shares to the tune of not
less than 1,000,000.
These are to be done as a prelude to taking over
the 'control and then to reorganise the Bank.'
This request is in keeping with the finding of exami-
ners recently appointed by the Minister of Finance
under the Banking Ordinance and whose findings and
recommendations, among others, include the
following:
1. 'In our opinion the whole of the ordinary
capital and reserves attributable to the ordinary
shareholders has been lost, together with part
of the preference capital. This is shown by the
revised balance sheet which forms statement 5.
2. 'We therefore recommend that the Minister
informs the Bank that he will take steps to revoke
the Bank's licence unless changes in the ownership
and management, agreeable to the Minister, are
made.
3. 'We suggest that the changes should be as
under: The existing 4 per cent Preference Shares,
held by the Western Region Marketing Board
should be converted into Ordinary Shares, so as
to give the Board control of the Bank.
4. 'The Western Region Marketing Board
should appoint additional directors of the Bank.
5. 'The day-to-day running of the Bank should
1 Exhibits SLD. 55, 55A and 55B. See also in respect of
this matter Exhibits SLD. 56 to SLD. 60.
SDay 4, p. 50.
SExhibit SLD. 1.
Day 21, p. 2.


be in the hands of the general manager, Dr Duro-
shola.
'We shall be obliged if you will kindly deal with
this matter as expeditiously as possible and let us
hear from you.'
The important provisions of the letter are to the
effect that:
1. '1 million preference shares 1 be conver-
ted into equity shares; and
2. That additional shares to the tune of not less
than 1 million be taken up by the Western
Region Marketing Board.' 2

It appears that immediately before the application and
just after the exercise with regard to the cheque for
675,000 3 Banking Inspectors had investigated the
affairs of the Bank and had submitted a Report to the
Federal Government in which it was suggested
among other things that the Regional Government,
at that time owning 1 million shares in that Bank,
should step in to save the Bank from possible collapse
on account of the unsatisfactory position of the
liquidity. The witness Duroshola testified to the
effect that after the letter of the 18th October, 1960,

left he was sent to Ibadan to negotiate with the
Western Region Marketing Board with regard to the
proposed injectment of further monies into the Bank.
He described the visit to Ibadan and the purpose for
that visit as follows:
'My Board of Directors then sent me to Ibadan
to represent them and inform them orally that,
though they asked for conversion of these pre-
ference shares into equity shares, they have re-
viewed the situation and found out that this
2 million would not be sufficient to put the Bank
in a proper footing as envisaged. As a result of that,
I was asked to attend a meeting of the Board
where the matter was going to be discussed to
make representations to them orally that the
Bank would need another 1 million which would
make an aggregate 3 million.'4
In effect they asked for 2 million in writing from the
Western Region Marketing Board and got 3
million. It appears that the request of the National
Bank of Nigeria Limited for facilities as envisaged in
these arrangements was discussed at a meeting of the
Western Region Marketing Board held on 3rd
November, 1960 5 and that thereafter the Ministry
of Trade and Industry was apprised of the decision
of the Western Region Marketing Board and that
the covering approval of the Ministry was obtained to
the transaction. The National Bank of Nigeria
Limited was informed of the covering approval and
was advised to pass necessary resolutions for the
purpose of accommodating the facilities. Consequent
on this the Board of Directors of the Bank met and
resolutions increasing the share capital of the Bank
were accordingly passed.6 The Western Region
Marketing Board was informed of this step and the
amount was made available to the National Bank of
Nigeria Limited accordingly. This was at the end of
1960 or the beginning of 1961. There is no doubt that
the National Bank of Nigeria Limited was in acute
financial difficulties at this time as the liquidity
position was very precarious and the investigating
panel of the Federal Government had made strong
recommendations for speedy assistance to avoid the
Bank being closed down.
The net effect of thatt exercise is that the Western
1 Exhibits AAOD. 10 and AAOD. 11.
2 Exhibit SLD. 1.
3 Exhibit AAOD. 15.
4 Day 20, pp. 82-83.
6Exhibit SLD. 2.
6 Exhibit AOA. 6.







Region Marketing Board has a total investment of
3 million in the National Bank of Nigeria Limited
constituted of 2 million newly invested by way of
purchase of ordinary shares of the Bank in the same
amount and a conversion of the 1 million four per
cent preference shares into ordinary shares. This
position readily gives to the Western Region Market-
ing Board a controlling interest in the management of
the Bank.
The witness Durosaro, who has now become the
Chairman of the Board of Directors of the National
Bank of Nigeria Limited, informed us that the affairs
of the Bank are now being handled properly. The
approval of the Minister of Trade and Industry was
sought and obtained 1 on the 9th January, 1961, to
the transaction before the monies were paid. The
letter from the Ministry 2 rightly raises the issue of
representation on the Board of the Bank and directed
that the Western Region Marketing Board:
'will proceed to finalise your proposals for exer-
cising effective controlling power in the Manage-
ment of the Bank and in particular to ensure that
the key posts of the Bank are held by suitably
qualified officials. It is required that your final
plans be submitted for the consideration and
approval of the Hon. Minister of Trade and Indus-
try at an early date.'
We know that the matters concerned in this directive
were later transferred to the Ministry of Finance as
the Ministry responsible for the financial policies
of the Government to appoint Directors who will
represent the Western Region Marketing Board on
the Board of Directors of the Bank and that as a result
the Marketing Board appointed the following to the
Board of Directors of the Bank after the existing
Directors had been asked to retire:
1. Chief S. L. Durosaro.
2. A. O. Oshinibi, Esq.
3. Alhaji A. O. Duroshola. 3
Previous to that and on the 20th December, 1960,
the Ministry of Trade and Industry had requested
the Western Region Marketing Board to:
'provide us as promptly as possible detailed
information on the steps you are taking to provide
qualified experienced and reliable staff for the
Bank.' 4
The witness Duroshola informed us that at present
the Bank has got on its staff the following:
1. F. O. Sogunro, Chartered Accountant.
2. T. A. Onigbanjo, A.I.B. Accs.
3. F. O. Okanlawon, A.I.B. Accs.
4. S. O. Banjo, A.I.B.
5. R. O. Adewusi, A.I.B. Accs.
6. A. Adenekan, Inter A.I.B.
7. 0. Egunjobi, Inter A.I.B.
The National Bank of Nigeria Limited, the witness
Duroshola also stated, had as its Financial and
Economic Officers the following:
1. E. A. Crane, F.I.B., F.C.I.S.
2. Dr S. Reich, Economist and Banker.5
and as its Auditors the following:
1. Messrs Olatunde Ayoola and Co., Chartered
Accountants.
2. Messrs Thomas Silva, Dawodu and Co.,
Certified Accountants.
In conclusion may we say on this Section that we
have attached to this Report a statement of account
showing the financial position of the National Bank
Exhibit SLD. 3.
,2 Ibidem.
3 Exhibit AAOD. 1.
Exhibit AOA. 4.
1 Day 20, pp. 91-92.


of Nigeria Limited. This is a Bank in which 3
million of the total shareholding of 3,250,000 is
vested in the Western Region Marketing Board and
it is clear from the Accounts of the Bank that not
much of the monetary capital thus invested still
remains liquid. This statement is attached asAppendix
25 to this Report.

Section 2. Observations and
Recommendations

The present state of affairs of the National Bank of
Nigeria Limited calls for little observations and
certainly only a few recommendations. This is so
because we are told that the several loans operated in
several names on behalf of the Action Group have
now been cleared and that the Bank now operates the
accounts of the Action Group on the normal basis of
banking practice. We are not oblivious of the fact
that the Western Region Marketing Board now has a
total amount of investment of 3 million in the equity
shares of this Bank, but we know also that the
Marketing Board in fact appoints all the members of
the Board of Directors. We are impressed by the
availability, and record with satisfaction our opinion
with regard to that, of trained and efficient staff, for as
revealed to us by the witness Duroshola in the
course of his evidence, the National Bank of Nigeria
Limited has now on its staff trained accountants and
internal and external auditors of repute.
It seems to us, however, that no investigation
whatsoever was made by the Western Region Market-
ing Board when it was proposed by the Board to
invest the original 1 million in the National Bank
of Nigeria Limited in 4 per cent non-participating
preference shares as well as when the second invest-
ment of an amount of 2 million with the Bank was
effected. We have already pointed out that by the
second arrangement the 1 million preference shares
were converted into equity shares and a further
2 million worth of equity shares was purchased
by the Western Region Marketing Board. No
evidence of any investigation into the affairs of the
National Bank of Nigeria Limited was given before us
and indeed witness Duroshola went to the Western
Region Marketing Board in Ibadan to negotiate for
participation to the total amount of 3 million and
secured the approval of the Marketing Board thereto.
The witness Durosaro did not agree that the injection
of 3 million into the National Bank of Nigeria
Limited was to save the Bank from ruin and stated:1
'I would not agree with the use of the word
'ruin' but in effect I would say that the purposes
were to put the National Bank on its proper footing,
with good management, and also to ensure that the
National Bank would be in such a position as to be
able to compete satisfactorily with the expatriate
banks:'
The witness had earlier on accepted this fact2 but had
opposed the action of the Western Region Marketing
Board on the suggestions of the Bank examiners
investigating the affairs of the Bank immediately
before the injection of 2 million into the Bank to the
effect that a further amount of money should be
injected into the Bank in order to save it from ruin. It
seems to us that with the magnitude of the investment
of the Western Region Marketing Board in the
National Bank of Nigeria Limited, the Marketing
Board is likely to be more damnified by a collapse of
the Bank than by the further injection of a reasonable
amount of investment in the Bank.
1 Day 8, p. 8.
SDay 7, p. 39.








The position of the National Bank of Nigeria
Limited, however, calls for some severe comments with
respect to the employment of the monies from time
to time deposited with the Bank by the Government
or the Statutory Corporations which are its customers.
We know that since the deposit of 1 million with
the Bank in 1955 the Bank has virtually constituted
itself into a banking asylum for the Action Group.
Almost all the many accounts of the Action Group
were kept in almost all the Branches of the Bank and
the various statements of accounts produced before
us show that considerable overdraft facilities were
granted in respect of these accounts.1 This must
necessarily reflect on the availability of cash for the
Bank for the accommodation of its other customers
and gives some support to the many suggestions
made by Counsel before us to the effect that the
National Bank of Nigeria Limited was being run by
the Action Group or the proteges of that Party.
Chief Durosaro, the Chairman of the Board of
Directors of the National Bank of Nigeria Limited,
denied the suggestion of partisanship2 but with the
heavy aggregate of overdraft facilities to a section
of its clientele it is difficult to find monies to satisfy
the others. The witness Chief Lanlehin told us of
how between the years 1958/9 he received a total
amount of over 1 million from the National Bank
without signing any papers for the amounts3 and also
how, at the Ibadan branch of the Bank he was
keeping the keys of a safe available to him on the
Bank premises.4 Whilst the latter suggestion may be
true, we think that the former suggestion was just
impossible. We take the view that whatever monies
the witness apparently collected were substantially
from the premium charges fraudulently 'raked off' the
finances of the National Investment and Properties
Company, Limited by whichever of the Directors of
that company organised the deal.

We are told that after the decision of the Western
Region Marketing Board to participate to the extent
of 3 million in the shareholding of the National
Bank of Nigeria Limited its authorised share capital
was increased to 3,250,000. This was effected by an
extraordinary resolution of the shareholders held
on the 9th December, 1960, to the effect that:

1. The share capital of the Board be increased
from 1,250,000 to 3,250,000 'by the creation of
2 million new ordinary shares of 1 each...'

2. That the existing 1 million preference shares
of 1 each be converted to 1 million ordinary
shares of 1 each.6
Only 181,000 shares do not now belong to the
Western Region Marketing Board out of the total
issued capital of 3,181,000. In 1957 when the
Western Region Marketing Board deposited the
amount of 1 million with the Bank in four per cent
non-participating preference shares, the capital and
resources of the National Bank of Nigeria Limited
were less than 300,000. We know, however, that
since the purchase of the preference shares deposits
of between 2 million and 3 million or more were
made with the National Bank of Nigeria Limited by
the Western Region Marketing Board until 1961
when the 3 million participation arrangement came
into effect. We have already instanced the other
accounts maintained by the Western Region Pro-
duction Development Board with the National Bank
of Nigeria Limited described by ChiefAwolowo in his
speech to the House of Assembly. We know that at
Exhibits FOO, 1-FOO. 2B; FOS. 2, 3, 4; AAOD.
20-28.
2 Day 7, pp. 37-8.
3 Day 78, p. 117.
4 Day 79, pp. 7-9.
2 See Exhibit AOA. 6.


30th September, 1961, the Bank was unable to repay
to the Western Region Marketing Board the deposits
of 941,370 then held by it.1
We know that under the Agreement of the 4th
October, 1957, between the National Bank of Nigeria
Limited and the Western Region Marketing Board the
Bank covenanted 'to engage an examiner and finan-
cial adviser of high repute in London.' We have
evidence that this had been done.2
The finances of the National Bank of Nigeria
Limited did not present a very happy picture, the
principal causes of that being:
S1. The huge loans outstanding in the names of
the erstwhile Directors of the Bank and/or persons
or companies in which they are interested;3 and

2. The loans to the Action Group which are
operated in various names and which are not
secured in any shape or form.
We are not aware of any drastic steps being under-
taken to retrieve the loans from the Directors and
we take the view that most of them are overdue for
collection. It is most unfair, at least to the other
shareholders of that Bank, that a few of them who are
Directors should enrich themselves, their relatives
and their companies or business undertakings at such
a rapacious rate as to threaten the security of the
Bank itself. What is required is a complete reorienta-
tion of the policies of the National Bank of Nigeria
Limited and, of course, the availability of further
capital finance. It is rather unlikely that the Western
Region Marketing Board in view of the state of its
own finances would be able to invest more monies in
the National Bank of Nigeria Limited but the retire-
ment of large overdrafts of the Directors would go a
long way in providing liquid assets to put the bank on
its feet.
The Chief Accountant of the Western Region
Marketing Board, Ladeinde, testified with respect
to the affairs of the National Bank of Nigeria Limited
as follows:'
'We have indeed recommended all sorts of things
about this. I gathered, in fact, that that is one of the
assignments of Chief Durosaro on the Board-to
reorganise it.'
We think that everything possible should be done
to save the National Bank of Nigeria Limited from
collapse, and having regard to the size of the invest-
ments of the Western Region Marketing Board in
the Bank as well as the interest of the large clientele
which the Bank must have accommodated during the
years between its inception in 19334 and now, this is
a matter of policy which should be pursued. All
avenues by which its scattered finances and resources
could be repatriated should be explored and exploited
and the drive for finance must be relentless and firm.
We advert at this juncture to the transaction
between the National Bank of Nigeria Limited and
the National Investment and Properties Company,
Limited with respect to the purchase of the property
Nos. 15/20, Broad Street, Lagos, which position as
pointed out by us still remains unsolved. It is manifest
that if the sale of that property were supposed to be
on the basis of the valuation of Messrs. Gleave and
Fox, an operative mistake had occurred in the
contract which certainly goes right down to the root
thereof. This is because the valuation clearly assumes
that the National Investment and Properties
Company, Limited had an unencumbered freehold
1 Day 8, p. 64.
2 Exhibit AAOD. 3.
3 Day 8, p. 34.
4 Exhibit AAOD. 12.









title to the land upon which the building stands;
in fact the land does not belong to the National
Investment and Properties Company, Limited and
does belong to the National Bank of Nigeria Limited.
It is significant that no question of premium charges
as suggested by Chief Shonibare in his evidence
before us1 was mentioned as being due to be paid
to the National Bank of Nigeria Limited in this
connection, and indeed there was no mention of such
charges being due for payment to the Bank in the
many letters exchanged between the parties over the
transaction.2 Chief Shonibare has, however, indi-
cated that the National Investment and Properties
Company, Limited was prepared to go back on the
transaction only if the parties would agree to be
restored in integro, i.e. to the original positions before
the transactions. It is difficult to envisage what this
means, but we feel that at least if the parties could
not be restored to the original positions, the National
Bank of Nigeria Limited would be in a position to
enforce the provisions of the Agreement of 6th
January, 1958, to the effect that they are entitled to:
1. Compensation for the freehold title to the
land.
2. A half share of any declared profits on the
transaction.3
This no doubt is a matter to be carefully looked into
by all concerned, but we are of the view that the













































1 Day 76, pp. 60-61.
2 See pp. 3-4 ante.
3 Exhibit SLD. 30.


matter should be pushed and pursued to its logical
conclusion.
There is also the incident in which a cheque for
675,000 signed by Chief Awolowo and Chief
Lanlehint was injected into the affairs of the National
Bank of Nigeria Limited some time in February,
1960. We indicated that at the time of the issue of
the cheque on the Action Group Trust Fund Account
in Ibadan, the total amount to the credit of that
account in the Bank was about 18,000. The arrange-
ments therefore involved the granting by the Bank
of a total overdraft of about 657,000 on the account
at Ibadan. No qash or specie was passed as is falsely
stated on the Bank slips of the same day.2 No doubt
the Bank approved that the books of the Bank should
be used for such a dishonest transaction and it is a
matter for regret that a Bank of any repute should
have lent a hand to the perpetration of such a deceit.
In fact by that design the Banking examiners were
certainly deceived.
In conclusion we state that we have attached as
Appendix Twenty-Six to this Report a list of the
debtors of the National Bank of Nigeria Limited as
at 31st December, 1960,3 there being no other and
later list produced to us, and we do this in the hope
that an awareness of the existence of such a list may
arouse the indignation of the present members of the
Board of Directors of the National Bank of Nigeria
Limited to rise and act.













































1 Exhibit AAOD. 15.
2 Exhibits AAOD. 16 and AAOD. 16 .
3 Exhibits AAOD. 13 and AAOD. 14.









CHAPTER 4
AGBONMAGBE BANK LIMITED
Section 1. Policy and Business Operations


In the policy statement submitted by Chief
Awosika, the Chairman of the Western Region
Marketing Board to this Commission' pointed out
that:
'It is a policy of the Board to assist the growth
of well established indigenous banking institutions,
bearing in mind that these Nigerian banks are in a
better position to understand and interpret cor-
rectly national aspirations, and if placed in a strong
financial position should be able to make more
effective contributions to progress in the private
sector of the country's industrial and commercial
activities.'
Chief Awosika was obviously trying to spell out in
greater detail some of the recommendations of the
International Bank Mission in 1954 in their Report
entitled 'Economic Development of Nigeria'2, where
at page 96 the writers discussed the important role
which indigenous banking institutions might play
if given the opportunity and facilities to do so in the
economic development of the country. We recall also
on this point that Chief Awolowo in his speech to the
Western House of Assembly in 1956,3 had indicated
the policy of his Government with regard to indi-
genous banking institutions and stated that one of
the banks that had passed the acid test4 was the
Agbonmagbe Bank Limited.

The Agbonmagbe Bank, we are told, is a bank in
which the directors are all members of the family of
Chief Okupe Agbonmagbe who is also the Chairman
of that Bank. The Memorandum and Articles of
Association of the Agbonmagbe Bank Limited was
produced in evidence before us5 and it is manifest
from this that the subscribers to the Memorandum of
Association were Chief Matthew Adekoya Okupe
himself and his wife Regina. At inception the autho-
rised share capital of the Bank was stated to be
'5,000 divided into one thousand shares of 5 each',
although it was expressed that the company might
increase its shares from time to time. At all times
material to this Inquiry the authorised capital of the
Agbonmagbe Bank was 100,000 divided into twenty
thousand ordinary shares of 5 each6, and the
evidence reveals that the amount quoted is the
increased share capital after the injection of money
into the Bank by the Western Region Marketing
Board. The share capital at the time of the Western
Region Marketing Board investment in the Agbon-
magbe Bank was 25,000 constituted by five thousand
ordinary shares of 5 each, out of which a total of
13,410 only was paid out in 2,682 ordinary shares
of 5 each.

It appears that on or about the 13th July, 19597
an application was received by the Eastern Region
Marketing Board from the Agbonmagbe Bank
Limited for 'a long-term deposit of 200,000 in that
Bank.' The Western Region Marketing Board met on
the 27th July, 19597 and approved the application for
deposit and accordingly informed the Agbonmagbe
Bank of their approval of its application8 In the letter
notifying the Agbonmagbe Bank of the approval of
the Western Region Marketing Board it was stated
inter alia as follows:
SExhibit SLD. 64.
Exhibit AOO. 42.
SExhibit AOA. 18.
4 See pages 1-2 ante.
5 Exhibit MAO. 12.
SExhibit IOD. 16.
7 Exhibit AOA. 8.
8 Exhibit AAL. 19.


'It is hoped that the deposit account which
,the Board proposes to open with your Bank will
sufficiently strengthen its financial position to
enable it give greater accommodation to those
licensed buying agents currently transacting busi-
ness with it. The Board will however be prepared
to review the present position at a future date.'
Such deposit was, in fact, made with the Agbon-
magbe Bank.2
Chief Okupe, the Managing Director of the
Agbonmagbe Bank Limited told us that prior to the
letter of application he:
'had discussion with Chief Obafemi Awolowo
as to the possibility of having patronage from the
Government of the Western Region and he told me
that he would look into the matter. I asked him
that I should be grateful if the Government of the
Western Region would assist indigenous banks and,
as a consequence of this, I put in an application to
the Marketing Board for the sum of 200,000 on
long-term deposit.'3
The amount so placed on deposit was to earn interest
at the rate of three per cent per annum and the deposit
was for a period of three years subject, however, to a
renewal at six months' notice. The Agbonmagbe
Bank Limited accepted the terms of the deposit,4
and when the cheque for the amount was eventually
handed over, the Agbonmagbe Bank Limited issued a
receipt for the deposit.5
It seems that the affairs of the Bank then proceeded
on normally for with the injection of 200,000 deposit
into the finances of the Bank, the accounts as at
30th September, 19596 were satisfactory. Attached
to the accounts7 is a statement to the following effect:


Percentage of Liquidity for Septe-
mber, 1959
Without Government Deposit Per-
centage of Liquidity for Septem-


63.6 per cent


ber, 1959: .. .. .. 28.4 per cent.
We know that by letter of the 19th July, 1962, the
Agbonmagbe Bank Limited have asked for a renewal
of the balance of this deposit.8
With witness Chief Durosaro told us how the
investments came about. He said that applications
had been received from the Agbonmagbe Bank and
the Merchants Bank Limited for deposits to be made
with those banks. When he was questioned by Chief
Awolowo, he testified as follows:
'May I remind you that after the application had
been received we had received an application from
Merchants Bank for many months asking for a
million pounds deposit, and nothing came out of it
further. For some time nothing came out of it,
and I do not remember whether I was invited
specially to Ikenne or after a meeting at Ikenne you
called me to your sitting room and told me that
pressure had been brought to bear upon you about
that request of the Agbonmagbe Bank and you
asked whether it was in keeping with the policy
of the Board and I said it was; and you said I
should give them a deposit similar to that we did on
exactly the same terms as we did for the National
SExhibit MAO. 1.
2 Ibidem.
3 Exhibits AAL. 20'and AAL. 21.
Day 22, p. 3.
Exhibit MAO. 2.
Exhibit MAO. 3.
Exhibit MAO. 13.
SExhibit MAO. 11.









Bank that is 850,000. Then I said, 'Shall we do
the same thing with Merchants Bank because we
could not afford to give 1 million to Merchants
Bank,' and you asked me to give exactly the same
amount to Merchants Bank. That was why the
amount was reduced 200,000 for both of them and,
of course, it was in keeping with the policy of the
Board-to help indigenous banking.'1
It will be recalled that the witness Chief Okupe
had himself testified to the effect that he saw Chief
Obafemi Awolowo in 1959 and asked for the financial
patronage of the Western Region Marketing Board.
It appears, however, that in the course of the
business of the Bank, loans and overdrafts were
granted in circumstances which, when considered in
the light of the Banking Ordinance, would be illegal
(see Section 7 of the Banking Ordinance). By that
Section it is illegal for any Bank to grant overdrafts
to any one customer in excess of twenty-five per cent
of its total paid-up capital and published reserves.
When the 200,000 was deposited with the Bank,
there was no evidence of any investigation being
made into the affairs of the Bank nor are we told
that even the balance sheet for the period immediately
before the investment was asked for. The authorised
share capital at the time of the investment was
25,000 and the issued and paid-up capital was in the
region of only 13,000. The obvious result is that not
much of the 200,000 deposit could be lent on normal
banking business without violating some of the
provisions of the Banking Ordinance.
It appears that some time in 1960, that is on 28th
September, 1960, or thereabouts, the Western Region
Marketing Board wrote a letter to the Agbonmagbe
Bank Limited,2 and also a letter to the Ministry of
Trade and Industry3 to the effect that the Western
Region Marketing Board was acquiring:
'80,000 ordinary shares in the Agbonmagbe
Bank Limited and to pay for the said shares in full.
'2. In anticipation of your acceptance of the
above proposal you are hereby authorised to deduct
a sum of 80,000 from the deposit of 200,000
placed with the Bank by the Board as per former's
receipt No. 91 of 1st October, 1959, and to utilise
the amount in settlement of the Board's liability
in respect of the ordinary shares applied for:
'3. It is" surmised that as a shareholder the Board
will be entitled to representation on the Board of
Directors of the Bank. This question is for later
discussion but in the meantime your views on this
subject would be appreciated'1
The evidence before us is that non-formal applica-
tion was ever made by the Agbonmagbe Bank Limi-
ted for this purchase and that the Secretary of the
Western Region Marketing Board, Mr Oshinibi,
stated that he did not know the background to the
letter nor was he aware of any letter grounding the
letter written to the Agbonmagbe Bank from the
Western Region'Marketing Board.5 In the same way
the Chief Accountant of the Western Region Market-
ing Board had testified on the point as follows:
'All I can say is that I was not consulted and I
did not think my predecessor was either.' 6
The position was however later explained in the
course of the evidence. Some officers or inspectors of
the Central Bank apparently visited the Agbonmagbe
Bank Limited and they had reported that among other
things the Bank should look for efficient staff and
SDay 7, pp. 76-77.
2 Exhibit MAO. 4.
Exhibit JOIL. 1.
4 Reference Ibid. Exhibit MAO. 4.
6 Day 10, p. 77.
6 Day 8, p. 30.


good auditors. The report also commented on the
liquidity position of the Bank1. The inspectors also
pointed out to the Agbonmagbe Bank Limited the
illegality of making advances in excess of the limits
prescribed by the Banking Ordinance, considering
that the issued and paid-up capital of the Bank was,
still no more than 13,000. When the complaints
were made it was obvious that the only feasible
alternative was to increase the share capital as the
other alternative, that is to call in the loans immedia-
tely, would ruin the business of the Bank. The evide-
nce discloses that thereafter Chief Okupe met both
Chief Awolowo and Chief Akintola at Ikenne and
apprised them of the situation, at the same time
soliciting for their assistance.2 We know that after
this meeting Chief Akintola called the witness
Durosaro and asked:
'the Marketing Board to help save the Bank not
by putting in any new money but by converting
part of the 200,000 deposit into equity shares.'3
The letters of the 20th September, 1960, were
therefore written, and on the 6th October, 1960,
the Western Region Marketing Board approved of the
purchase and informed the Ministry accordingly. 4
The approval of the Ministry was obtained, and by
the letter covering the approval dated the 7th October,
1960, the Ministry observed inter alia as follows:
'The acquirement of shares in indigenous banks
is in conformity with Government policy of
assisting indigenous banks to serve more effectively
the economic interests of the Region. It is not
therefore considered advisable that your invest-
ments need necessarily be such as to give you
controlling powers in the affairs of the bank.'
The first part of the letter from the Ministry
enquiring about the extent of the Bank's capital and
debentures suggested that no investigation whatso-
ever was made again about the circumstances of the
Bank at the time of the conversion of deposits into
shares. The Managing Director of the Agbonmagbe
Bank Limited, Chief Okupe, however, replied to the
letter of offer and stated that:
'shares have been allocated to you accordingly,
and as soon as other formalities are completed with
the Registrar of Companies, you will be duly
informed.'6
Meanwhile no further action appeared to have been
taken on the proposals raised in the letter of the
Ministry dated the 7th October, 1960,7 for accord-
ing to the witness Oshinibi:
'On receipt of that letter, my Chairman minuted
the letter to both the Chief Accountant and myself
for attention but a couple of days after, he did
inform me that the Government was looking into
the question of how the Board could participate
in the affairs of the Agbonmagbe Bank Limited,
and that further action on our part should await
further instructions from Government. So, no
action was taken on that letter.'8
Despite this statement, however, it seems that the
Ministry still pursued the matter for on the 30th
November, 19609 the Ministry wrote to the
Western Region Marketing Board asking for:
1. how the Western Region Marketing Board
proposes to exercise its controlling authority
on the Agbonmagbe Bank Limited; and
2. what steps the Board proposes to take to
1 Day 22, pp. 43-46.
2 Day 22, pp. 46-49.
3 Day 7, pp. 77-78.
4 Exhibits AOO. 3 and AOO.4
5 Exhibit AOO. 5.
6 Exhibit MAO. 5.
SExhibit AOO. 5.
s Day 10, p. 85.
Exhibit AOO. 7.








protect its investment in the Bank1.
Despite the statement of Mr Oshinibi again, on the
2nd November, 1960, the Chief Accountant of the
Western Region Marketing Board had forwarded to
the Ministry of Trade and Industry:
1. a copy of the audited final accounts of the
Bank for the year ended 31st March, 1960; and
2. a copy of an interim balance sheet as at 31st
August, 1960.
It was understood by all concerned at that time that
it was necessary 'to increase the authorised capital to
100,000' and that the legal formalities were being
pursued.
In the meantime, the Ministry discovered that in
view of the precedent established in the case of the
National Bank of Nigeria Limited2 to the effect
that as the nominees of the Western Region Market-
ing Board on the Board of Directors were appointed
by the Ministry of Finance, the Treasury should be
consulted, and, in fact, the Treasury was so consulted
". At this point of time, the Chief Accountant of the
Western Region Marketing Board, Mr Towsey, had
examined the financial affairs of the Agbonmagbe
Bank Limited and had submitted a review to the
effect that the general appearance of the final account
makes a good impression4, even though when that
officer described the affairs of the Bank with the
bank examiners of the Central Bank, the examiners
wanted to report some information to the Western
Region Marketing Board in the presence of the
Managing Director of the AgbonmagbeBank Limited.
The Managing Director was not, however, available.
The Chief Accountant therefore suggested that in
order to protect the interests of the Western Region
Marketing Board the Board should:
1. avail itself of the information promised by
the banking examiner; and
2. put a man or men of the Western Region
Marketing Board on the Board of the Agbon-
magbe Bank.5
In the meantime no definite or positive steps were
taken by either the Ministry of Trade and Industry
or the Western Region Marketing Board to appoint
anybody to the Board of Directors of the Bank, but
the evidence before us reveals that even the Secretary
of the Western Region Marketing Board stated that
the letter of the 30th November, 1960, written from
the Ministry of Trade and Industry to the Western
Region Marketing Board was not passed to him for
action at all. That re-echoes the statement of the
Chief Accountant of the Western Region Marketing
Board when questioned about the sapience of the
investment:
'Well, as I say, I was not consulted; all I can say
about this is that this policy decision was not all
based on pure commercial aspects; there was the
element of helping the African business about it;
you know, the investments in National Bank,
Agbonmagbe, and so on.'
The Managing Director of the Agbonmagbe Bank
Limited, however, in the course of his evidence
testified to the effect that he accepted the principle
of representation and that he, in fact, issued a share
certificate 8 to the Western Region Marketing Board
after the conversion of part of their deposit into
shares 9. He had duly paid interests on the deposits
of the Western Region Marketing Board with him
and he produced to us the relevant bank tellers by
1 Exhibit AOO. 7.
2 See Chapter 4 Section 1.
3 Exhibit JOIL. 7.
4 See minutes Exhibit AOO. 9.
SExhibit AOO. 12.
6 Day 10, p. 87.
SDay 8, p. 30.
8 Exhibit MAO. 6.
s Day 22, pp. 7-8.


which the interests were paid into the account of the
Western Region Marketig Board'.
The witness Okupe also testified to the effect that
information about the day-to-day running of the
Bank was supplied to the Western Region Marketing
Board and that indeed the Chief Accountant of the
Western Region Marketing Board paid occasional
visits to the Bank, 2 although he would not say when
last the expatriate Chief Accountant visited his Bank.
It appears that by letter dated the 30th March,
1961, the Western Region Marketing Board was
informed that the Treasury would take over the whole
matter of representation on the Board of Directors
of the Bank3, the Ministry itself having been notified
of this step earlier on by the Treasury4. The Ministry
had written to the Treasury and we know that there-
after the Treasury and indeed the Premier opened
discussions with the Managing Director of the
Agbonmagbe Bank Limited with regard to the matter
of representation of the Western Region Marketing
Board on the Board of Directors of that Bank. We
know that no settlement has been reached with regard
to this matter up till today and that indeed there is no
representation on the Board of Directors of the
Agbonmagbe Bank Limited of the Western Region
Marketing Board'. We know that meetings were
arranged between the Minister of Finance and the
Managing Director of the Agbonmagbe Bank Limited,
but that no useful results have been reached at these
meetings6. On the part of the Managing Director of
the Agbonmagbe Bank Limited he stated that he did
not:
'oppose representation and that is distinctly
indicated in my letter to them that the offer is
accepted. What I opposed is what is not made known
to me at the time the shares were purchased and
that is, it appears, there is a motive to control the
management of the Bank and the civil servants of
the Western Region, I am sorry to say, were so
careless that they have caused this gap between
myself and the Western Regional Government.
When they asked for representation I replied that
the term was accepted. What I was expecting from
them was a letter indicating that Mr 'So and So'
has been appointed as a member of your Board
and that whenever you have meetings you please
notify him. Instead of that they continued writing
letters upon letters to me, asking me to put up
proposals. And I continued writing to them to
give the proposals. If I will refer Your Lordship
to page 20 of this report-my letter of the 20th
February to the Permanent Secretary to the
Treasury. 'I thank you for your letter reference
F467/21 of 16th February, 1961, and in reply I
have to inform you that I have not up till now had
confirmation of the agreement. In order not to
keep the matter hanging you may please put
forward your proposal to enable us arrive at a
decision over the issue .. This proposal has
never been put up to me.'7
We know that on the 20th February, 1962, the
Managing Director of the Agbonmagbe Bank Limited
had written to the Treasury asking the Treasury:
'not to keep matters hanging you may please put
forward your proposals to enable us to arrive at a
decision over the issue while I shall pursue the
implementation of my arrangements vigorously.'8
The arrangements which the Managing Director
envisaged were not disclosed to anybody, and the
witness Chief Odebiyi, Minister of Finance, in the
1Exhibits MAO. 8 and MAO. 9; see also Exhibit MAO. 7
2 Day 22, pp. 11-12.
3 Exhibit AOO. 18.
4 Exhibit JOIL. 8.
6 Exhibits AOO. 19 and AOO. 23.
6 Exhibits AOO. 26, AOO. 30, IOD. 5--10 and IOD. 12.
7 Day 22, pp. 12-13.
8 Exhibit IOD. 13.








course of his evidence testified that at the meeting
between him and Chief Okupe there was no question
of representation discussed as the background to the
investment was unknown to him. He stated further:
'What we told him was to find out from him
what proposals he had to put before Government
about how the shareholding of the Marketing
Board could become effective in the Bank, and as
I said before in one of the evidence which was led
here before it was stated that the purpose for
putting money there was not to take over the
control of the Bank and therefore that was why
we wanted him to present his proposals.'1.
Anyway, we know that a request by the Treasury
for further particulars to the Managing Director of
the Agbonmagbe Bank Limited was met by him2.
As far as we are aware, the position remains as
unsolved today as it was when the Premier 3 inter-
vened in March, 1962, and arranged a meeting with
Chief Okupe who, however, called off the meeting
'due to some unavoidable circumstances.'4. We
know that the Administrator had instructed that the
Treasury should meet the Managing Director to get
him to agree to representation. After a meeting with
the Secretary for Finance on the 27th May, 19625,
the Managing Director of the Agbonmagbe Bank
Limited, wrote to the Treasury as follows:
'The present proposal therefore is as follows:
that the sum of 200,000 (two hundred thousand
pounds) be transferred' en bloc to non-participating
preference shares at the rate of three per cent
interest per annum. This would put the Bank on
better footing as far as paid-up capital is con-
cerned.'
At this stage it is manifest beyond words that Chief
Okupe would not agree to representation on the
Board of Directors by the Western Region Marketing
Board nor would he agree to a refund of the 200,000
deposit because, as he told the Secretary for Finance,
that would relegate the Bank into the same position
in which it was before the conversion of 80,000 into
shares. The matter was left in abeyance by the
Government as it featured in this Inquiry.

Section 2. Observations and
Recommendations
We are satisfied that there was no investigation
whatsoever into the affairs of the Agbonmagbe Bank
both when the 200,000 was being deposited and
also when the 80,000 conversion into shares took
place. The evidence plainly establishes that the
deposit of 200,000 was made by the Western
Region Marketing Board on the instruction of Chief
Awolowo and that the conversion of 80,000 was
made on the instructions of Chief S. L. Akintola.
At the time of the deposit of 200,000 and of the
conversion of the 80,000, both Chief Awolowo and
Chief Akintola were, during the material times,
Premiers of the Western Region of Nigeria.
The avowed policy of the Western Region Govern-
ment is to help indigenous Banks with some credit,
and to all intents and purposes when the 200,000
was injected into the Agbonmagbe Bank there was
no reason to doubt that the Bank would do well.
We do not agree with the Managing Director of that
Bank, Chief Okupe Agbonmagbe, that his Bank was
not in difficulty when the 200,000 was deposited
with the Bank, and a close examination of his accounts
and in particular the balance sheet reveals that the
liquidity ratio of the Bank was rather unsatisfactory.
1 Day 22, p. 112.
2 Exhibits IOD. 4 and IOD. 5.
3 See minutes Exhibit IOD. 17.
4 See minutes Exhibit IOD. 18.
6 Day 20, pp. 37-38.
6 Exhibit IOD. 21.


If any previous investigation were made into the
affairs of the Bank at the time when this money was
to have been deposited, it would have been discovered
that:
1. There was a necessity for increasing the share
capital of the Bank; and
2. There was a need for the provision of trained
or skilled staff for the Bank.
We take the view that if these had been done, the
difficulties which subsequently arose to the Bank,
creating a necessity to approach both Chief Akintola
and Chief Awolowo at Ikenne in 1960 for further
and substantial financial assistance, would have been
obviated.
We note with some regret that whilst it is manifest
that the Managing Director of this Bank was obstruc-
tive with regard to the appointment of representatives
of the Western Region Marketing Board to the
directorate of the Bank, he was genuinely sceptical
of the ability of civil servants to run a bank in which
he had invested virtually the whole of his life. He was
making arrangements for external finance so that he
might be able to refund or repay the total of the
deposits to the Western Region Marketing Board,'
but this is in obvious ignorance of the fact that it
would be impossible to force a repayment on shares
once issued and also that by the terms of the fixed
deposits he was bound to hold them to maturity.
Although the Managing Director testified before
us to the effect that when the 80,000 share conver-
sion took place the liquidity position of his Bank was
not unsatisfactory, we do not share his views. No
balance sheet or accounts reflecting the actual position
immediately before the take-up of shares was pro-
duced before us. Nor are we aware that any was
sought for or indeed prepared. It is, however, our
view that it is easy to see the trend of the balances
of the deposits and current assets over the current
liabilities. Besides the evidence establishes that at his
time loans were granted in excess of the legal limits
prescribed by the Banking Ordinance and there was,
as admitted by the Managing Director himself,
adverse comments by the Banking examiners about
the absence of sufficiently trained staff from its
establishment.
This is a rather urgent need if it is desired in any
way to save the Bank, for the perpetuation of mistakes
by far more hideous than the mere occurrence of a
single one. This, of course, involves the establish-
ment of a virile and capable directorate able to deal
with the peculiar problems of the Bank and to direct
its course in a realistic way. We see from the bank
statement of the Action Group produced by Chief
Okupe 2 that although he himself was a member of the
Action Group and indeed a leader in Ijebu Remo,
he did not on that fact alone give out overdrafts to
that customer. With respect to the matter of represen-
tation on the Board of Directors of the Bank, we fail
to see any reason or reasons why the Minister of
Finance did not discuss the matter with Chief
Okupe at the meeting held between them in view
of the fact that that was the only matter referred to
him and contained in the letter of 14th March, 1961,
from the Ministry of Trade and Industry,3 and indeed
in the letter dated 15th March, 1961, from the
Treasury to the Ministry of Trade and Industry4.
The dilatoriness of the Government in putting for-
ward concrete proposals had actually whittled down
the strength of any position possessed by the Western
Region Marketing Board with respect to the fact
of investment. That should have been arranged and
agreed upon before the payments were ever made at
all.
1 Exhibits IOD. 10 and IOD. 13.
2 Exhibit MAO. 14.
3 Exhibit IOD. 4.
4 Exhibit IOD. 5.








We recommend in this regard that the Government
should appoint its nominees to the Board of Directors
of the Bank, the Western Region Marketing Board
being the majority shareholders of the Bank, and that
if they are refused the right to manage the affairs of
the company, a report should be made to the Banking
examiners of the Central Bank. It is also suggested
that the position that obtained in England would also
obtain in this country whereby in such a case appli-
cation can be made to the Courts for a declaration of
rights and interests of the majority shareholders
with respect to the management of the company.
Finally, we do recommend that on the strength


of the minutes of the Chief Accountant of the Western
Region Marketing Board to the effect that the affairs
of the Bank look healthy5, attempts should be made
to save the Bank whether by way of injection of
further monies or by way of reorganisation. This
preeminently depends upon the co-operation of the
Managing Director, as we are informed that the
Bank has always been a family affair. Without such
co-operation, it is our view that it is not possible to
avoid a possible and unpleasant situation in which
the present management not only has to yield
grounds absolutely or face the necessary litigation
of enforcing the rights of the majority shareholders.


6 Exhibit AOO. 9.









CHAPTER 5
MERCHANTS BANKS LIMITED
Section 1. Policies and Business Operations


The Merchants Bank Limited was incorporated
on the 25th January, 19521 with an authorised share
capital of 50,000 divided into 50,000 ordinary shares
of 1 each. At the inception of the company the
subscribers to the Memorandum and Articles of
Association were:
1. Moses A. K. Sonowo.
2. Benjamin 0. E. Williams
3. Patrick Jacob Osoba.
4. Daniel A. O. Sallu.
5. Samuel 0. K i ii. I,,,.,, Director,
Oriwu Commercial i ,,. .2
It appears from the audited accounts of the Merchants
Bank Limited for the year ending 31st December,
1958, that even at that time the subscribed and paid-
up capital was 15,250, from which must be deducted
an amount of 2,600, representing calls in arrears.
This leaves a balance of paid-up capital of 12,650.
That was the position as at 31st December, 1958.
We are aware of the speech of the Premier of the
Western Region, Chief Awolowo, in the Western
House of Assembly on the 21st December, 19563 in
which he declared that the policy of his Govern-
ment was to assist indigenous banking institutions
and in which the Merchants Bank Limited was, along
with the National Bank of Nigeria Limited, extolled
and described as some of the banking institutions
that had passed the acid tests which were described
in that speech for the purpose of viability for invest-
ments of public funds. We know that on 20th Novem-
ber, 1958, the Merchants Bank Limited submitted an
application to the Western Region Marketing Board
for 'a deposit account for say Lm. and generally to
notify your Board to appoint us as one of your bankers
for operating a current account.'4 The letter was
apparently replied to by the Western Region Market-
ing Board which had stated that the matter was
receiving attention. Again on the 7th September,
1959, the Merchants Bank Limited wrote another
application to the Western Region Marketing Board in
exactly the same terms and indeed asking for a
deposit of 1 million and to be appointed bankers to
the Western Region Marketing Board for the pur-
pose of maintaining a current account.
Before the application was received by the Western
Region Marketing Board, however, the witness
Chief Durosaro testified that he was contacted by
Chief Obafemi Awolowo who had sent for him to
meet him at Ikenne and who thereafter advised him to
make the deposit of 200,000 in the Merchants
Bank Limited for such a step was in keeping with the
policy of the Government.5 Accordingly on the 27th
July, 1959, the Western Region Marketing Board met
and approved a resolution whereby an amount of
200,000 was to be deposited with the Merchants
Bank Limited. The decision was communicated to
the Ministry of Trade and Industry6 and the approval
of the Ministry was obtained to the transaction.7
No investigation of the accounts or the affairs and
business of the Merchants Bank Limited seems to
have been made, and indeed the witness Chief Adeyi,
Minister of Trade and Industry, admitted that he
was not aware that any papers were, on behalf of the
Merchants Bank Limited, ever forwarded to his
Ministry and also that he did not see any of the
1 Exhibit OJ. 8.
Exhibit OJ. 8, p. 10.
SExhibit AOA. 18.
Exhibit AOA. 9.
6 Day 7, p. 76.
6 Exhibit AAL. 20.
SExhibit AAL. 21.


balance sheets of the Merchants Bank Limited.'
The witness Ladeinde testified in this respect to the
reasons for the absence of investigation:2
'There was the other large factor which I men-
tioned yesterday as being impossible to put into
figures, which is the general thing of helping
African business, and that was a very important
consideration .... It is impossible for me to say
how much risk the Board would be willing to take
in any particular instance but as I said there is the
element of risk once you go out of pounds, Il !ii..,1
pence and deliberately want to help African
business.'
It appears, however, that in accordance with the
provisions of Article 31 of the Articles of Association
of the Merchants Bank Limited3 all the Directors at
the inception, i.e. P. J. Osoba, O. E. Williams,
D. A. O. Sannu, M. A. K. Sonowo, and Oriwu
Commercial Agency Limited. (S. O. Kamson) took
up at least 1,000 shares each. The witness Chief
Sonowo testified to the effect that shortly after
writing the letter of 7th September, 19594 or rather
early in 1959 he mentioned the contents of the letter
to Chief Awolowo6 because he was 'the leader of
the party and the leader of my constituency ..and
also the Premier of Western Nigeria at that time.'
He was not sent to do this by the Board of Directors
of the Bank and had approached Chief Awolowo on
his own initiative. Chief Awolowo, the witness testi-
fied, said 'alright' and eventually discussed the matter
as stated before with Chief Durosaro. The amount of
200,000 was deposited in fixed deposits with the
Bank. This, however, was not the only money recei-
ved by the Merchants Bank Limited from the
Western Nigerian Corporations or from the Western
Nigeria Government. The witness Chief Sonowo
himself testified to the effect that the first deposit
that the Bank received from the Western Region was
one for 10,000 which was made with the Merchants
Bank Limited about two or three years before 1958.
This amount had been repaid. The witness further
testified that in 1958 the Bank received another
deposit of 100,000 which also had been repaid at
maturity. This deposit was received from the Western
Region Development Production Board. Although
the witness did not know the exact date of the
deposit of 100,000 by the Western Region Develop-
ment Production Board, he was certain that it was
before the deposit of 200,000.6
No evidence was given before us as to the payment
or rather the repayment of this last deposit of 200,
000 from the Western Region Marketing Board.
The evidence is to the effect that with effect from the
23rd September, 1960, the licence of the Merchants
Bank Limited under the Banking Ordinance was
revoked and during the present year the Bank had
gone into liquidation. Indeed, Mr Oluseye Johnson,
practising Accountant, Lagos, who is a joint liquida-
tor of the Bank testified before us as to the fact of
liquidation. We have no direct evidence of the
activities of the Merchants Bank Limited since we
were never informed of the business arrangements
from the time of its inception to the present. A study
of the balance sheet for the year ended 31st Decem-
ber, 1959, shows an item of loans and advances to

SDay 17, p. 72.
2 Day 9, p. 4.
3 Exhibit OJ. 8.
4 Exhibit AOA. 9.
SDay 25, p. 71.
6 Day 75, p. 76.








customers totalling 177,827. 8s. 8d. and a figure
of investments in the sum of 106,346. lls. 3d.
We have no evidence of what the investments were.
In the figure of 177,827. 8s. 8d. must be included the
amount of over 35,000 which was owing to the
Merchants Bank Limited by one of its erstwhile
Directors, and in fact the Managing Director, Chief
Patrick J. Osoba. Indeed, according to the witness
Sonowo, Chief Osoba alone had overdrafts against
his name to the extent of 54,271. 7s. 10d.1 We
were also shown a list by the liquidator Johnson
showing the names of the overdrawn current account
customers of the Bank.2 This account shows a total
of 85,421. 18s. 3d. as at the end of December, 1959.
But quite apart from these debts we know that the
Directors of the Merchants Bank Limited themselves
are owing to the Bank large sums of money which are
still to a considerable extent outstanding. The
witness Sonowo told us that the amount of 200,000
deposited in the Merchants Bank Limited by the
Western Region Marketing Board was invested
overseas. He admitted that monies went out of the
Bank by ordinary I.O.U's and that reports had to be
made to the police because thousands of pounds were
so involved.3 Later on in his evidence the same
witness testified that between 3,000 and 7,000 of
the Bank's money went off in this way as 'between the
staff, cashier, accountant and subordinate staff'.'
With regard to the amount of 100,000 deposited
with the Merchants Bank Limited by the Western
Region Production Development Board in 1959,
whilst it is true that repayment was eventually effected,
as testified by the witness Sonowo, it is not true that
such repayment was effected on time. It appears that
although the money was deposited with the Mer-
chants Bank Limited on 21 days' notice, it had been
reinvested by the Bank in securities overseas at
ninety-two days maturity. The letter dated 18th
April, 1959, from the Western Region Production
Development Board to the Managing Director of the
Merchants Bank5 complained about the non-
availability of this money when demanded by the
Western Region Production Development Board.
It occurs to us that an amount of 50,000 out of this
money was first repaid and that later on of the balance
of 50,000 only an amount of 15,000 was available
for payment and was in fact paid over to the Western
Region Production Development Board.
We were informed that the amount of 35,000 was
the money in respect of which the former Managing
Director of the Merchants Bank Limited, Chief
Patrick J. Osoba, was prosecuted and convicted for
stealing. In his own evidence the witness Osoba
stated that he did not steal the money and that he
was reported to the police by his co-Directors who had
purported to remove him wrongly from office as a
Director 6 and that he himself had earlier reported
them to the police for having stolen the monies of the
Bank.7
It appears that at a meeting of the Directors of the
Merchants Bank Limited held on 29th July, 1959, a
resolution was taken that the affairs of the Bank
should be probed, and Messrs. John Adebayo, a firm
of practising Accountants in Lagos, were appointed
to do this. Such an investigation took place and the
Report of the Accountants was produced in evidence
before us3. The Report spotlighted the amount
of 35,000 stated by the other Directors to have been
stolen by Chief Osoba and demonstrated that the
1 Day 25, p. 84.
2 In File Exhibit OJ. 2.
3Day 26, p. 58.
4Day 26, p. 59.
Exhibit PJO. 28; see also Exhibits PJO. 29, 30 and 31.
SDay 27, p. 73; see also Exhibit OJ. 6, p. 99.
7Day 27, pp. 81-84.
SExhibit PJO. 35.


amount was not in fact stolen. That it was a guaran-
teed overdraft arranged by Patrick Osoba with the
consent of the other Directors of the Bank. The
Report states inter alia as follows:
'The Directors always say that they do not know
this, that they do not know that, yet all the material
information about everything they say they do not
know always comes from them.
'They said for instance that they knew nothing
about the investment in a ship yet it is from them
that we know:
1. the name of the ship 'Empress of Nigeria';
2. that it cost 350,000;
3. that Mr Osoba must come to Nigeria with it;
4. that the first deposit for the investment was
from the balance of 50,000 belonging to the
Western Nigeria Development Board;
5. of the code number for operating the account
is 02;
6. that ten per cent interest is chargeable on the
investment;
7. that the owner of the ship was the Nigeria
Shipping Co., Ltd.
8. that the fund was obtained through the
realisation of a previous Treasury Bill;
9. that the sum of 35,000 was paid through
Hambros Bank Limited of 41 Bishopsgate,
London, for the account of Messrs Lobisa
Rederi Aktiebolag Lovisa, Finland;
10. that the order of the ship is now cancelled;
11. that Mr Osoba is having difficulty in obtain-
ing refund of the deposit-yet they know
nothing about it.'
The witness Osoba testified before us as to how he
arranged with the then Manager of the Merchants
Bank Limited, Mr Soremekun (now deceased) and
his own friend, Chief Rotimi Williams, Q.c., who
promised to see the authorities of the Western Region
Production Development Board and indeed the
Western Region Government for him to approve of
his use of the amount of 35,000 then remaining on
deposit with the Merchants Bank Limited in U.K.
securities as a deposit for the purchase of a ship by
his company2. He maintained in particular that the
Agreement executed between him and the owners of
the ship, Messrs Ab. R. Nordstroom and Company,
Finland3 was vetted by Chief F. R. A. Williams, Q.c.,
and also that before he gave out any instructions for
the transfer of the 35,000 to the account of the
shipping owners or to the stake holders for the ship
owners, he had executed an instrument of guarantee
for the total amount together with interest in favour
of the Merchants Bank Limited and had also deposited
the documents of title relating to the properties which
he was employing as security4. It is correct to point
out that although the guarantee for the withdrawal
of the money was executed by him in the name of
Messrs Arbuckle Smith and Company Limited, the
real beneficiaries of the money overseas were' the
Nigerian Shipping Line Limited.
On account of his evidence that certain documents
relating to this transaction, especially Exhibits
PJO.44, 45 and 46 were not produced at his trial,
although they were made available by him to his
solicitor, it is doubted whether or not the court that
heard his case would not have been influenced by
the effect of these documents upon the evidence
culminating in his conviction3.
Be that as it may, we know that a special examina-
tion of the Bank was conducted by the Banking
examiner of the Central Bank in October, 1959. The
1 Exhibit PJO. 35.
2 Day 27, pp. 6-7; see also Exhibits PJO. 8 to 21.
1 Exhibit PJO. 8.
4 Exhibits PJO. 44, 45 and 46.
Exhibits PJO. 41 and 42






Report of the examination was made available to us
and was admitted in evidence.1 The Report shows
that P. J. Osoba alone, or together with his companies,
owned the Merchants Bank Limited a total amount
of 67,410. 15s. 10d as follows:


P. J. Osoba
Arbuckle Smith & Co., Ltd.
Arbuckle Smith (Nigeria) Ltd.
Nigeria Shipping Co., Ltd.


Ss d
54,271 7 10
5,719 12 2
548 0 5
6,871 15 5

57,410 15 10


The Report also shows that apart from the overdraft
of P. J. Osoba there were some advances made by the
Merchants Bank Limited which certainly contravened
the provisions of the Banking Ordinance in that they
were more than twenty-five per cent of the paid up
capital and published reserves of the Bank. These
were:
s d
E. O. Shomoye .. .. .. 4,040 7 7
Wiso Commercial Syndicate .. 12,662 8 4
Olufunni Trading Company .. 4,618 16 0
Oriwu Commercial Agency Ltd. 9,987 7 5
Nigeria Building and Civil
Engineering Co. .... 6,861 13 6


Nigerian Engineering and
Transport Co ..
Owodunni Trading Co. .
M. A. K. Sonowo Private a/c. ..


5,949
3,841
36


16 7
9 10
17 11


The Report concludes with a summary which reads
as follows:
'(a) The Bank is in a very precarious state owing
to the Osoba position and to the large number
of dormant overdrafts. If it were wound up
now it is almost certain that its assets would
not realise sufficient to cover its liabilities to
the public.
(b) There is a great need for additional trained
staff and for more supervision control and
efficiency in its book-keeping.
(c) If present difficulties can be overcome, it
has the nucleus of a sound banking business.

Section 2.-Observations and
Recommendations.
We were told in the course of our Inquiry that this
Bank is at present in liquidation and on account of
this fact we do not propose to make any further
observations or recommendations about the affairs
of the Merchants Bank Limited.


1 Exhibit PJO. 43.












PART TWO


Western

Development


Nigeria

Corporation























Part Two


CHAPTER 1.-WESTERN NIGERIA DEVELOPMENT CORPORATION


Page

SECTION 1.-Financial and Investment Policies and Practices ........ .. 310

SECTION 2.-Business Operations including Management Staff Relations, etc. .. .. 318

SECTION 3.-Observations and Recommendations .. .. .. .. .. .. .. 348

CHAPTER 2.-NIGERSOL CONSTRUCTION CO., LTD.
NIGERIAN WATER RESOURCES DEVELOPMENT LIMITED

SECTION 1.-Nigersol Construction Co., Ltd., and Nigerian Water Resources Development Ltd.
Policies and Business Operations .. .. .. .. 353

SECTION 2.-Observations and Recommendations .. .. .. .. .. .. .. 384







CHAPTER I
WESTERN NIGERIA DEVELOPMENT CORPORATION
Section 1. Financial and Investment Policies and Practices


We stated elsewhere1 that the Western Nigeria
Development Corporation as at present constituted
was established by Law No. 5 of 1959 entitled 'The
Western Nigeria Development Corporation Law
1959' and that it took over on the 16th April, 1959,
all the assets and liabilities of the former Western
Region Production Development Board including
any schemes already approved by that Board. The
predecessors of the present Western Nigeria Develop-
ment Corporation were:
1. The Western Regional Production Develop-
ment Board established by the Regional Pro-
duction Development Board Ordinance, 1951;
and
2. The Western Region Production Develop-
ment Board established by the Western
Region Production Development Law, 1955.
The provisions of the Law are so worded to make
it obligatory on the subsequent Corporation or
Board to take over any scheme or schemes already
approved by its immediate predecessor and Section
8 of the Law, 1959, provides as follows:
'8. It shall be the duty of the Corporation to
foster the economic development of the Region
by the promotion, establishment, co-operation or
assistance of approved agricultural, industrial or
commercial projects in accordance with the
provisions of this Law.'
The Section was introduced as an extension of the
the powers of the Corporation over those of its
predecessors for the functions were thereby extended
to cover 'industrial and commercial projects' and
were not, as previously limited to the producing
industries alone.
The witness Okunoren in the course of his testi-
mony told us that the Western Nigeria Development
Corporation is within the portfolio of the Minister
of Trade and Industry2 and that the Western Nigeria
Development Corporation undertakes both agricul-
tural and industrial projects. He indeed produced
the list of both the industrial3 and the agricul-
tural4 projects. The various projects are stated
to be undertaken by the Western Region Develop-
ment Corporation in furtherance of the powers
vested in the Corporation by Section 10 of the Law
and which powers include:
(a) the acquisition of interests in any agricultural,
industrial or commercial undertakings (Sec-
tion 10(c))
(b) the lending of monies to such undertakings
(Section 10(c)) and
(c) the participation in the operation of any such
undertakings (Section 10(h)).
For the purposes mentioned above the Western
Nigeria Development Corporation is empowered
by its Law to hold properties and to invest, if possible,
any monies belonging to it which are not immediately
required for any of its projects.
At its inception in 1959 the Western Nigeria
Development Corporation took over the assets and
indeed the liabilities (Section 9(3) of the Law) of the
Western Region Production Development Corpora-
tion. The total amount received by the Western
Nigeria Development Corporation at that time was
17,976,112 made up as follows:
SSee page 18 ante.
2 Day 64, page 20.
SExhibit ZOO. 1.
Exhibit ZOO. 2.


Amount received from former Market-
ting Boards .. .. ..
Amount received from Loans:
Western Region Government at 5%
per annum .. .. ..
Western Region Marketing Board
Unpaid interest on loans from
Western Region Government and
Western Region Marketing Board
Provisions for Loss on Investments
unused .. .. .. ..


11,378,633


5,540,900
3,000,000


906,900

33,563


Total .. .. .. 20,859,996
Less: Losses on Revenue
Account .. .. 3,666,630
Less adjustments .. 782,746 2,883,884

Total .. .. 17,976,112

This amount has been expended by the Western
Nigeria Development Corporation and at presentthe
net current assets of the Corporation amount to
1,501,129. This figure is arrived at as follows:
Funds received by the Corporation 17,976,112
Less grants and non-recoverable
development expenditure .. 3,522,683

C 14,453,429


Less investments as follows:
Fixed Assets 7,417,693
Investments in companies 5,489,999
Preliminary expendi-
tures on Pepsi Cola 44,608


12,952,300


1,501,129


From this it is clear that there is at the 31st March,
1962, these net current assets of 1,501,129. This
amount is represented in the balance sheet of the
Western Nigeria Development Corporation as balan-
ces of assets but does not involve that the Western
Nigeria Development Corporation had that much of
liquid cash. In fact, the amount of net current assets
is made up as follows:
Balances with Banks and in hand 643,864
3% Saving Bonds 1965-75 .. 247,500
Debtors and Stocks .. .. 919,827


Less Creditors

Net current assel


1,811,191
310,062

:s .. 1,501,129


It appears that the predecessors of the present
Western Nigeria Development Corporation had
during the years 1955 or earlier incurred expenses
which had to be written off and made grants which in
any case are not recoverable. A total amount of
3,522,683 accounts for this exercise, and the more
important items of that class are as follows:


Net reimbursements, etc.
Road construction
Scholarships
Expenditure on Pioneer Rice



S.
.
and


1,237,072
854,889
376,070


Oil Mills .. .. .. 575,972
The item net reimbursements Constitute the amounts
spent on reimbursing the Cocoa Marketing Board on
account of its commitments in 1955 and earlier years.
Other items of lesser importance are expenses
incurred in respect of experimental and pilot schemes,
plantations and other expenditure written off, grants
to agricultural shows and demonstrations and grants








to the Western Region Finance Company in 1955 of a
total amount of 100,000. It would be seen in the
accounts of expenditures (supra) that a total amount
of 7,417,693 is stated to be invested in fixed assets
and this amount could be particularised as follows:
Headquarters buildings .. 906,923
Agricultural projects .. .. 5,725,990
Agricultural projects, partnerships 109,730
Industrial projects .. 675,050

7,417,693

A statement showing the source of funds of the
Western Nigeria Development Corporation together
with cumulative figures from 1955 is attached to this
Report and marked Appendix 27. In the same way a
statement showing the details of the use made by the
Western Nigeria Development Corporation of its
funds is attached to the Report and marked Appen-
dix 28.
The list of agricultural and industrial projects
produced before us suggests a wide range of activities
in connection with the projects of the Corporation.
We have no direct evidence from any of the witnesses
with regard to the financial position of the Western
Nigeria Development Corporation with respect to
these projects, although we are aware that invest-
ments were made in the various projects from time to
time as decided by the Western Nigeria Development
Corporation. The witness Okunoren in the course of
his evidence described the various projects (agricul-
tural and industrial) in which the Western Nigeria
Development Corporation is interested.1 He also
produced a list of the industrial and agricultural
projects showing the amounts which were invested at
the various times by the Western Nigeria Develop-
ment Corporation.2 It is sufficient to point out that in
respect of investments in industrial companies the
Western Nigeria Development Corporation had up
till the 31st March, 1962 spent a total of 5,489,999.
These investments include shares (as in the Asbestos
Cement Products (Nigeria) Limited, Crittall Hope
(Nigeria) Limited, the Nigerian Mosaic Glass
Manufacturing Limited, Nigerian Plastics Com-
pany Limited, Nigerian Water Resources Develop-
ment Limited, Nigersol Construction Company
Limited and so on), or in mortgage debentures (like
in the case of the Nigerian Textile Mills Limited,
where an amount of 421,000 was invested during
1961), or by way of unsecured loans as in the Co-
operative Bank of Western Nigeria, the Nigerian
Water Resources Development Limited and the
West African Portland Cement Company). A state-
ment of account showing details of the various trade
investments in industrial companies is attached to
this Report and marked Appendix 29. Whilst on this
matter of investment we point out that the Western
Region Production Development Board held securities
with the British Government which went up to as
high an amount as 3,227,582 on the 31st March,
1955, but these were gradually being realized over the
years leaving now only an amount of 247,500 in three
percent Savings Bonds 1965-75. This investment
was made by the predecessor of the present Cor-
poration in 1955.
The Western Nigeria Development Corporation
made some long-term deposits, all of which have now
been retired or realized. These consisted of fixed
deposits in:
(a) Agbonmagbe Bank Limited three
years at four per cent .. 25,000
(b) Merchants Bank Limited two years
at three percent ... 10,000
(c) National Bank of Nigeria Limited
1 Day 65, pages 103-111.
2 Exhibits ZOO. 34 and ZOO. 34A respectively.


five years at three per cent .. .. 500,000
National Bank of Nigeria Limited
five years at two per cent .. 500,000
As stated before all these fixed deposits have now
been retired. Alongside with the long-term deposits
the Western Nigeria Development Corporation also
invested some of its assets in short-term deposits as
follows:
(a) Crown Agents for Overseas Gove-
rnments ... 53,000
(b). Merchants Bank Limited .. 50,000
(c) National Bank of Nigeria Limited 1,350,000
(d) National Bank of Nigeria Limited
London Agents .. .. 1,669,612
(e) Post Office Savings Bank .. 150
The above amounts have been accumulated where
possible in order to give the optimum picture in
favour of the Corporation, but as we pointed out
before, of all these investments only an amount of
247,500, as stated above, remained to be realized.
The Crown Agent, the Merchants Bank Limited
and the Post Office Savings Bank had already repaid
their deposits in full. We attach to this Report as
Appendix 30 a statement of account showing the
position of the net current assets of the Western
Nigeria Development Corporation as at the 31st
March, 1961. From this it will be seen that the total
of net current assets of the Western Nigeria Develop-
ment Corporation (less the three per cent Savings
Bonds) is 1,253,620, out of a total of 17,976,112 of
funds which had accrued to the Western Nigeria
Development Corporation since its inception to the
31st March, 1962. The Western Nigeria Develop-
ment Corporation has a current interest burden of
437,178 and was unable to find the money with
which to pay interest to the Western Region Govern-
ment or the Western Region Marketing Board in
1960-61 and 1961-62 and so unpaid interests liability
on the Western Nigeria Development Corporation as
at 31st March, 1962 amounted to 906,500. With
regard to the Government loans, we point out that
no formal agreement was executed for these loans
totalling 5,540,900, but letters were exchanged
between the Western Region Government and the
Western Nigeria Development Corporation to the
effect that the rate of interest would be five per cent
and that loan repayments shall take place from be-
tween fifteen and twenty years after the fructification
period of five years.
It does not appear that the Western Nigeria
Development Corporation would be in a financial
position to pay part of the interest or principal of the
loans for some years, and indeed the Western Nigeria
Development Corporation had estimated that it
would require a total amount of approximately 8
million within the next five years ending in 1967 to
complete the various projects which the Corporation
now has in hand. The same applies to the loans
from the Western Region Marketing Board. A total
amount of 3 million was loaned to the Western
Nigeria Development Corporation by the Western
Region Marketing Board1 and repayment is due
within five years. Only small amounts had
been repaid by the Companies, i.e. the Nigersol
Construction Company Limited and the Nigerian
Water Resources Development Limited but the
capital loans are supposed to have been used and the
Corporation itself has not been in any financial
position to make any repayments or to pay any interest
on this loan.
Section 2. Business Operations including
Management, Staff Relations etc.
By the provisions of its Law the Western Nigeria
Development Corporation shall consist of a Chair-
man, four Executive Directors and not less than six
1 See Chapter 1, Part 1. ante.








and not more than eight other directors, all of whom
shall be appointed by the Minister, and the Chiiir-
man and other directors shall hold office for a term
of five years and three years respectively. By the
provisions of Section 22 of the Law, the Corporation
may employ
a secretary and such other officers or bodies as it
may consider necessary for the proper and efficient
conduct of the business of the Corporation.'
The Secretary at present is a Mr Okunoren, who
testified before us. According to him, he
'joined the Corporation in January, 1953 as an
Assistant Secretary, then in 1958 I was appoin-
ted the Personnel Secretary or if you like the
Personnel Officer of the Corporation, and in
Aiiagtit, 1958 I was appointed the Secretary.'1
It a ippe., that apart from the Secretary there is also a
New Projects and Industrial Manager. Mr Okunoren
is a lawyer by profession and we weretold that the
New Projects and Industrial Manager is also a lawyer.
The Chairman at the time of the dissolution of the
Board was Mr Alfred Rewane who also testified
before us. He is also the Chairman of the Nigersol
Construction Company Limited and the Nigerian
Water Resources Development Limited, companies
which are subsidiaries of-the Western Nigeria Deve-
lopment Corporation. We are also told that Mr
Rewane is the Political Secretary to Chief Obafemi
Awolowo and that he is also one of the four directors
and indeed shareholders of the National Investment
and Properties Company2.
We have no evidence of any strain in the staff
relationship in the Western Nigerian Development
Corporation3, although we are convinced from the
description of its structure that it constitutes the
largest single establishment of all the other Statutory
Corporation with which we are concerned. Sugges-
tions were made by Counsel to the witness Rewane
with respect to his conduct and attitude towards
some of the members of the staff who did not agree
with his dictatorial policy and who preferred to
confine their role to that of the civil servant rather
than of the politician. The case of Mr Omotosho,
one-time Secretary of the Western Nigeria Develop-
ment Corporation was put in issue4. It appeared as
if Mr Omotosho was appointed in September 1955
5, after he had applied for the post of secretary to the
Western Nigeria Development Corporation which
had then been advertised in the London Times6.
Chief Adeyi, in the course of his evidence testified
to the effect that Chief Awolowo prevailed upon him
to use his influence to get Omotosho removed and
testified as follows:
'In the case of a man like Omotosho, because
Mr Rewane complained that he could not work
with Mr Omotosho, I was asked to remove him.
As a matter of fact I had to do that against the
advice of my permanent officials.'7
According to the witness Rewane, Mr Omotosho had
been found guilty by him of backbiting Rewane and
had indeed tried to unstool Rewane and instal Chief
Awosika as the Chairman of the Western Nigeria
Development Corporations.8 Be that as it may, Mr
Omotosho was removed without any written query
being issued to him so that he might be heard in his
own defence, and although a committee consisting
of Chief Ighodaro, Chief F. R. A. Williams, Chief
Awosika, Oba Akran,. Rewane and some other
SDay 64, page 70.
2 See Part I, Chapter 2 ante.
3 See, however, Day 68, pages 5-10.
4 Day 70, pages 93-94.
6 Exhibit AOR. 59
'Exhibit AOR. 60.
SDay 12, page 87.
8 Day 70, pages 98-112


persons met in Oba Akran's house and discussed
Omotosho's affairs, he himself was not called to that
meeting and there was nothing before the Executive
Council upon which the decision to remove him was
based. Apart from this we are not in possession of any
direct evidence of any particular strain in the staff
relationship although we do not doubt that such
course of conduct embarked upon by the Chairman of
the Corporation is inevitably bound to have some
reactions in the proper quarters among the staff.
We advert, however, at this point to the mechanisa-
tion of the accounting system proposed for the
Western Nigeria Development C'orpration. We were
told that before this exercise extensive alterations and
renovations were carried out to the Chairman's office
at a total cost of about 25,000. Thiswas early in 1961.
The witness Rewane testified to the effect that the
extension was necessitated by the complaints of the
directors of the Western Nigeria Development
Corporation to the effect
'that when they came to Board Meetings they
have no place to read their papers. I did not share
their views but they are directors and they insisted1.
Just about the same time the Western Nigeria
Development Corporation by its Chairman, Alfred
Rewane, introduced the scheme of mechanising the
accounts of the Corporation. The consent or approval
of the Ministry of Trade and Industry was not
sought or indeed obtained to the scheme and indeed
on this point the witness Rewane testified as follows:
'It was not necessary to get the permission of the
Minister; the Board Law was quite clear on it;
we do not get permission for everything we do.'2.
and then went on to explain the reasons why it was
necessary to embark upon such a scheme in his own
words as follows:
'The true position is that we were having
frequent resignation of the senior staff of the
Accounts Department of the Development Cor-
poration, and we were then faced with a very acute
shortage of staff. There were advertisements almost
every month in the papers but we had no response.
We sent somebody to England and they came with
no accountant and then Mr Powell, the Financial
Adviser, suggested to me that the probable way
out was to mechanise our Accounts Department
and also the records of the Corporation. I asked
him to come and put up a memo. He put up a memo
which I read and I found a lot of commonsense in
it. Particularly when I understand that all the
important corporations in the country to-day have
reverted gradually into mechanisation of accounts
and records. I decided to take the matter to the
Board. We called the Cooper Brothers to come and
give us a report and they gave us a report which
we examined. The total cost of the mechanisation
was about 68,000 out of which the fees of the
Company which was going to set this organisation
amounted3.
It appeared that on the 26th February, 1962, the
Western Nigeria Development Corporation passed a
resolution at its meeting held on that day to the effect
that:
'full scale mechanisation of its accounts and
records including punch card processing be under-
taken and that a sum of 19,000 to cover the first
phase of the programme should be earmarked.'
When this matter was reported to the Ministry, the
Ministry pointed out that:
'In any event it is considered that even if that
letter had not issued, the Corporation would take
the ordinary precaution of ensuring that the
Honourable Minister in charge of its affairs was
SDay 68, page 2.
2 Day 68, page 3.
3 Day 68, pages 3-4.








consulted before embarking upon a scheme
expected to cost as much as the Corporation's
mechanised accounting scheme.
In the circumstances I am to confirm that your
Corporation should not be financially and wholly
committed to its mechanised accounting scheme
without the prior and specific approval of the
Honourable Minister of Trade and Industry. The
scheme should now be formally submitted by your
Corporation for the Honourable Minister's con-
sideration1.
This letter did not apparently meet with the pleasure
of the Western Nigeria Development Corporation,
for the Secretary of the Western Nigeria Develop-
ment Corporation, Mr Okunoren, in his minutes to
the Chairman Rewane,2 stated that the letter was
another instance.
'of the Ministry's suggestion that the Corporation
seems incapable at times of taking sound decisions
on matters within its competence'
and suggested that the Chairman should discuss
the matter with the Minister in order to avoid the
creation of frictions. It seems, however, that the
letter was replied and the reply, after stating that
the Chairman would take up the matter with
the Minister, continued as follows:
'I am further directed to refer to your letter.....
of the 19th March and to observe that since our
Corporation decided on the 26th February to
mechanise its accounting and other records and
your letter of the 20th February was not intended
to have retrospective effect, it would seem that
this question of Mechanisation does not fall
within its ambit.'8
The tone and language employed in that letter clearly
demonstrated that the Western Nigeria Develop-
ment Company was not prepared to listen to the
advice and warning given by the Ministry with
respect to their being committed on the mech-
anisation scheme. The witness Rewane admitted that
some of the accountants invited by the Western
Nigeria Development Corporation to carry out a
survey of the system earned as much as fifty guineas
per day4. We are told that the cost to the Western
Nigeria Development Corporation of this scheme
was about 58,000, out of which the Western Nigeria
Development Corporation had earmarked an amount
of 19,000 for the first phase of the installation.
We know, however, that this scheme has now been
abandoned after a considerable amount of public
funds had been invested in it.
But quite apart from this, we record that the
Western Nigeria Development Corporation did
engage in the several projects listed in Exhibit ZOO. 1
and ZOO. 2. The first Exhibit deals with the indu-
strial projects and another exhibit produced by the
witness Okunoren5 shows the same projects excep
that the latter list does not include
1. Lafia Canning Factory.
2. Lafia Rest House.
3. Ikpoba Rubber Factory.
4. Pepsi Cola.
The obvious answer is that with respect to the
industrial projects which were left out of Exhibit
ZOO. 34, they are all projects in which the Western
Nigeria Development Corporation is the only party
operating the projects under the provisions of Section
19(d) of its Law as opposed to being in partnership
with any other Company or body of persons. The
evidence with respect to the activities of these associa-
ted companies is so paltry and we assume that the
general position which we gleaned from the evidence
1 Exhibit AOR. 72.
2 Exhibit AOR. 74.
3 Exhibit AOR. 73.
4 Day 68, page 4.
6 Exhibit ZOO. 34.


of the witness Rewane is the true picture. The
witness Okunoren did read out the list of the indus-
strial projects together with the various amounts
thereafter spent on the various projects by the
Western Nigeria Development Company' and a list
of the industrial projects, together with the amounts
spent in each case up to the 31st March 1962, is
attached to this Report and marked Appendix 31.
The witness Rewane2 gave us some ideas of the
operational affairs of these various industrial projects.
1. LAFIA CANNING FACTORY
This factory does not seem to be doing well and
indeed the witness Rewane testified that he had
recommended that it should be closed down. It was
established in 1952, and planned by the officials of
the Civil Service. It was presupposed, Rewane said,'
'by the planners that once you build a factory
here people will start to grow the citrus and supply
the factory with the citrus which they planted.'3
This was the assumption of those who established
the factory then, but the assumption was not justified
because as Rewane further pointed out,
'that overlooked two facts. First that ina develop-
ing country, the price of oranges start to swell
from time to time as people civilise. They need
more oranges and the cost certainly go up. The
result is this that the cost projection according to
them was that oranges would be got at about
6 a ton to feed the factory from farmers around
Ibadan. That has been proved wrong because you
cannot get oranges, good oranges for anything less
than 12 now and, therefore, when you have
oranges supplied there in the very first instance
without any overhead cost you will start to run
at a loss even from the purchase of the oranges
which you supplied to the factory. The second
reason is that the size of the factory is so much
that you cannot up till now be able to feed the
factory with the required raw material so they
work half time.'4
The total amount invested in this project was 392,-
085, and the Corporation had had to make large
payments since the inception of the factory to cover
losses which at 31st March, 1962 approximated to
425,000. Whilst the total of the fixed assets was
valued at 121,896, the total investment including
losses in this project has come to 576,000.
2. LAFIA REST HOUSE
An investment of just over 100,000 was made in
this business and the witness Rewane told us that that
enterprise is now just paying its way5. The figure of
the amounts for that business, however, reveals that
up to the 31st March, 1962, the business had an
accumulated loss figure of 4,589. It is not easy to
predict the future of this business for the figures of
profits and losses over the years were as follows:


1955
1956
1957
1958
1959
1960
1961
1962


.. 4,056
.. 4,318
417
.. 2,023
.. 2,589
.. 2,036
.. 4,007
.. 1,963


Loss
Loss
Profit
Profit
Loss
Loss
Profit
Profit


It appears, however, that with efficient management
the views of the witness Rewane with regard to this
undertaking might be achieved. (see Appendix 32).
3. IKPOBA RUBBER FACTORY
An amount of 230,568 was invested in this project
in 1955 and the witness Rewane stated that it is
1 Day 65, pages 103-112.
2 Day 70, pages 39-42.
3 Day 79, page 39.
*Day 70, pages 39-40.
5 Day 70, page 40.







'paying its way and making good profits.' Up until
the 31st March, 1962, it had a total cumulative loss of
43,143. The highest figure of loss was 49,760 in
1956, but it is fair to point out that it had made
profits in the years 1960 (56,034) and 1962 (8,188).
(see Appendix 32).
4. NIGERIAN PLASTICS COMPANY LIMITED
The witness Rewane testifying before us stated of
this company as follows:
'That is again declaring good profit now. I do
not think it is making any loss because after the
patronage which we got from the Federal Govern-
ment we broke even at that point'. 1
The nominal and paid-up capital of this company is
65,000 and the expenditure of the Western Nigeria
Development Corporation with the company is
32,500. The other shareholders are U.A.C. 22,750,
and Yorkshire Copper Company Limited 9,750.
It appears that the Western Nigeria Development
Corporation first took up 17,500 shares during the
year 1957 and the balance of 15,000 during the year
1961. In 1960 an unsecured loan of 20,000 was made
to this company by the Western Nigeria Development
Corporation and this loan has not yet been repaid by
the company.
5. NIDOGAS
The full name for this is the Nigerian Industrial and
Domestic Gas Supply Company Limited. The
witness Rewane did not consider this investment as a
prudent one and took the view that bad management
was principally responsible for its failure 2. The
authorised capital of this company is 150,000 and
the paid-up capital is 100,000, out of which 30,000
was paid by the Western Nigeria Development
Corporation. The other participants in the enterprise
are-
Liquigas Limited .. 30,000
Mr Anselmo ... 5,000
In 1960 the Western Nigeria Development Corpora-
tion made a loan (unsecured) of 5,000 to the
company.
6. NIGERIAN PLASTICS (SALES) COMPANY
The witness Rewane testified that this was an
organisation established to promote the sale of the
plastics produced by the Nigerian Plastics Company
Limited. The authorised capital of this company is
1,000, out of which the Western Nigeria
Development Corporation had paid 500. The other
participants are U.A.C.--350, and Yorkshire Copper
Company Limited-150
7. CRITTAL HOPE (NIGERIA) LIMITED
The authorised capitalof this Companyis 200,000
and the Western Nigerian Development Company
holds 22 per cent of the shareholding, that is an amount
of 45,000. Out of this the Western Nigeria Develop-
ment Corporation had paid its share of 36,000 of the
total called up capital of 160,000. Theotherpartici-
pants in the enterprise are:
Crittal Limited .. 102,000
John Holt Limited .. .. 38,000
Henry Hope .. 25,000
The witness Rewane testified that this company was
making very good profit. A total amount as stated
before of 36,000 was invested in the business.
It seems that an amount of 25,000 was first invested
in 1959 and that the balance of 11,000 was invested
during the year 1961.
8. THE NIGERIAN PRE-STRESSED CONCRETE COMPANY
The witness Rewane informed us that this company
is in Abeokuta and that it is making good progress.
1 Day 70, page 40.
Day 70, page 41.


A total amount of 5,000 was invested in this com-
pany by the Western Nigeria Development Corpora-
tion and the other interests in the company are
represented by:
C.F.A.O. ... 20,000
Taylor Woodrow and U.A.C. .. 20,000
Out of a total nominal amount of 50,000. The total
capital liability of the Western Nigeria Develop-
ment Corporation inthis venture is 10,000, i.e., a
certified liability of 5,000 to the Western Nigeria
Development Corporation.
9. WEST AFRICAN PORTLAND CEMENT COMPANY
LIMITED
This is described by the witness Rewane as making
very good profit indeed. It appears that a total of
390,000 was invested so far by the Western
Nigeria Development Corporation in this company.
The other participants are:
Associated Portland Cement .. 510,000
U.A.C. .. .. .. .. 100,000
The Western Nigeria Development Corporation has
a total capital liability of 390,000 out of the entire
nominal capital of 1 million. As stated before, this
business is doing very well. The Western Nigerian
Development Corporation has made a total loan of
780,000 to this company made, up of loans made in
1960 (585,000) and in 1961 (195,000.) No part of
these loans has as yet been repaid.
10. ASBESTOS CEMENT PRODUCTS (NIGERIA)
LIMITED
A total amount of 157,500 is invested in this
company by the Western Nigeria Development
Corporation, that is 119,000 in 1960 and 38,500 in
1961. The witness Rewane stated that the company
is making 'reasonable profit.' The nominal capital
of the company is 600,000, all of which had been
called up. The other participants are:
Italian Group .. .. .. 342,000
Commercial Group .. .. .. 48,000
The Western Nigerian Development Corporation has
a total capital burden of 210,000, out of which as
stated before it had paid 157,500.
11. VONO (WEST AFRICA) LIMITED
The Western Nigeria Development Corporation
had invested a total of 3,000 in this business and the
witness Rewane was unable to give us any informa-
tion about this company because, as he stated, he
received no information about the company before
he was supoenaed to give evidence. The different
participants in the total nominal capital of 20,000
are as follows:
Vono Limited .. .. .. 11,000
U.A.C. .. .. .. .. 6,000
Western Nigeria Development
Corporation .. .. .. 3,000
12. THE NIGERIAN TEXTILE MILLS LIMITED
The witness Rewane testified that the Nigerian
Textile Mills Limited has not yet started operation.
At present the Western Nigeria Development
Company has invested a total amount of 150,000 in
this enterprise and besides have accepted mortgage
debentures on the assets of the company to the
extent of 420,000 which mortgage has so far not
been repaid. The authorised capital of the company is
455,000, and the other participants are:
Amenital Group .......... 168,125
Arcturus Development Company
Limited .. .. ... .. 136,875
The Western Nigeria Development Company had
paid up its entire share of the capital of 150,000.
13. TOWER ALUMINIUM (NIGERIA) LIMITED
The Western Nigeria Development Corporation







had il% ItCd a total amount of 29,000 in this
co.ll'.pany, the other participant, in which are:
i\[ill.dland Metal Spinning .Company
Limited .. .. ... 63,000
Aluminium Union Limited 32,000
Akinloye Aboderin Limited 1,000
The total nominal capital of 125,'000 has been
called up and, as stated before, the Western Nigeria
Development Corporation had paid its share of
29,000. The witness Rewane had nothing to say
about this company.
14. THE NIGERIAN MOSAICS AND GLASS
MANUFACTURING COMPANY LIMITED
This is a company in which the Western Nigeria
Development Corporation invested a total of
20,000. The witness Rewane testified that this
company is doing very well. The other participants
are principally Joe Harold who holds 23,000 shares
and Rognoni, who holds 9,472 shares. Other
shareholders are:
Viamello .. .. .. .. 5,000
Chief Doherty .... 3,000
Chief Odutola .. .. 2,500
F. 0. Sullivan 500
P. Adim .. .. .. 500
K. Ndukwe .. .. 500
S. Ulor (?) .. .. 100
The balance of 10,428 shares is unissued. Of the
total called-up capital of 64,582, the Western
Nigeria Development .Corporation has paid its
own share of 20,000. With respect to this company
the witness Rewane testified as follows:
'According to Joe Harold, they are not getting
good markets, therefore cannot produce to the
capacity of the machine.'
15. PIONEER BISCUIT COMPANY LIMITED
This is a company with a nominal capital of
150,000, all of which had been called-up. The other
participants are:
Chief Doherty .. .. .. 25,000
Nassar Group .. .. 105,000
The witness Rewane told us that this business had
not yet started operation. The Western Nigeria
Development Corporation has invested a total
amount of 20,000 in this undertaking.
16. NIGERIAN SUGAR COMPANY LIMITED
The witness Rewane told us that this is a Federal
Government affair and the factory is under construc-
tion. The Western Nigeria Development Corpora-
tion has invested a total of 50,000 in this enterprise,
the other participants in which are:
Federal Government .. .. 50,000
N..li i ,rn Nigeria Government .. 310,000
Bookers (Nigeria) Limited.. .. 300,000
Eastern Nigeria Government .. 100,000
The remaining 690,000 shares are unissued. The
Western Nigeria Development Corporation still has a
contingent share liability of 50,000 on the called-up
capital of 460,000, after having accounted for the
50,000 already invested.
A list showing the profit and loss on the industrial
projects of:
(a) Ikpoba Rubber Factory
(b) Lafia Canning Factory
(c) Lafia Rest House
(d) Pioneer Oil Mills and Rice Mills
(e) Pepsi Cola and
(f) Pineapple Plantation
is attached to this Report and marked Appendix 32.
In the same way the statement of expenditure on
some of these same projects is attached herewith and
marked Appendix 33.
So far we have not dealt with these projects in any
details nor do we consider it necessary to do so with


respc it to quite a number of them (1). Some of them,
however, in view of the evidence which came before
us, have to be considered in some dcL-ta. Before we
do this, however, we propose to deal with some other
projectswith;which theW \.- te rn Nigcr .i Development
Corporation was concerned and which has resulted in
considerable losses to the Corporation. We point out
that the Western Nigeria Development Corporation
has incurred a liability of 75,000 in respect of the
first contract for the erection of a luxury hotel in
Ibadan at an estimated cost of 800,000. This pro-
ject was sponsored by the Western Region Govern-
ment and beyond a loan of 5,11.11 I from the West
Region Government, no arrangements whatsoever
seem to have l., n in d,,. F.-r fiii,.,iii., thei, -\p1 nd iti,..
All the industrial projects except the Lafia Rest
House ran at a loss up to the 31st al\I.,, I''1,2, and
although the witness Rewane did not admit this, we
are satisfied that the state ofll,. .i>.,,iiir- .,. r -ti>l
in Appendix (32) demonstrates quite clearly that they
were all running at a loss at that time. The luxury
hotel does not seem likely to produce any revenue for
some years to come. Of the total investment of the
Western Nigeria Development Company of
5,489,999 more than half, i.e., 3,141,447 is in the
two companies of Nigersol Construction Company
Limited and the Nigerian Water Resources Develop-
ment Limited. We shall deal more fully with these
two companies in ( I !pii rt two post. We point out
that of the -I.,, ,.I companies in which investments
l\er" held, apart from the Nigersol Construction
Company Limited and the Nignri i Water Resources
Development Limited, only two companies, i.e.,
Crittall Hope (Nigeria) Limited and the Nigerian
Pre-stressed Concrete Company Limited have paid
dividends of 1,800 and 2,500 respectively.
The Nigersol Construction Company Limited
is a company in which the Western Nigeria Develop-
ment Corporation holds 60 per cent shares, and the
remaining 40 per cent shares are held by the Israeli
interests: of Soleh Boneh Limited. The contract of
partnership was pi,. ., i:! l' for us(2). We knowthat
soon after the inception of this company, a loan of
2 million was procured for it from the Western
Rcginn Marketing Board but thatlater on a substantial
pirii.-,ii .l ii, amount w ,s deposited with the
National Investment and P'I.. perti-,: Company which
was unable to repay the loan when requested to
do so. As stated above, this company will be discussed
more fully later (3).
The Nigerian Water Resources Development
Limited is another Nigerian Company in which the
Western Nigeria Development Corporation holds
60 per cent shares and the balance of shares were
held by the Israeli interests of Water Resources
Development (International) Limited. A loan of
1 million was also procured for thi-. col- p.r.nv from
the Western Region i\l 1 Lkti ig Board and a part of
this loan was later divertedto tio l N.iti:on.l Invest-
ment and Properties Company. The agreement of
partnership between the Western Nigeria Develop-
ment Corporation and the Israeli interest was also
produced in evidence:4 (This Company will be more
fully discussed in Chapter 2 post).
PEPSI-COLA FACTORY
This is an industry ii \v.llic!, as stated before, the
Western Nigeria Development Corporation has
invested a total amount of Q'672.778. Up to the
end of March, 1962, the cumulative loss was
202,452. The witness Rewane in the course of his
evidence testified as to how he ca.nm to be associated
with the Pepsi Cola project and hqw later on he
SSee generally on these companies Day 70, pages 39-42.
Exhibit ZOO. 4.
S Chapter 2 post.
4 Exhibit ZOO. 5.









went to meet the Dirlctors of Pepsi Cola if New
York and obtained the franchise for the production
of the Pepsi Cola soft drinks in Nigeria. The present
Pepsi Cola company would not, however, invest in
the Nigerian project but they are prepared to supply
plant and materials and if need be advice.1 Rewane
testified to the effect that A. G. Leventis had sub-
mitted a memorandum to the Western Nigeria
Development Corporation2 against the introduction
of Pepsi Cola to Nigeria and that he had, in fact,
written to the Premier, Chief Awolowo, advising
against the projects.3 The witness Rewane was not
surprised by these warnings because they had come
from a prospective rival and he would not consider
that upon the representations of Leventis alone the
Western Region Government should be dissuaded
from embarking upon the project Pepsi Cola. Indeed
Rewane submitted in turn to the Ministry of Trade
and Industry a memorandum in which he outlined
the advantages to be gained by undertaking the
project and the necessity for exercising caution with
respect to the criticisms of the project by Leventis.4
Later the Western Nigeria Development Corpora-
tion went 'full ahead' with the project, and by the
31st March, 1961 had incurred a total amount of
85,020 on the project. There are two factories, one
at Mushin and another one at Ibadan, and the actual
records of expenditures up to the 31st March, 1961
is as contained in Appendix 33. This shows with
respect to the Ibadan project the Western Nigeria
Development Corporation had expended a total of
277,864 as against an amount of 192,000 which
was approved by the Executive Council. The appen-
dix also shows that with regard to the project at
Mushin, the expenditure incurred by the Western
Nigeria Development Corporation to the 31st March,
1962, totalled 394,914. The Executive Council had
approved an amount of 200,000 for this scheme
which was in fact the amount authorised by the
Corporation itself. The result clearly is that with
respect to both projects several thousands of pounds
in excess of both Corporation and Executive Council
approved amounts have been invested. This project
is, however, not a success, and as stated before by the
31st March, 1962 had been involved in total cumula-
tive losses of 202,452, the figures for the years being
as follows:
1961 .. .. .. .. 85,020
1962 .. .. .. .. 117,432

202,452
The witness Rewane himself stated the cause of the
failure of the project as follows:
'Yes, but there are quite a lot of factors militating
against that factory. Before we started, we knew we
were going to have an uphill task to make the project
pay except we get the full support of Government
and we knew that Leventis was not taking kindly
to it. In my letter which I wrote to the Permanent
Secretary at one time, I complained very bitterly
about the conduct of Leventis and what happened
after that was that Leventis employed Akintola's
wife as the Sales Agent for the whole of Oshun
Division and employed his daughter as Sales
Promotion Manager for the whole project and these
two people went about telling women in Ibadan-
according to a report which I got from one Mr
Tubio-that if any woman drinks Pepsi Cola she
would be sterile and we had to face the problem
of eradicating this unsavoury propaganda.5
The witness had put the blame on the lack of support
Day 69, pages 23-6.
Exhibits AOR. 56 and AOR. 71.
'Exhibit AOR. 57.
Exhibit AOR. 51.
SDay 69, page 26.


for the project by the Western Region Government
and the propaganda methods of Chief Akintola's wife
and daughter. It should be noted, however, that when
the project was mooted and the Ministry advised,
the Permanent Secretary had warned against the
project1 and had stated as his grounds of objection
the following inter alia:
'The first major point is the refusal of the Pepsi
Cola company to provide any capital or to attract
any capital from other sources. They do not appear
willing to risk their own money in this venture nor
that of their friends. Their profit is, however,
secured; they will make a profit on their concen-
trate, however much or however little the Develop-
Sment Corporation may sell.'
The Permanent Secretary then went on to suggest
that the Ministry should withhold its consent to this
scheme until-
(a) Either substantial capital is forthcoming
from Pepsi Cola or from any suitable firm it
can interest in the project or Pepsi Cola will
supply satisfactory guarantee regarding sales;
(b) the costings and profitability figures have
been examined in detail in the light of the
criticisms made. Satisfactory written agree-
ments are prepared regarding the use to be
made of the Lafia and the development of
local resources; and
(c) Mr Leventis' (?) alternative proposals have
been studied fully.2
The witness Rewane thought, however, that his
memorandum,3 was a complete answer to the admoni-
tions of the Permanent Secretary, Ministry of Trade
and Industry and to Mr A. G. Leventis, and in any
case he was not aware that even in the Leventis
establishments Pepsi Cola was being sold.4 In his
own evidence, Chief Akintola denied that his wife
was ever a selling agent for Leventis in respect of the
sales of Coca Cola, and stated that his daughter knew
the Leventis family through one of their daughters
with whom she went to school abroad and that the
Leventis daughter had invited his own daughter to
resign her appointment from where she was working
to join her father's establishment.
With regard to his wife, Chief Akintola stated as
follows:
'She is not. As far as I know my wife sells practi-
cally all such drinks that are on sale in this country,
including Pepsi Cola, Coca Cola, and all these such
drinks, and in fact if anyone is passing through
North he will see in front of her Hotel the lighted
sign of Pepsi Cola always, electric light of the sign
advertising Pepsi Cola is still there up till now.5
And with respect to his daughter, Chief Akintola
testified as follows:
'I think she is a Public Relations Officer there,
which she has been since 1958; it was when she
was working for Pearl and Dean, that these two
friends of hers-daughters of George Leventis
came here and I think it was through them that
she resigned from Pearl and Dean to join the
Leventis since 1958; and she has been stationed all
along up till now in Lagos, not in Ibadan.6
We would just say briefly on this matter that it was
for the Western Nigeria Development Corporation
when taking out a project of the type of Pepsi Cola
to study the markets for their projects especially with
respect to the various competing interests with which
they are likely to meet when they enter into such a
field. Everybody knows that in this country there is
quite a large number of soft drinks of various types
1 Day 70, page 30.
2 Exhibit AOR. 56.
3 Exhibit AOR. 51.
SDay 70, page 35.
Day 85, page 87.
SDay 85, page 88.









and brands being sold about. This inevitably gives
rise to a considerable amount of severe competition
and it would be most silly to accept a project like
Pepsi Cola to be taken out and then to expect that
competition would be restricted by the activities of
the Government in any part of the Federation.
PIONEER OIL MILLS AND RICE MILLS
It appears that these mills were handed over to
the Western Nigerian Development Corporation by
the Government about 1956. The Western Nigeria
Development Corporation therefore operated the
mills by itself but by the end of that year the losses
were up to 54,000. In the following year the losses
still remained at 29,143. The Western Nigeria
Development Corporation therefore decided to let
out these mills and stop operating them by itself.
The Secretary of the Western Nigeria Development
Corporation, Chief Okunoren, testified that at the
time of this decision
'Incidentally certain gentlemen applied to us
and said they wanted to hire the mills. We agreed
to hire the mills to them on tenancy basis and the
three gentlemen concerned are Chief Edukugho
-we hired out seven mills to him .... I will come
to that. Mr Agbosasa is a tenant of five mills and
one Mr Osion is a tenant of three mills. We did
not really enter into any formal agreement with
them'.
The witness testified that all three tenants are
from the Mid-West area which is also the home of
Alfred Rewane, the Chairman of the Western Nigeria
Development Company. There were, however, terms
settled with regard to the use of the mills as follows:
'We did not enter into any formal Agreement
with them but we exchanged correspondence
which set out the terms of the tenancy agreement.
The tenants are to pay rent per mill at the rate of
200 excepting in the case of two mills when they
have to pay 300 per annum. The two mills are
Uguluku and Ibossa, all in the Mid-West. They are
free to make use of the Corporation's engineering
staff and services for a fee of 300 per annum per
mill exclusive of any stores and materials we supply
to them. But during the first year of operation,
they will pay only fifty per cent of the rent and
fifty per cent of the service rendered to them by
our engineering staff. We agreed to advance to
the tenants, working capital at the rate of 1,500
per mill.'2
It seemed that these tenants were given certain
advances by the Western Nigeria Development
Corporation to operate the mills in exchange for
which they executed promissory notes but they are
now as a result in arrears with their rents and one
of them, Chief Edukugho, is owing a total amount of
20,974 2s. We know that in view of letters of demand
to them the tenants had presented a petition3 to
the Western Nigeria Development Corporation
asking the Board to write off the debts because their
failures were due to:
(a) inadequate supplies of good quality fruit;
(b) lack of co-operation by local suppliers;
(c) low percentage of oil in the fruit.
The witness Okunoren testified to the effect that on
the receipt of the petition the Board considered it and
decided that a total amount of 14,253 14s 5d out of
the total debt of the tenants should be written off.
At the same time the position of the tenants with.
regard to their debts was as follows:4
Chief Edukugho .. .. 2,
Chief Agbosasa .. .. 3,5
Mr Osion .. .. 7,749
1 Day 64, page 115.
SDay 64, page 115.
3 Exhibit ZOO. 31.
SDay 64, page 118.


The difference between the figures now quoted and
the figure of Edukugho's debt stated above is represen-
ted by interest. The same witness Okunoren testified
that these tenants have now all been sued to the
Court. This was the position with regard to the erected
oil mills, but the witness also testified before us with
respect to certain un-erected oil mills as follows-
'We did not sell the oil mills. We hired the oil
mills out and later on, the oil mill tenants decided
to withdraw. Then we handed the oil mills back to
Government. That is all. But then we had at our
Warri stores some unerected oil mills which we sold,
some of them.'"
These mills were held under hire purchase terms and
the whole operation was supposed to last for six years.
It was strongly suggested to the witness that the sale
was effected by favouritism in that Mr E. O. Eyo,
who is an Action Grouper living in the Eastern Region,
was able to purchase some of the mills whilst many
people living in the Mid-West could not get any.
Apart from the industrial projects with which we
have dealt, we have pointed out that the Western
Nigeria Development Corporation also undertook a
few agricultural projects and these projects are listed
in Exhibit ZOO. 2. In the course of his evidence the
witness Okunoren told us of the actual amounts
already expended by the Western Nigeria Develop-
ment Corporation on the Agricultural projects.2 A
list showing the agricultural projects and the amounts
invested by the Western Nigeria Development Cor-
poration on them as at the 31st March, 1962 is attached
to this report and marked Appendix 34.
We comment generally that none of the various
agricultural projects have yet come to maturity.
The first one to mature is expected to do so in 1964
and so far any proceeds from sale have been used to
reduce the investment made. We have shown, and
indeed the last Appendix demonstrates this, that the
agricultural projects including the Colin Oil Mill,
the Lafia Canning Factory, the Lafia Hotel, the
Pepsi Cola Project, Ibadan, the Pepsi Cola Project,
Mushin, and the Ikpoba Rubber Factory, with which
we have already dealt, are all running at a loss, so far.
Not one of the several agricultural projects of the
Western Nigeria Development Corporation was spot-
ted for observation before us (we do not know why),
except the Remo or Ikenne Rubber Plantation. The
total amount of monies invested in this project as at
March, 1962, was 249,935. It appears that the first
intimation the Western Nigeria Development Cor-
poration had of the possibility of this project was a
notice to the effect that some of the technical experts
of the Western Nigeria Development Corporation had
discovered an area of about 6,000 acres in Remo
District suitable for rubber plantations. This matter
was placed before the meeting of the Western
Nigeria Development Corporation on the 25th July,
1958, and the scheme was approved and the Ministry
was asked for its covering approval4. It is manifest
from the evidence of the witness Okunoren that no
soil survey of the area was carried out before the
Western Nigerii Dc~lopim-nt Corporation decided
to make the investment. At the levels of the Ministry,
the Permanent Secrctary opposed the project'" 'and
later wrote to the Western Nigeria Development
Corporation asking for clarification of the following
points:
'(a) What other sites were considered for rubber
plantation and for what reasons was the
proposed site l.clctcd?
(b) What is the land used for at present? Is
it uncultivated, farmed or used for Cocoa
1 Day 65, page 47.
2 Day 65, pages 35-36.
3 Day 64, page 119. ,
4 Exhibit ZOO. 20.
5 Exhibit ZOO. 22.







and Kola; is there ample farming land in
addition in the vicinity so that this land can
readily be spared for plantation purposes?
(c) Are the land owners willing to make the land
available? In the copy of the minutes for-
warded with your letter it is stated that
the land is eminently suitable for rubber
plantation, how has this been established?
Is the soil suitable as it is or will it require
additional fertilizers? Further information is re-
quired on how the projection costs were
calculated, in particular, has allowance been
made for fertilizers and for compensation for
existing crops; what valuation has been allowed
for the latter?
(d) What proportion of labour housing has
been allowed for in the cost of projections?
What is the saving expected from the use of
the nearby towns to house labour?
(e) In the Board's minutes of the 25th July the
Board approved the idea of establishing this
plantation subject to the availability of funds;
how is it proposed to finance this project?
Is reliance being placed solely on allocation
which has been made available in the 1960-65
Development Plan?"
It appears that the letter was not replied. The
scheme was also opposed by the inhabitants or
farmers of the area concerned who thereafter sub-
mitted petitions against the scheme to:
1. The Agricultural Manager, Western Nigeria
Production Development Board;2.
2. The Premier (Chief Awolowo).3
and in the petition 3 the land owners had urged
inter alia as follows:
'We have spent all our lives in growing on these
farm lands, cocoa and palm trees from which we
now earn ready cash for our living and for the pay-
ments of our rates and taxes and the education of
our children, and now to cut down these economic
trees is to work very great hardship on us. We
would like to see something done to make the soil
more fertile so that these economic trees can be
made to produce fruits in hundreds-fold.'
We are told that the Ministry was not satisfied with
the investigation made into the soil even before the
Western Nigeria Development Corporation decided
to go ahead with the scheme and that the Ministry of
Agriculture's letter read inter alia as follows:
'2. The technical officers in this Ministry have
examined the Western Region Production Deve-
lopment Board's proposals to establish a rubber
plantation in the vicinity of Ikenne and they
have advised as follows:
(a) this Ministry was not asked by the Western
Region Production Development Board to
make a soil survey of the selected area before
the Board put forward its proposals for a
rubber plantation. I am arranging, however,
for the Soil Survey Section of the Ministry
to start surveying the area within the next
two months. I shall be grateful if you will
be good enough to arrange for a represen-
tative of the Western Region Production
Development Board to be available to show
the Soil Survey officers the area intended
for use;
(b) it is not clear from the information supplied
by the Western Region Production Develop-
ment Board what proportion of the 5,000 acres
suggested consists of ground which the Board's
experts believe to be suitable for establishing
rubber. No details are given of either the
acreage of rubber trees proposed nor of the
SExhibit ZOO. 23.
SExhibit ZOO. 24.
SExhibit ZOO. 25.


rate of planting that was used in preparing the
Western Region Production Development
Board's estimates. If the final total acreage
under rubber approximates 5,000 acres then
the costings appear to be reasonable;
(c) the Western Region Production Development
Board's estimates of revenue seem to have
been based on final yields of 950/1,000 lbs.
of dried rubber per acre. Although modern
clones are capable of producing yields in
excess of this figure, experience to date in
Western Nigeria suggests that it would be
wiser to rely at least initially on more conser-
vative estimates of production;
(d) this Ministry has tried to secure accurate
annual rainfall figures for the Ikenne area. So
far it has not been possible to obtain these.
The best rubber in Western Nigeria has been
developed in areas which receive not less than
70 ins of rain per annum. Although this is the
optimum reasonable results have been achieved
in areas with a rainfall of from 60 ins to 70 ins
per annum. It is expected that Ikenne lies
within the 60 ins to 70 ins per annum rain-
fall belt, but this is a matter which has still
to be confirmed.
3. Until the investigational work mentioned
above is completed, at the 'official level' this
Ministry is not in a position to support proposals
for a Western Region Production Development
Board rubber plantation at Ikenne.'1
We know that on the receipt of this letter at the
Ministry the Minister of Trade and Industry, Chief
Adeyi, counselled caution in discouraging the
Western Nigeria Development Corporation about
the project for he stated in his minutes as follows:
'2. Consequently I am not sure whether one
would expect favourable reply from the Board
since there has never been a precedent to my
knowledge on such queries when the Board want
to establish new projects. I have no doubt that the
Board will have answers to the questions so far
raised but are they such answers as we would need
in the Ministry? If I remember correctly, points at
(d) and (e) must have been covered in papers
already submitted by the Production Board.
3. I want you to call back the letter but at the
same time invite the Board's experts for discussion
when you would raise those questions if you feel
you must raise them.'2
The scheme eventually proceeded to the Executive
Council where it was approved 3. The memo to the
Executive Council stated that the Executive Council
is invited to approve the inclusion of the scheme in
the Board's programme of agricultural development
and the proposed expenditure for 900,000. The
witness Okunoren did not explain why Ikenne should
be picked upon for this project, but he stated that
the Western Region Production Development Board
proceeded with the scheme after Government had
approved of it*. The position today is that none of
the land holders of the Estate on which the rubber
plantation is sited has been compensated for the lands
employed in the plantation and quite a few of them
have not been paid any compensation for their
crops5.
Section 3.-Observations and
Recommendations
In his address to us, Chief Oladipo Moore, Q.;c,
stated with regard to the Western Nigeria Develop-
ment Corporation as follows:
1 Exhibit ZOO. 26.
s Exhibit ZOO. 27.
Exhibit ZOO. 27.
4 See generally Day'65,1pages 2-17 for a fuller report
of this scheme.
5 Day 65, pages 16-17.








'In so far as this Corporation is concerned, we
cannot help but come to the conclusion that this
was a one-man Corporation and that that man was
the Corporation's Chairman, Mr Alfred Rewane.'
In our view this was the position throughout our
study of the affairs of the Western Nigeria Develop-
ment Corporation but as we were dealing with matters
with which the Corporation was concerned, not only
as projects approved by the Corporation itself but also
as projects taken over, it is well so say a few words
about the projects generally.
When dealing with the industrial projects of the
Western Nigeria Development Corporation we point
out that apart from the two companies that we have
named, the Nigeria Pre-stressed Concrete Co., and
the Crittall Hope (Nigeria) Ltd., no others of the
companies had declared any dividends. This excludes
the two companies of Nigersol Construction Co.,
Ltd., and the Nigerian Water Resources Ltd., with
which we propose to deal in the next Chapter. No
evidence was given before us as to who negotiated
the several agreements with the several interests
involved in the multitude of companies with which
the Western Nigeria Development Corporation was
concerned. It is clear from a study of Appendix 32
that most of the investments in the various companies
were made in 1959 and 1960. Indeed apart from the
Illushin Estates Ltd. (33,125), the Nigerian Indus-
trial Domestic Gas Supply Co., Ltd., (20,000),
and the Nigerian Plastics Co., Ltd., (17,500), all
the other industrial projects investments totalling
5,489,999 (less the figures of those referred to above)
were made since the inception of the present Corpora-
tion. Most of them, the evidence clearly establishes,
are running at a loss and where they did not run at
a loss, no figures of profits have been recorded at all.
We are of the view that many of these projects have
been recklessly entered into without any regard what-
soever for the safety of the monies that were being
invested in the various undertakings. In most of the
cases no previous references were made to the
technical advice of the Western Nigeria Development
Corporation and where they were made, the advice
was not heeded.
We advert to the agricultural projects in this
respect as well. The agricultural projects are listed
in Appendix 35 and the witness Okunoren referred
to them in the course of his evidence before us. The
total amount involved is over 4,876,716, and this
had been invested in the various agricultural projects
shown in the list.1 None of these projects, we are
told, has matured, although investments in them have
been made for upwards of three years back. With
regard to the Ikenne or Remo Rubber Plantation,
we have it on record that this scheme was opposed
by:
(a) the Permanent officials of the Ministry of
Trade and Industry;
(b) the land owners in the area concerned;
but that despite this the Board decided that the
scheme should proceed and the Executive Council
approval was obtained to the project. We are told
that there have been no yields in this respect and
that the soil is not suitable for the type of production
envisaged because of the low figure of rainfall recorded
in that part of Nigeria. It is true that some of the
minutes, especially the minutes from the Agricultural
Manager of the Ministry of Agriculture, is to the
effect that the plantation might be usefully sited in
that place but that minute was written after the
scheme was approved and that in any case the purport
of it is that although a rubber plantation could be
sited anywhere in Nigeria, the yield must inevitably
depend upon the quantity of rainfall available to that
area. We cannot but come to the conclusion that this
is a matter which should have been investigated by
1Exhibit ZOO. 1.


the Premier himself. The inhabitants of the area
concerned did send a petition to the Premier protest-
ing against the expropriation of their land for this
project. No reply appears to have been sent to this
nor were we apprised of any action having been
taken in this direction. Indeed the position is that
no-one has been paid any compensation for the land
acquired since 1958 and that only a few of the
farmers had been paid compensation for the crops
on their lands taken over by the Western Nigeria
Development Corporation.
The affairs of the Western Nigeria Development
Corporation calls for serious investigation into the
conduct of its day-to-day affairs. We have referred
earlier on in this Chapter to the staff relationship
in that Corporation, and although we have no direct
evidence of any strain in the staff relationship, we are
satisfied that if matters continue as they have so far,
a situation will be reached in which the disgruntled
sector of the staff will come out with their grievance
and may react in such a way as would be inimical
to the interests of the Corporation. We advert at this
point to the suggestion of the learned Counsel appear-
ing for the Corporations with regard to the way in
which Rewane was running the Corporation. The
evidence establishes that he had run the Corporation
as his own private business and has no regard what-
soever for Ministerial control over his actions. The
incident concerning the mechanisation of the account-
ing system is well in point at this juncture. That
scheme was initiated without consultation with the
Ministry and even when the Ministry protested, the
Ministry was informed that the letter had come too
late and therefore it could not apply to the scheme.
Some public money had been sunk in that scheme
before it was eventually abandoned because the
Western Nigeria Development Corporation had no
money to finance its other projects let alone mechanise
its accounting system. We point out that we see
nothing wrong with mechanisation of the accounting
system of the Western Nigeria Development Corpora-
tion and in fact that depicts a progressive stage in the
operation of the business, but that must be done with
regard to the realities of the situation, especially the
financial situation. Here again is another example of a
reckless plunge into an enterprise without counting
the cost, and the scheme was abandoned eventually
for lack of finance.
We refer shortly to the activities of the Chairman in
connection with the loans granted by the Western
Regional Marketing Board to the Western Nigeria
Development Corporation to finance the operations
of the Nigersol Construction Company Limited and
the Nigerian Water Resources Development Limited.
We are satisfied that this loan, as stated before by us,
,see Part I, Chapter 2, was all the time meant to be
employed to finance the National Investment and
Properties Company Limited.
With regard to the witness Rewane, we have already
stated our views about him1. We only add that he
appears to us to be so reckless with regard to handling
the affairs of the Corporations that we have unhesita-
tingly come to the conclusion that he should, under no
circumstances, have been made the Chairman of any
Corporation. The reasons which we have given above
abundantly demonstrate his inability to control staff
equitably and impartially, and he gave us the impres-
sion that unless the staff all bowed to his whims and
caprices at whatever cost and no matter the propriety
of the matter involved, they would find no favour
with him. Such a Chairman is neither desirable nor
useful at all in any Corporation in which progress is
sought. His performance with the affairs of the
National Investment and Properties Company Limi-
ted have already been discussed. He knew all along
about the purposes for which the National Invest-
SPart I, Chapter 2, Section 4.








ment and Properties Company Limited was formed
and indeed actively assisted in the diversion of public
funds through the National Investment and Pro-
perties Company Limited into the coffers of the
Action Group. He himself signed a few vouchers for
the receipts of money from the National Invest-
ment and Properties Company Limited for the
Action Group. He knew or ought to have known that
the National Investment and Properties Company
Limited had not declared a dividend since its incep-
tion and that indeed all monies operated upon by
the National Investment and Properties Company
Limited were monies obtained from the Western
Region Marketing Board and which were specifi-
cally given out as loans against specific projects. He
had in the course of his evidence said many things
against Chief Akintola. We do not accept his
evidence. We know that he lied in many respects and
indeed when he stated that he paid 25,000 for his
share contribution in the National Investment and
Properties Company Limited we knew that he was
not speaking the truth. The truth is that not one of


the directors had paid one penny as share contribution
to the National Investment and Properties Company
Limited. Wherever his evidence conflicts with the
evidence of Chief Akintola, we prefer and accept the
latter. In the course of his evidence he himself
admitted that he is worth in real properties the total
amount of 161,4801 out of which he had indeed paid
to contractors a total of 113,270. Os. Od. He tried
in the course of his evidence to justify the pay-
ment of such large amount by his receipts from:
1. The S. & R. Company in which he is a partner
of Chief Shonibare; and
2. The receipts from the acquisition of some
lands belonging to him and Shonibare in
Ikenne.
We take the view that all the amounts on these pro-
jects put together would not account for half of the
properties which he claimed to possess. Where he got
the money to pay for the projects from we do not know
and we do not think that anyone else apart from him-
self will ever know.


1 Day 71, p. 31.









CHAPTER 2
NIGERSOL CONSTRUCTION COMPANY LIMITED AND NIGERIAN WATER RESOURCES
DEVELOPMENT LIMITED
Section 1. Policies and Business Operations


We stated elsewhere in this Part that we shall dis-
cuss the affairs of Nigersol Construction Company
Limited and the Nigerian Water Resources Develop-
ment Company Limited more fully in another
Chapter. These two companies have been erroneously
referred to as 'Israeli Companies'. We wish to point
out quite clearly now that these two companies are
indeed Nigerian companies and are incorporated in
Nigeria. The interests represented on the share-
holdings are:
(a) Sixty per cent Nigerian interests as held by
the Western Nigeria Development Corpora-
tion; and
(b) Forty per cent Israeli interests as held by
the Israeli partners.
In the case of the Nigersol Construction Company
Limited the agreement of partnership is Exhibit
ZOO. 4 entered into on the 14th January, 1959, as
between the Western Region Production Develop-
ment Board of the one part and Messrs. Soleh
Boneh Limited of Haifa, Israel, of the other part.
The primary objects of the Company as appearing on
the Memorandum of Agreement are:
(a) the planning and construction of buildings-
factories and other civil engineering works
in Nigeria; and
(b) the carrying out of such other activities as
the parties hereto may from time to time by
mutual agreement determine.
The Agreement further provided that the-'initial
authorised share capital of the Company will be
t200,000 divided into 200,000 ordinary shares of 1
each' and provisions were also made with respect to
the directorate as follows:
'There shall be a Board of Directors of the
Company consisting of three Nigerians and two
Israeli to be nominated by the Board and Soleh
Boneh respectively. The Board of Directors shall be
responsible for the policy of the Company and
subject to clause 11 hereof control and direct the
Company.
The Chairman of the Board of Directors shall be
a Nigerian Director nominated as Chairman by the
Board'1.
Section 22 of the Memorandum of Agreement
provides as follows:
'This Agreement will remain in force for a
period of five years as from the date hereof or for
such longer period as may be agreed from time to
time by the parties.'
We know that in pursuance of this Agreement the
Western Nigeria Development Company invested in
the shares of this Company a total amount of 120,000
(see Appendix 31).
With respect to the Nigerian Water Resources
Development Limited, the agreement of partnership
was also produced before us and admitted in evidence
as Exhibit ZOO. 5. The parties to that agreement were
the Western Region Production Development Board
of the one part and the Water Resources Development
(International). Limited of, the other, part. This
agreement, like its couintrpart Exhibit ZOO. 4 is
dated the 14th January, 1959. The primary objects of
the Company shall be:
(a) the undertaking of the water ,resources
development schemes in 'Nigeria including
SExhibit ZOO. 4.


preliminary investigations and surveys, geolo-
gical and hydrological investigations and
prospecting, engineering valuations, planning,
design and construction of bore holes, water
works, drainage, damming and irrigation
schemes; and
(b) the carrying out of such other activities
including setting up of industrial enterprises
related to the field of water development as the
parties thereto may from time to time by
mutual agreement determine'.
The Agreementl provides for a directorate of five in
the following terms:
'There shall be a Board of Directors of the
Company consisting of three Nigerians and two
Israeli to be nominated by the Board and Water
Resources Development respectively'2.
Section 10 of the Agreement3 made provisions for the
Chairman of the Board of Directors being a Nigerian
and also to empower the Board to have the control
and direct the policy of the Company. The initial
authorised share capital of the Company is 100,000

divided into 100,000 shares of 1 each, and all the
shares were issued at inception. The Western Nigeria
Development Corporation had paid a total of 48,000
in the shareholding of the Company and as well as a
share liability of 12,000 to make up for its sixty
per cent shareholding which amounts to 60,000.
Before we go further with this Chapter, it is as well
to point out that we have dealt with these two Com-
panies in one Chapter as we take the view that that
procedure will make for easy comprehension of the
activities of both Companies which certainly have
much in common and have, in fact been treated as twin
sisters in the course of the proceedings before us.
It appeared that soon after the execution of the
Agreements4, the affairs of the two companies were
referred to the Executive Council. The Western
Nigeria Development Corporation had met on the
5th February, 1959 to ratify the Agreements entered
into between the Chairman of the Western Region
Production Development Board for the Corporation
and the Israeli interests in both companies and
had indeed ratified the two Agreements5. The E\e-
cutive Council was then notified of the position and
the Executive Council approval was obtained to the
formation of the two Companies as envisaged by the
two Agreements to which we refer6.
The history of the two companies is tied up with the
visit in 1958 to Israel of some mtmnibers of the
Executive Council of the Western Rction Govern-
ment and the consequent negotiations by the Miini stry
of Economic Planning 'with certain Israeli interests
for the establishment of a Construction Company
which would also be concerned with developing water
rI-o lrces within the Region.' The matter arose in this
way: during the year 1958 Chief Akin Deko, the
then Minister of Agricilture and Natural Resources.
Mr Rewane, Chief Oguniya, and one Mr Aribisala
went on an economic tour to Europe and Asia and in
the course of their toui visited Israel. The witness
Rewane in the course of his evidence indiened that
the formation of the two companies wa- otn the initia-
tive of the Government and that indeed thaigree-
1 Exhibit ZOO. 5.
2 Exhibit ZOO. 5, SLtiln 10(,).
Exhibit ZOO 5
4Exhibits ZOO. 4 and ZOO. 5. ':
5 Exhibit ZOO 7
6 Exhibit ZOO. 6.









ment for the formation of the Companies1 were sent
down to the Western Nigeria Development Cor-
poration 'as directives from the Ministry of Trade
and Industry2. Rewane had visited the institutions
of Solen Boneh Enterprises in Israel and the Water
Resources Development (International) Limited and
was satisfied that they were respectively institutions
of very great experience in civil engineering and
water engineering and that they have an international
reputation both in Africa and in Asia3.
When the delegation to which we have referred
above returned to Nigeria, the Ministry of Econo-
mic Planning (the Minister was Oba C. D. Akran)
placed the benefit of the entire discussions with
the Israeli Partners before the Executive Council
by Memorandum dated the 4th December, 19584
and in which the most important points giving rise
to the negotiations as well as the heads of agreement
between the two parties were set out inter alia
as follows:
'2. There were three major considerations
giving rise to these proposals, namely:
(a) it has become increasingly apparent that
there is a growing shortage of capacity on the
part of contractors for the undertaking of
major construction and water engineering jobs;
(b) water drilling and certain specialised hydro-
logical surveys might well be undertaken more
economically by making use of a large and
experienced water organisation rather than
the setting up of a specialise division of the
Ministry of Works and Transport;
(c) there is a need for a locally based company
equipped to carry out major civil engineering
and water development works to compete with
contractors financed and directed from over-
seas and to provide training and experience for
Nigerians in the management of such an
undertaking.
3. Negotiations have led to the preparation of
draft Heads of Agreement attached as Annexure I,
which were prepared in conjunction with the
representatives of the Israeli interests. The
Heads of Agreement set out the broad terms on
which a limited liability Company for construction
and development work would operate, and provide
for participation by Government and Israeli
Government and Israeli interests in the proportions
60 per cent to 40 per cent; the agency through
which the Government will participate in the
Company will be the Production Board and the
Company will require a subscribed capital of the
order of 200,000, of which only 50 per cent to
60 per cent would need to be paid up initially.
Total Government commitment would be 120,000
of equity capital and, in addition, some 500,000
of working capital (this is not a firm figure) which
would be supplied in the form of a loan, would
be required.'
Following on this the Israeli representatives came
over to the Western Region and broad lines of agree-
ment were settled with them as to the proposed
participation in the companies that would be establi-
shed. It appears that prior to this time the Executive
Council had approved the broad general heads of
agreement and that later but before the execution
of the agreements6 the Law Officers of the Govern-
ment approved the draft of the agreements before
execution6.
Those agreements were then executed and the two
companies-Nigersol Construction Company
Limited and Nigerian Water Resources Development
1 Exhibits ZOO.4 and ZOO,5.
I Day 69, page 67.
Day 69, pages 66-69.
Attachment to Exhibit JOIL. 23.
'Exhibits ZOO. 4. and ZOO. 5.
Exhibit ZOO. 3.


Limited-were formed and were duly incorporated
under the Laws of Nigeria. The Nigersol Construc-
tion Company Limited was incorporated on the 29th
September, 1959 and the Nigerian Water Resources
Development Limited was incorporated on the 25th
July, 19591. Chief Awolowo had in the course of his
cross-examination questioned witnesses to suggest
that the terms of the original heads of agreement
approved by the Executive Council during the time
when the matter was first introduced to the Executive
Council2, were more favourable to the Western
Nigeria Production Development Board than the
terms subsequently embodied in the final agreements
executed with Israeli Partners for the formation of
the two companies3. Indeed there are differences in
some provisions of the two sets of agreement which
could be demonstrated shortly as follows:
1. Paragraphs 2, 3, 4 of the earlier agreement
reads as follows:
'2. The 'Company' shall give priority to any
civil engineering and any water development
works as assigned to it by the Western Region
Government on terms as agreed with the 'Com-
pany' but is not thereby barred from undertaking
commercial non-Government contracts.
3. The Government is not bound to offer all
civil engineering and water development work
to the 'Company', but it is intended that the
majority of the work not undertaken directly
by Government shall be undertaken by the
'Company' provided that it can compete reason-
ably with other contractors.
4. Work assigned to the 'Company' by
Government shall be either by negotiated
contract or by open tender.'
whereas the corresponding Sections in the final
agreement read as follows:
15(a) The Board will do its best to ensure
that the activities of the Company shall benefit
from knowledge of local conditions and local
sources of supply and from privileges afforded
to local contractors.
(b) The Company shall give priority to any
construction work as assigned to it by the
Government of the Western Region on terms as
agreed upon, but the Company is not thereby
barred from undertaking commercial non-
governmental contracts in Nigeria.
(c) The Board undertakes to procure from the
Government of the Western Region a letter of
intent stating (a) that the majority of works
not undertaken directly by the Government shall
be assigned to the Company provided that it can
compete reasonably with other contractors and
(b) that the work assigned to the Company shall
during its first year of operation be by negotiated
contract.
2. Section 15 of the earlier agreement provides as
follows:
'15. Upon the adoption of these Heads of
Agreement, a detailed Memorandum of Agree-
ment including a description of works proposed
during the first year of actual operation of the
'Company' and the condition of their assignment
will be worked out between and signed by the
parties, whereupon the formation of the 'Com-
pany' will be proceeded with.'
whereas the corresponding section in the final Agree-
ment reads as follows:
'Section 22. This Agreement will remain in
force for a period of five years as from the date
hereof or for such longer period as may be agreed
from time to time by the partie-. Upon th<
1 Day 64, page 84.
Attachment to Exhibit JOIL. 23.
SExhibits ZOO. 4 and ZOO. 5; also attachments to
Exhibits JOIL. 24 and JOIL. 25.









termination of the Agreement, the Board shall
buy out and Soleh-Boneh shall sell its interests
and rights in the Company at a price to be
mutually agreed between the parties hereto, but
failing such agreement within three months, at
a price to be determined by Arbitration under
this Agreement.'1
The provision of Section 15 of Exhibits ZOO.4
and ZOO.5 gave rise to early difficulties because
when the contract for road tarring was awarded more
or less immediately after the registration of these two
companies, Mr Rewane complained to the Ministry
of Works that the portion allotted to the Nigersol
Construction Company Limited was insufficient and
that in any case the final Agreement was to the effect
that the majority of all works not undertaken by the
Government would be given to the two Companies
2. The Ministry of Works at this time was con-
cerned with the matter and Chief Awolowo, the
Premier, insisted that the quota awarded to the two
companies was satisfactory and that indigenous
contractors were not to be shut out of practice by the
two companies3. A meeting then took place
between representatives of the Ministry of Works, the
Premier, Chief Awolowo, and the representatives of
the two companies concerned 4. In his ruling on
the matter, the Premier stated inter alia as follows:
'As regards the award of contract to the Nigersol,
the Premier held the view that the Company
should not aim at getting work on a non-competi-
tive basis.
Although the Government had shares in the
Company, Government did not intend to drive
out other contractors and create a monopoly for
Nigersol. Nigersol should compete with other
contractors on equal basis'.5
We did point out that the Nigersol Construction
Company Limited was incorporated on the 25th
September, 1959. We stated earlier on that a portion
of road tarring works was awarded to the Nigersol
Construction Company Limited some time before
July, 1959. We now point out that an advance
payment of 45,000 was made to that company,
apparently paid to its General Manager, before the
incorporation of the Company. It seems clear that its
Company started operation before it was formally
incorporated and money was therefore required for
the execution of the assignments which had been
awarded to the Company before incorporation. The
payment of 45,000 was made on the 3rd April,
1959, and it seemed to have evoked a considerable
amount of correspondence involving the finances of
the company and the availability of money to the
Western Nigeria Development Corporation to pay
its own share of the capital contribution of this
company. It will be recalled that by the terms of the
Agreement 6, the share capital of Nigersol Construc-
tion Company Limited is 200,000, out of which the
Western Nigeria Development Corporation is liable
for 120,000. In the case of the Nigerian Water
Resources Development, the share capital is 100,000
of which the Western Nigeria Development Corpora-
tion is liable for 60,000. All its share contributions
in respect of Nigersol Construction Company
Limited had been paid by the Western Nigeria
Development Corporation'. With regard to the
Nigerian Water Resources Development Limited,
only an amount of 48,000 has been paid out of the
total share capital liability of 60,000.
At a meeting of the Western Nigeria Development
I ???
2 Exhibit ZOO. 35 and accompanying minutes.
8 Day 70, pages 47-49.
4 Exhibit ZOO. 36.
5 Day 70, page 49; also see minutes attached to Exhibit
ZOO. 35. See further on this Exhibit ZOO. 36.
6 Exhibit ZOO. 4.
7 See Minutes ZOO. 8; also Day 70, pages 84-90.


Corporation which took place on the 5th April, 1959,
it was resolved that the Board had no funds to finance
the two companies and that as no monies were then
forthcoming from the Government, despite the
assurances given by the Government in December
1958 to the effect that the Western Nigeria Develop-
ment Corporation would be provided with sufficient
funds to finance the two companies 1 and that there-
fore the executive of the Western Nigeria Develop-
ment Corporation should open negotiations with the
Government for the purpose of obtaining finance for
the two companies. It appeared that on account of all
these vicissitudes the Managing Directors of both the
Nigersol Construction Company Limited and the
Nigerian Water Resources Development Limited
wrote a joint letter dated the 24th December, 1959,
to the Minister of Works, complaining of lack of
patronage by the Government and stating inter alia as
follows:
'One of the conditions of such agreements was
that the Corporation would procure from the
Government of the Western Region a letter of
intent stating (a) that the majority of the works not
undertaken directly by the Government would be
assigned to the companies provided they could
compete reasonably with other contractors; and
(b) that the work assigned to the companies would,
during the first year of their operation, be by
negotiated contract.'
It is with considerable regret that we must report
that so far these conditions have not been fulfilled.


We should also like to point out that if contracts
for work to the value of 30,000,000 are awarded to
our firms, we would be prepared, as part of such
contracts, to order and supply all the materials
and equipment required. This would enable us to
keep a close control of all supplies so as to ensure
that they arrive according to the scheduled pro-
gress of the works.
*

We make these representations in the confident
expectation that the Honourable the Minister will
approve these proposals and so enable us to set
about obtaining the equipment and building up our
organizations and personnel, and thereby embark on
the Five Years Development Plan with the urgency
which the task demands.'2
It appeared that at this point of time there was a
considerable amount of confusion over the affairs of
these two companies. The confusion was spearheaded
in one direction by the indigenous contractors and in
another direction by a section of the officials of the
Ministry of Works. There were complaints made by
the officials of the Public Works Department and
Chief Odebiyi in the course of his evidence on this
point testified as follows:
'In addition to that the Ministry of Works
Engineers were very envious. They wanted to take
the whole credit for most of the work and naturally
they did not like any outsider civil construction
firm to compete with them'.3
In any case the complaints were defended by the two
companies and it was decided that a working party
should be set up to look into the allegation of non-
co-operation on the part of the Public Works De-
partment officials with the two companies, the allega-
tion of inefficiency on the part of the two companies,
and to find out whether the works being given to
the two companies were being properly done and
1 Exhibit ZOO. 9.
2 Attachments to Exhibit ZOO. 11, Exhibit AOA. 25;
also Exhibit AOR. 3.
3 Day 23, page 110.








to advise on how they might be properly carried out
in the future.
Chief Akintola had in the meantime become the
Premier of the Region and according to him he had
decided to set up the working party in order to
resolve the situation which had deteriorated considera-
bly at that time. The members of the Working Party
were:
1. The Permanent Secretary to the Ministry of
Economic Planning;
2. The Chairman of the Western Region
Marketing Board; and
3. The Principal Agricultural Officer who was
later replaced by the Senior Assistant Secre-
tary for Finance in the Treasury.
The investigators met and eventually submitted a
Report. The Report was signed by Chief I. 0.
Dina, Chairman, and Chief S. L. Durosaro and Mr
H. A. Ejueyitchie, Members, and the principal points
in the Report are the recommendations of the panel
to the following effect:
1. that the Government should do its best to
fulfil its own part of the contract entered into
with the Companies, i.e., assignment of
sufficient work to enable the Companies to
stand on their feet;
2. that works to the value of at least 400,000
should be assigned immediately to the
Nigersol Construction Company Limited
specifically with a view to fulfilling the
agreement reached between the Company
and the Controller of Works in respect of the
first year of operation;
3. that steps should be taken to fulfil that part
of the contract which enjoined the Govern-
ment to 'assign' to the Companies the majority
of the work not directly undertaken by the
Ministry of Works and Transport. In our
view, this may be implemented in one or the
other of the,following ways:
(a) by continued negotiation of contracts
with the two Companies;
(b) by guaranteeing to the Companies suffi-
cient amount of job over a period of years;
(c) by not putting to open tender any work
guaranteed or intended for negotiation with
the two Companies;
4. that in order to facilitate the fulfilment of
Government obligations to these Companies,
the principle of the packaged deal should be
observed as much as possible with the Niger-
sol Construction Company Limited as was the
case already with the Nigerian Water Re-
sources Development Company Limited;
5. in order to save time and money, because
'time is money', these Companies should not
be tied unnecessarily to a single source of
supply, i.e., Crown Agents, provided they
can obtain materials of the requisite speci-
fication direct from other suppliers approved
by the Ministry of Works;
6. that the two Companies should be enjoined to
provide adequate staff and equipment to
enable them to cope efficiently with any size
of work that may be made available to them
under the terms of these recommendations.'2
As a result of this favourable Report, we were told,
the Minister of Works wrote the letter dated the
9th February, 1960, to the two companies concerned.
That letter reads as follows:
'I am directed by the Honourable the Minister
of Works and Transport to refer to your letter
dated 24th December, 1959, and to say that the
1 Exhibit SLD. 65; see also Day 65, pages 23 FF.
2 Exhibit SLD. 65.


Government has considered your submissions
therein and decided that work to the tune of 30
million is guaranteed to you during the 1960-65
Development period on the understanding that:
(a) the work will be assigned to you mainly by
negotiated contract;
(b) in most cases you will plan, design and
execute the works concerned;
(c) where obtaining materials from Crown
Agents will lead to delay, you arepermitted
to buy such materials from other sources
approved by this Ministry; and
(d) you will continue to execute such works as
are assigned to you satisfactorily.'
It appeared that before the letter of the 9th Febru-
ary, 1960 was written approval of the Executive
Council to the Contents thereof was sought and
obtained2, and at a meeting of the Western Nigeria
Development Corporation of the 10th February, 1960
it was decided-'On the motion of Mr Oyesina,
supported by Dr. Oyenuga, it was unanimously
agreed that-
(a) a loan of 3 million be secured from the
Western Region Marketing Board with interest
of half per cent above Bank of England rate;
(b) a loan capital of 3 million be advanced to
these Companies for the purposes stated in
proportion of 2 million to Nigersol Con-
struction Company and 1 million to the
Nigerian Water Resources Development Limi-
ted;
(c) the Companies be indemnified to provide for
repayment of the loans only on condition that
the terms of the agreement with Government
are fulfilled;
(d) repayment of the loan should be on the
basis of ten per cent of the value of the work
allotted to the Companies each year in respect
of the contracts negotiated with Government.'3
On the same day, the 10th February, 1960, the
decision of the Western Nigeria Development Cor-
poration was conveyed to the Ministry of Trade and
Industry4. It seemed that the Western Nigeria
Development Corporation or the two companies
themselves had apportioned the total value of 30
million among themselves for the position appeared
that Nigersol Construction Company Limited appor-
tioned to itself 20 million worth of contracts and
the Nigerian Water Resources Development Limited
the balance of 10 million worth of the contracts.
In the course of his testimony, Mr Rewane, the
Chairman of the companies, testified to the effect that
Nigersol Construction Company Limited was to have
20 million worth of contracts and the balance of
10 million would go to Nigerian Water Resources
Development Limited.
Be that as it may, the Ministry of Trade and
Industry decided on the 13th February, 1960 that a
clarification should be sought of how the amount of
3 million was computed and
'whether it is confirmed that the other partners in
this Company should contribute loan capital in
proportion to their equity holding, i.e. a further
2 million'.5
The letter of the Ministry, although addressed to the
Secretary of the Western Nigeria Development
Corporation was replied by the Chairman6 by letter
which contains inter alia the following passages:
1 Exhibit ZOO. 10.
SExhibit ZOO. 11; also Exhibit AOR. 4.
8 Exhibit ZOO. 12.
4 Exhibit JOIL. 25.
SExhibit ZOO. 13.
6 Exhibit ZOO. 14.








'You will recall that in the agreements signed
between Israeli representatives and my Corpora-
tion in January, 1959, the Corporation undertook
to procure from Government letters of intent
assigning to these companies works not undertaken
directly by Government. The decision of the
Executive Council is in recognition of this obliga-
tion. You will appreciate that the responsibility
rested with my Corporation for securing this work.
As the majority shareholders in the Company, my
Corporation also has an obligation to devise means
whereby the Companies can be provided with
funds to build up the necessary organisation to
such a level as will enable them to proceed to
the execution of such works as soon as contracts
are negotiated.


While the loan to my Corporation will be made
available at a rate of interest which will be half
per cent above the ruling Bank of England Rate,
it is intended that the loans to the Companies
should be made available at one per cent above such
rates. My Corporation will suffer no disadvantage
from such transaction-on the contrary it will
earn half per cent on the money borrowed from
the service it is rendering'.1
We know, however, that the Western Region
Marketing Board was contacted for this loan and that
Chief F. R. A. Williams, Q.c., was requested to and he
did prepare the agreements by which the two
Companies obtained these loans totalling 3 million,2
Chief F. R. A. Williams, Q.C,, was instructed by Mr
Rewane to prepare the documents 3 even though there
were lawyers in the Western Nigeria Development
Corporation; the Agreements were forwarded to
him by Chief F. R. A. Williams accordingly.4 We
know that the Western Region Marketing Board met
on the 12th February, 1960, and approved the loan
of 3 million to the Western Nigeria Development
Corporation and secured the approval of the
Ministry to the transaction on the 29th June, 1960.V
Chief Adeyi, at the material time the Minister of
Trade and Industry, told us that after receiving the
notification of the Marketing Board to the effect that
the Western Region Marketing Board had approved
the loan, Alfred Rewane, the Chairman of the
Western Nigeria Development Corporation, the
Nigersol Construction Company Limited and the
Nigerian Water Resources Development Limited,
approached him and discussed with him to the
effect that the sum of 3 million to be invested in the
two companies is to increase the organisation of the
two companies, to get more equipment, and to get
suitable personnel for the firms concerned. He stated
that Rewane
emphasisedd the necessity of the loan and also
emphasised the fact that unless this money was
given it would be absolutely impossible for the
two companies to fulfil their obligations.'7
In the course of the evidence before us, the Witness
Rewane gave us the reasons why he thought that the
companies concerned required a loan assistance of
3 million, as follows:
'When government guaranteed to the two
companies 30 million worth of work and saying
to be spread over five years it meant to say that if
the work guaranteed was evenly distributed that
the two companies will be expected to execute
1Exhibit ZOO. 14.
2Exhibit CGO. 1-Nigerian Water Resources Limited;
and Exhibit GCO. 2-Nigerian Construction Company
Limited.
SExhibit ZOO. 15.
SExhibit CGO. 2A or AOR. 2; see also Exhibit ZOO. 16.
Exhibit AOA. 28; see generally on this Part I, Chapter I.
SExhibit ZOO. 17.
Day 13, page 33.


work to the value of 6 million a year and it there-
fore became necessary for the companies to seek
ways and means of preparing for such execution.
The two .M ,I ;I. Directors of the Company
and of which I was Chairman had discussion
with me and we were thinking of ways and means
of preparing for this huge contract which we ex-
pected from government. Now, we examined all
possible means of getting money, which is the
primary thing, in order that we may buy equipment
in anticipation of the work and to build up the
organisation. Certainly, the fact that additional
capitalisation of the company would be required was
agreed by us as a company and we examined all
possible ways and the Israeli partners felt that a
heavy amount of money will be required and that
money will be a total loss to them if government
did not fulfil its obligation under the guarantee,
and they spoke to me about it that the only way
they think, and which had been the practice in other
places where they had had work, is to get govern-
ment to give either the loan of ten per cent down
payment. After I had discussed with them I
discussed the matter with the Ministry of Trade
and Industry as I stated in my memorandum to
the Corporation'.1
We know that the loan of 3 million was paid and
indeed deposited in the account of the Western
Nigeria Development Corporation in London at that
branch of the National Bank of Nigeria Limited.2
Under the Agreement for the loan, the Western
Nigeria Development Corporation agreed to lend
Nigersol Construction Company Limited 2 million
and Nigerian Water Resources Development Limited
1 million with interest at one per cent above Bank
of England rates. The payment of the interest, how-
ever, was restricted to three per cent of the monies
received by the Companies from the Western Region
Government or its agencies in payment for contracts
executed by the Company. In the same way payment
of the loan capital is similarly restricted to ten per cent
of monies received in similar circumstances by these
companies on account of contracts awarded by the
Government or its agencies. The letter3 dated the
14th March, 1960, was signed by Mr Rewane and
Mr Shur, one of the Israeli directors, and addressed
to the Western Nigeria Development Corporation of
which Mr Rewane was Chairman. We point out in
this connection that the loan agreements4 were
executed by Rewane as Chairman of the Western
Nigeria Development Corporation and for the
Western Nigeria Development Corporation and also
by the same Rewane as Chairman of the two com-
panies for the two companies. We know that the
payment of this loan of 3 million by the Western
-Region Marketing Board was made before the appro-
val of the Ministry was conveyed." Hereafter
followed a series of complicated transactions which
it is not necessary to relate in full in this Report.
The important points of what happened are, however,
as follows:
1. The Western Nigeria Development Corporation
informed the companies concerned of the
availability of the amount of 3 million as
follows:
(a) 1,500,000 available in London by the 5th
March, 1960;
(b) 500,000 available in London by the l1th
March, 1960;
(c) 1 million available in London by mid-March,
1960.
1 Day 66, pages 24-25.
2 Exhibits AOR. 54 and AOR. 75.
: Exhibit AOR. 54 and Exhibit AOR. 75.
Exhibits CGO. 1. and CGO. 2.
5 Exhibits ZOO. 17 and ZOO. 18.








The letter involved contained and indeed ended with
a paragraph as follows:
'I shall be grateful if you will let me know how
the money allocated to your company should be
paid. It should be noted that the whole of it would
be available by the middle of March. Would you
then please give your directions as to the Bank in
England where the money should be paid into for
your account.
Please note that I would like to know how much
of the.... should be paid to you on the 5th March,
how much of the .... should be paid to you on the
11th, and how much of the balance of.... should
be paid to you when it is received from the Western
Region Marketing Board.'"
The letters to the Company were signed by Mr
Alfred Rewane, as the Chairman of the Western
Nigeria Development Corporation. Previous to this
letter the Board of Directors of Nigersol Construction
Company Limited had purported at a meeting held
on the 12th March, 1960, and by minutes also signed
by Mr Rewane, to appoint Mr Rewane to execute
the agreements of loan on behalf of the companies.2
With respect to the loan agreement, we record that
the evidence reveals that:
1. various documents were executed by Rewane
alone or by Rewane and one other Israeli
director of the two companies purporting to
delegate authority to Rewane to act for the
companies and to ratify any action taken by
him.3
2. It became clear that the two companies
would not require more than a total of about
800,000 for their immediate needs.4
3. The companies met and resolved that the
Chairman should investigate and report on the
possibility of depositing the balance of
2.2 million in a finance house or banking
institution.5
4. Within two days of this resolution (that is
between 12th March and 14th March, 1960)
Alfred Rewane reported to the companies that
the National Investment and Properties
Company would accept the amounts left over
on short-term deposits.6
5. The total amount of 2.2 million was paid to
the National Investment and Properties
Company and acknowledged by the National
Investment and Properties Company.7
6. Later on these amounts were demanded by
the companies and the National Investment
and Properties Company was unable to
repay.8
It appeared from the minutes of the meeting of
Nigersol Construction Company Limited that the
Chairman, Mr Rewane, had recommended that funds
should be made available for the company in London
to enable the company to make local payments for the
purchase of materials bought by or supplied to the
company for its building activities.9 It would
be observed that no application for these deposits was
ever made by the National Investment and Properties
Company, the Nigersol Construction Company
Limited or the Nigerian Water Resources Develop-
ment Limited and no terms whatsoever were settled
before the payment of the various deposits totalling
1 Exhibit AOR. 6.
2 Exhibit AOR. 7.
3 Exhibit AOR. 9.
4 Day 66, pages 37-40.
6 See Minutes Exhibit AOR. 7 signed by Mr Rewane.
6 Exhibits AOR. 10 and AOR. 11; see also Day 66, pages
66-67.
SExhibits AOR. 8, AOR. 12, AOR, 23 etc.
8 Exhibits AOR. 15 and AOR. 16.
o Exhibit AOR. 15.


2.2 million. In the letters of acknowledgement,
however,1 passages occur to the following effect:
'We shall repay the said amount or any part
thereof to you or to whomsoever you may order as
you may direct from time to time provided thirty
days' previous notice be given to us in cash case.'
The minutes of the meeting of the Nigersol Con-
struction Company Limited 2 has stated that Rewane
had got the National Investment and Properties
Company to accept the deposits 'from the company,
paying the company interest at the rate of 2 per cent
per annum, the deposit to be withdrawable by the
company or to its order on thirty days' notice.'
We recall that by letter of the 6th March, 1961,3
the National Investment and Properties Company
repeated its inability to repay the deposits then
called for. The letter3 written by the National
Investment and Properties Company to the Nigersol
Construction Company Limited reads in full as
follows:
'This is to acknowledge receipt of your letter
of 4th March, 1961, calling upon us to repay to you
the amount of 1,400,000 deposited by you with
us, together with interest accrued thereon.
Whilst we realise that under the strict terms
of the deposits you made with us you are fully
entitled to withdraw the whole amount upon
thirty days' notice, we had reason to believe that
the deposits would in fact remain withus for a
considerable period of time, and, accordingly, did
not expect that we would be called upon to repay
the whole amount at the present time and did not
provide for this eventuality.
It is with great regret that we find ourselves
compelled to advise you that we are unable to
comply with your demand unless we can obtain
credit facilities for this purpose.'
In consequence of this the Board of the Nigersol
Construction Company Limited met and resolved to
accommodate the National Investment and Proper-
ties Company and the transaction contained and
indeed described by the documents Exhibits AOR.
18 and AOR.24 then ensued. The pith of the transac-
tion is that an arrangement was negotiated by Rewane
on behalf of the National Investment and Properties
Company and the two companies to the effect that
the Anglo Israel Bank would open accounts in their
London branch for the two companies, i.e., the
National Investment and Properties Company on
the one part, and the Nigersol Construction Company
Limited and the Nigerian Water Resources Deve-
lopment Limited on the other part. That Bank would
then debit the National Investment and Properties
Company account with the amount of 2.2 million
and credit the two companies with a similar amount.
The National Investment and Properties Company
might pay any monies to the credit of its account
but the two companies might now draw a penny on
their accounts unless the National Investment and
Properties Company had got so much to the credit of
their own account. In this connection it is apposite to
mention that the documents Exhibit AOR.20, AOR.22
(written by the National Investment and Properties
Company), AOR.21 (written by the Anglo Israel
Bank Limited) and AOR.23 (written by the Western
Nigeria Development Corporation) were all created
on the same day, the 28th March, 1961, and those of
them that were supposed to have been written locally
in Nigeria were, in fact, carried by Rewane himself
to London on or about that day for the purpose of this
transaction.4
1 Exhibits AOR. 8. and AOR. 12.
2 Exhibit AOR. 10.
S Exhibit AOR. 17.
4 See generally for this matter Day 66, pages 63-110.








The witness Rewane explained in a most elaborate
way the reasons for entering into such an arrange-
ment, which we think to be a rather dirty arrange-
ment or at the le st an untidy one. His explanation
was as follows:
'We were faced with this obligation of taking
the National Investment and Properties Company
to court when they wrote back that they had not the
money. At the request of the National Investment
and Propeties Company, I decided after consul-
tation with other Directors of the Board of Nigersol
and Watei Resources and we went to Israel and
put the whole thing before our other partners.The
other partners, Mr Golan, Mr Shur and myself
went to London and discussed with the Anglo
Israel Bank w ether they were prepared to give
the loan. We elored the possibility of getting
the National Inv stment and Properties Company
some loan from e Anglo Israel Bank. Then, of
course, the Anglo Israel Bank asked for the security
the National Investment and Properties Company
will be able to mke \I explained to them that the
National Investment ad Properties Company had
quite a lot of property but these properties had
been mortgaged to the Government and conse-
quently except they were prepared to accept
a second charge and that second charge should be
approved by the Marketing Board they will not be
able. Then the Anglo Israel Bank was not prepared
except we are prepared to find other securities.
Then we met and discussed and it was agreed that
well, instead of Nigersol and Water Resources
being put in the unpleasant position of suing
the National Investment and Properties Company
we should tran fe" that responsibility to the
bank if we agree 1 secure the loan then if need be
they should sue the National Investment and
Properties Comp ny then the name of Nigersol
and Water Res urces will not come into the
transaction.1
This was tlhe posi ion which was summarised to the
witness Rewane b the Chairman of the Com-
mission as follows:
'So tha the po ition now is this. The National
Investment and Properties Company will borrow
money from the Anglo Israel Bank to repay that
money into your wn account at the Anglo Israel
Bank and then a charge will be placed upon
that money in favour of the Bank to secure the
repayment of the loan by the National Investment
and Properties company. 2
Rewane did explain that the purposes of this
untidy arrangement were two-fold:
1. to avoid the dirty work of suing the National
Investment a d Properties Company and also
to transfer te debt to the Anglq Israel Bank,
and
2. to increase he rate of interest that would
accrue to th two companies.3
We do not accept this explanation for the events that
happened showed clearly that the National Invest-
ment and Properties Company had only paid back an
amount of 320,551 17s. 2d. and even then the source
of this payment is still not known.4
Quite apart from this aspect of the business of the
two companies, we know that they had executed quite
a substantial amount of engineering works in the
country, The list5 shows some of the important
buildings erected by the company often times under its
building financing scheme whereby the contract is
financed by the company which then at completion
lets out the building and collects its entitlements from
1 Day 66, page 85.
2 Day 66, page 87.
3 Day 66, pages 86 and 103.
4 Exhibit SOS. 21.
Exhibit ZOO. 19.


the rents paid by the tenants. Many important per-
sonalities in Western Nigeria have been beneficiaries
of this scheme. It appears to us that the scheme is
operated with the co-operation of and assistance of
the Anglo-Israel Bank which eventually provided the
finance and that Nigersol Construction Company
Limited acted throughout as agents of that Bank.'
We are told that in respect of this side of the com-
pany's activities a total amount of profit of 39,863.
9s. Id. has been realized as at the 31st March, 1962.2
We append a list of the persons for whom Nigersol
Construction Company Limited had erected build-
ings under this scheme as Appendix 35.
The evidence is that the works executed by the
Nigersol Construction Company Limited and the
Nigerian Water Resources Development Limited were
also satisfactory, and the Nigerian Water Resources
Development Limited had, in fact, been eulogised
by some of the witnesses who testified before
us3. In particular we point out that the Nigerian
Water Resources Development Limited have been
able with a financial provision of million to make
as many as sixty bore holes and produce six million
gallons of water per day in the Region within the
comparatively short time of its existence.
We are also told that in accordance with the
provisions of one of the Clauses in the Agreements4
the two companies have embarked upon overseas
training schemes for Nigerians and also on the
award of scholarships tenable in both local and
overseas universities for the training of Nigerians in
the type of engineering activities undertaken by the
companies'.
We know that the Nigersol Construction Company
Limited and the Nigerian Water Resources Develop-
ment Company Limited are now in need of
money to finance their operations, and with the
amount of 2 million tied up in London, the reserves
of the companies must be adversely affected6.
The substantive directors of the Nigersol Construc-
tion Company Limited at the end of December, 1961,
are as follows:
A. O. Rewane
Samuel Eyitayo
Ezekiel O. G. Bamiro
Benedict O. Olusola
Simla Golan
Jacob Shur
Walter B. Mayerhoff.

We know that more often than not alternative
directors were employed for the decisions of major
issues, even of policy, and the deal with the National
Investment and Properties Company was effected at
meetings purported to be held by the alternate
directors of the company. It was provided in Exhibit
ZOO. 4 that the working capital of the Nigersol
Construction Company Limited might be procured
by that company by loan and the company has since
its inception received from shares and loan capital
and from trading activities a total of 3,147,070,
which amount had been used up as follows:


Fixed Assets
Not current Assets
Short-term Deposits


. 1,150,701
567,619
.. 1,428,750

3,147,070


Statements giving financial information about this
1 Exhibits AOR. 63 and AOR. 64.
2 Exhibit AOR. 53.
3 Exhibit AOR. 36. Day 85, page 34. Refer also to
Report of the Working Party, Exhibit SLD. 65.
6 Exhibits ZOO. 4 and ZOO. 5.
4 Exhibit AOR. 62; also Day 65, pages 33-4.
SExhibit AOR. 79.








Company are appended to this Report and marked
Appendix 36.
At the 31st March, 1961, the company was running
an overdraft account at the Apapa and Ibadan bran-
ches of the Bank of West Africa Limited to a total
of 218,900. We point out that the Western Nigeria
Development Corporation had guaranteed the com-
pany's account with the Bank of West Africa Limited
up to 200,000 and had also guaranteed the com-
pany's account with the Bank of America up to
500,000. The Nigerian Water Resources Develop-
ment Limited has received a total of funds in the
amount of 1,784,508 since its inception in July,
1959. See Appendix 37. This amount has been
expended by the Company as shown in the statement
of account attached to this Report and marked
Appendix 38.
At the 28th December, 1961 the substantive
directors of the Nigerian Water Resources Develop-
ment Limited were:
Alfred Rewane
Sharbon Yron
Paul Harman Duron
Yehuda Jacob Potok
Stephen A. Daramola
O. Efueye
Samuel Owoola Lanlehin.
We recall here again that for the various transac-
tions involving the Anglo Israel Bank, the National
Investment and Properties Company, and this
Company, alternate directors who had no stake in
the company were generally employed.
Section 2. Observations and Recommendations
We have in the preceding Section described the
history of the formation of the two companies with
which we are now dealing. Suffice it to say that we
take the view that the introduction and the establish-
ment of the two companies is a laudable achievement
on which the propounders should be congratulated.
We discover that although the substantive directors
of both companies were as named by us in the
preceding Section, alternate and new directors were
appointed in the persons of Chief Lanlehin1,
Mr Efueye2, Ayo Akinsanya3, and Chief Dara-
mola4. Mr Efueye and Chief Daramola were
indeed appointed directors by the Corporation. We
deprecate the idea of holding meetings at all times
with alternate directors who in our view had no stake
in the matters in respect of which they were called
upon. Nevertheless we feel that these alternate
directors did nothing by way of contribution to the
discussions which eventually led to the transaction
with the Anglo Israel Bank.
First of all, with respect to the loan of 3 million
obtained from the W.R.M.B., we conclude that the
application for and the grant of the loan were entirely
unjustified. We record that no correspondence
whatsoever was produced to us either by the
W.N.D.C. or by the company to show that the
company made any application for a loan or that a
meeting of the board of directors of that company
requested for such a loan. In the absence of that,
it is not possible for us to say that that company
indeed required the loan. Learned Counsel appearing
for the Nigerian Water Resources Development
Limited did question Mr Rewane as to whether or
not the company ever applied for the loan and his
answer was that he was acting as Chairman of that
company when he asked for the loan. So many ques-
tions of considerable importance are posed by the
loan which was granted to these two companies by the
Western Region Marketing Board. First of all we
SExhibit AOR. 65.
SExhibit AOR. 66.
SExhibit AOR. 68.
Exhibit AOR. 69.


advert to our comment before that the Western
Region Marketing Board did not wait for the covering
approval of the Minister of Trade and Industry
before paying out the amount of 3 million which was
loaned to the Western Nigeria Development Corpora-
tion. Chief Durosaro in the course of his evidence had
told us how he was approached by Chief Awolowo
and requested to make the loan available. Chief
Adeyi had also in the course of his evidence told us of
how he was approached by Rewane to make the loan
available to the Western Ni,:ri., Development
Corporation. Be that as it may, we are not satisfied
that evidence has been given before us to justify the
payment and the making of the loan. Indeed it
transpired that only an amount of about 800,000
was used by the two companies. No evidence was
given before us as to how that amount was used by
these two companies and the majority of the docu-
ments involving this transaction were signed on the
one part by Mr Rewane as Chairman of the Western
Nigeria Development Corporation and on the other
part by the same Rewane as Chairman of these two
companies.
Another matter to which we advert is why this
money was required to be paid in London to these
two companies which are Nigerian companies. In
the course of his evidence Rewane said:
'I think that was where they wanted it. Even
part of it which Nigersol used was brought back
and part of it which they used for the purchase
of material, I think they issued cheque to pay the
suppliers overseas.'1
Indeed it was manifest from the evidence before us
that what part of it was used by the Nigersol Construc-
tion Company Limited, if any, had to be repatriated
back to Nigeria. If we were to go by the evidence,
we would say that we are left in considerable doubt
as to the purposes for which this money was required
and indeed of the reasons why it was required to be
paid in London.
No reasons were given to us why Chief F. R. A.
Williams, who was at that time a Queen's Counsel,
should be requested to prepare Exhibits CGO. and
CGO.2. Mr Rewane in the course of his evidence2
stated that the Isreali partners had already prepared
a draft which he handed over to Chief F. R. A. Wil-
liams after he had consulted Chief Akintola, the
Premier, who had advised that he should seek the
advice of Chief Williams on it. He stated:
'No. I said it in this place that after you have
given me your instruction I felt that well, to send
the instruction is on record and just to send it for
vetting would not be the right thing. So, although
I sent the agreement to him I gave him instruction,
so that to charge him with the responsibility of
preparing it. It is on record.'3
We are satisfied from the letters written to and by
Chief F. R. A. Williams, who has refused to come
and give evidence4, that no such drafts were attached
and indeed Chief Williams was instructed to prepare
the necessary agreements and he was paid a fee of
five hundred guineas for such assignment. In the'
course of his testimony the witness Rewane had
submitted that there was nothing unusual in giving
loans to the two companies involved and indeed that
the practice was used in other countries. To this end
he produced contracts by:
1. The Imperial Government of Iran Plan
Organisation6
Day 70, p. 11.
SDay 70, pp. 12-14.
3 Day 70, p. 14.
SDay 85, pp. 124-129.
SExhibit ZOO.16.
Exhibit AOR. 14.









2. Contract Agreement by the Union of Burma1
3. Gauchar International Airport (Nepal) Con-
tract. 2
Previous to that a quarterly magazine of the Eastern
Nigeria Government entitled Development had been
produced through the witness Okunoren3. We wish
to record that we have gone through all these docu-
ments4 and we are satisfied that nowhere in all these
contracts were the contractors granted any loans of
the type envisaged by the agreement with the Nigersol
Construction Company Limited. We did see evidence
of down payments or advances towards the financing
of specific contracts but nowhere were the contractors
paid by way of loan against unspecified contracts to
be awarded at any time or times unspecified at the
time of the payment of the loan. We are satisfied that
these documents were put into the proceedings to
mislead us and to divert our attention from the more
important issues which were involved in this transac-
tion.
On the question of the loan we say generally that
we can find no justification for it and we have come
to the conclusion that the demand for the loan might
be the exemplification of a general conspiracy to
obtain by false pretences the amount from the
W.R.M.B. and the conspiracy is manifested by the
very act of taking the loan. This conclusion is inex-
capable from the fact that we have no records of the
demand of the companies for these loans, from the
fact that the predominant element in the negotiation
was the overbearing presence of Rewane acting in
the dual capacities in which he acted and from the fact
that no evidence was given before us of the actual
use to which any part of that money was made by
the companies concerned.
Then we know, and this may be further evidence
of the conspiracy, that an amount of 2.2 million
was deposited with the National Investment and
Properties Company Limited. We recall that Chief
Durosaro had testified to the effect that Chief
Awolowo had asked him to make the loan available
to the Western Nigeria Development Corporation
and that Rewane had also asked Chief Adeyi to make
the loan available to the Western Nigeria Develop-
ment Corporation. Chief Awolowo is at all times the
Federal President of the Action Group and Rewane
is his Political Secretary and also a director of the
National Investment and PropertiesCompany Limited.
The first two instalments of these monies were paid
and within two days of these payments the National
Investment and Properties Company Limited had
been shown up as being ready to receive these
deposits. It is clear on the facts of the case that the
National Investment and Properties Company Limi-
ted, although prepared to accept these deposits, was
singularly unable to repay when called upon to do so.
Rewane knew or must have known being a director
of the National Investment and Properties Company
Limited that that Company would not be able to
repay when called upon to do so. Chief Shonibare
when questioned about it said that he was told that
the deposits would remain with the National Invest-
ment and Properties Company Limited for much
longer as is shown in their letter. Chief Shonibare
indicated that it was Rewane who gave him that
impression. Besides, and this is more important,
Rewane himself explained the situation as follows:
'I expected the N.I.P.C. to get some money
from Government within a month or two just about
the time some money came and I wanted to make
this demand so that when the money in fact came
the money could be claimed and I will put pressure
1 Exhibit AOR. 49.
2 Exhibit AOR. 50.
Exhibit ZOO. 29.
4 Exhibits ZOO. 29, AOR. 48, AOR. 49 and AOR. 50.


on the Board of N.I.P.C. to make refund. They
wrote back which I expected because-'1
We have stated elsewhere that the Western
Nigeria Development Corporation appeared to us to
be a one-man Corporation and indeed but for that
fact the trick which was perpetuated on the Corpora-
tion by this loan transaction would not have been
possible. Rewane himself realized the absurdity of it
all and stated in his evidence as follows:
'I think there is confusion in the whole thing.
When I applied it is the company which applies.
As the Chairman of that company when I apply
I do so on behalf of the company. I was acting in
dual capacity. It is no fault of mine. And I acted
in that capacity. I had discussions with the two
Managing Directors and I applied to Government
on their behalf.'2
We advert at this point to the use or uses to which
this money was put. We stated that there was no
evidence whatsoever from the companies themselves
or rather from the directors of the companies them-
selves as to the use to which the money was put.
In the letter3 written by Rewane to the Managing
Director of the company, the money was stated to
be-
'put yourself in a position to cope with the work
which the Western Region Government has
guaranteed your company under the 1950-5 Deve-
lopment Plan.'
In the course of his evidence the witness Rewane
stated:
'Now we examined all possible means of getting
money which is the primary thing, in order that
we may buy equipment in anticipation of the work
and to build up the organisation. Certainly the fact
that additional capitalisation of the company
would be required was agreed by us as a company
and we examined all possible ways and the Israeli
partners felt that a heavy amount of money will
be required and that money will be a total loss to
them if Government did not fulfil its obligation
under the guarantee, and they spoke to me about it
that the only way they think and which had been
the practice in other places.where they had had
work is to get government to give, either the loan or
ten per cent down payment.'"
In the minutes of the Nigersol Construction Com-
pany Limited.5 Rewane stated that the money would
be required 'for the immediate surveying, designing
and planning operations and for securing the purchase
of the proper equipment and materials so as to enable
the company to commence execution of the said
negotiated contracts immediately after the award
thereof.' It is clear from these various versions of the
use to which the money was put that the true picture
has not been unequivocally placed before us. We
recommend that this matter should be further in-
vestigated because we take the view that the con-
spirAcy to which we have earlier adverted might be
unravelled by closer investigation.
We do not share the view that the Nigersol Con-
struction Company Limited and the Nigerian
Water Resources Development Limited are shutting
out indigenous contractors in their fields of activities.
The document Exhibit ZOO. 37 shows clearly that
indigenous contractors have their fair share of
contract allocation both before and after the institu-
tion of these two companies. In connection with this
the witness Okunoren testified6 that the share of the
Nigersol Construction Company Limited of Govern-
1 Day 66, p. 84.
2 Day 67, p. 54.
SExhibit AOR. 6.
Day 66, p. 24.
SExhibit AOR. 7.
SDay 65, p. 95.









ment expenditure on buildings over the years was
as follows:
1959-60: .. .. .. 11.4 per cent
1960-61: .. .. .. 21.4 per cent
1961-62: .. .. 43.7 per cent
Average for the years: .. 32 per cent1
We are satisfied that the documents produced to us
show the comparative percentage of contract works
undertaken both by indigenous contractors and by the
two companies to which we are referring.2
With respect to the Nigerian Water Resources
Development Limited we share the views of Chief
Akintola3 that it is an institution without which we
cannot do for a very long time to come. It occupies a
unique position in the set-up of things. Chief Akintola
said further:
'Even in the case of rural water supply, it is
only seeing what they do in actual practice to
appreciate the value of the contribution that the
Water Resources are making towards the country
in rural areas especially in pathetic areas where one
would think it was impossible to have water supply.
They have a miraculous way of getting water out
through these bore holes; they would get good
water and in most places, the water would be of
such quality that it would require no further
processing at all.'4
With respect to the Nigersol Construction Com-
pany Limited, we take the view that despite the
grading of contractors as reflected in the Gazette
publication5, it would be necessary to try to sort out
the available contracts and award only to Nigersol
those in respect of which they are peculiarly fit both
from the point of view of technicality or of financing.
We are still of the view that in this field of contract
work, they will continue to be useful for a long time
yet and we do not agree with the suggestions put
many times by Counsel for the Association of
Master Builders to the effect that indigenous con-
tractors are able, from whatever angle one looks at the
matter, to do everything that the Nigersol Construc-
tion Company, Limited is at present doing. We
are satisfied that in this connection the Israeli part-
ners have done their best to promote the business of
the two companies to which we are now referring, and
indeed we have no strictures to make with respect to
the activities of the two companies except with
respect to the ways in which the companies have
been used by the persons to whom we have referred
for the achievement of their selfish and may be crimi-
nal purposes.





















I See also Exhibit ZOO. 33 in this connection.
2 Exhibit ZOO. 37.
SDay 85, p.34.
SDay 85, p. 34.
SExhibit ZOO. 30.


With respect to the activities of the Nigerian
Water Resources Development Limited, we refer
in particular to the evidence of Rewane himself in
which he extolled the role of that company and
commended it.1
Our attention had been drawn to the counterparts
of these companies in the Eastern Region2. We have
studied this magazine and we are satisfied that
nowhere does it show that the Eastern counterpart
had obtained any loan from the Regional Government,
far less used that loan for the financing of any private
company.
In considering the activities of these two com-
panies we refer again to the fact that they have
awarded scholarships,3 to the fact that the Working
Party which investigated their affairs had com-
mented satisfactorily upon their activities in all
respects,4 and to the fact that the companies pay
higher wages than other companies of its kind in the
Federation,5 and finally, to Chief. Akintola's own
version of their usefulness and the necessity to retain
them for sometime yet in the organisation of contract
business in this country.6 Indeed the witness Okuno-
ren shared the view that there was no other engineer-
ing organisation in Nigeria that could do the same
work as the Nigerian Water Resources Development
Limited was doing.7
Finally on this aspectof the activities we suggest that
the circumstances of the letter of guarantee of 30
million contract8 are rather surprising, even though
we know that it has received the covering approval of
the Executive Council. The guarantee made no refere-
nce whatsoever to ensuring that the contract prices
were fair, and this might, if strictly adhered to, give
the Nigersol Construction Company Limited an
unfair advantage and the opportunities for fantastic
profits at the expense of the Government or the
agency of Government concerned. We take the view
that the letter of intent to the effect that 430 million
worth of contract would be guaranteed should be
rescinded and we doubt ourselves the legality of such
a contract, especially when it was not supposed to be
executed within the lifetime of one Government.
We take the view also that if this contract were
rescinded and the Nigersol Construction Company
Limited were allowed to compete on equal basis
with other contractors and at the same time enjoy
some reservations with respect to Government
contracts of the category to which we have referred,
the latent advantages of these companies would
manifest themselves and the use to which they would
be put will definitely be magnified.



















1 Day 65, p. 18.
2 Exhibit ZOO. 29.
3 Exhibits AOR. 37, AOR. 38 and AOR. 39.
4 Exhibits AOR. 40 and SLD. 65.
6 Exhibit AOR. 36.
6 Day 83, p. 118.
7 Day 65, p. 18.
8 Exhibit ZOO. 10.




















PART THREE


Western

Finance C


Region

,orpora tion
















Part Three


WESTERN REGION FINANCE CORPORATION


CHAPTER 1.-WESTERN REGION FINANCE CORPORATION


Page

SECTION 1.-Financial and Investment Policies and Practices .. .. .. .. .. .. 43

SECTION 2.-Business Operations .. .. .. .. .. .. .. .. .. 45

SECTION 3.-Management including Staff Matters and Staff Relations .. .. .. .. 46

SECTION 4.-Observations and Recommendations .. .. .. .. .. 47


CHAPTER 2.-INVESTMENTS


SECTION 1.-Arab Brothers (Motors) Limited

SECTION 2.-Epe Boatyard Company, Limited

SECTION 3.-G.L. Gaiser (Nigeria) Limited

SECTION 4.-Harolds Limited (Ikeja Arms Hotel)

SECTION 5.-Great Nigeria Insurance Company, Limited

SECTION 6.-Ikorodu Ceramics Industries..

SECTION 7.-Observations and Recommendations


51

.. 53

54

56

57

57

61


CHAPTER 3.-MAJOR AGRICULTURAL AND INDUSTRIAL LOANS


SECTION 1.-Joseph Asaboro Limited ..

SECTION 2.-The Nigerian Fishing Company

SECTION 3.-S. A. Okubule and Shonny Brothers

SECTION 4.-Observations and Recommendations


.. Vol. 3 .. 1

2

3

4
.. ., 4


CHAPTER 4.-THE LOCAL LOANS BOARDS


SECTION 1.-Business Operations and Management

SECTION 2.-Observations and Recommendations


S .. .. .. .. 6

6









CHAPTER 1
WESTERN REGION FINANCE CORPORATION
Section 1. Financial and Investment Policies and Practices


We have already mentioned in the Introduction
to this Report that the Western Region Finance
Corporation was established under the Western
Region Law No. 9 of 1955, as amended by Laws No.
4 of 1956, 36 and 37 of 1958 and 10 of 1960. The
Corporation's immediate predecessor was the Western
Region Development (Loans) Board set up in 1949.
In formulating its financial and investment policy
and practices the Corporation was guided by the
descriptive title given to the Law under which it is
constituted, namely 'A Law to provide for the
establishment of a Regional Finance Corporation and
Local Loans Board for the purpose of fostering the
economic development of the Region and for pur-
poses connected therewith.' Aina, who joined the
Western Region Development (Loans) Board in 1952
and has been Secretary of the Finance Corporation
since its inception on the 28th April, 1955, classified
loans granted by the Corporation under the following
headings: Industrial Loan, Short-term Contractors'
Loan, Major Agricultural Loan and Food Processing
Loan1. In the brochure entitled 'For All Intending
Loan Applicants' distributed free to the public by
the Corporation and a copy of which was tendered
before us as Exhibit BOA.1, the guiding principles
under which industrial and agricultural loans will
be granted are clearly set out. Exhibit BOA.2, also
tendered, sets out the internal procedure adopted
when considering loan applications.
In general it would appear to us that the Corpora-
tion's intention is to grant loans after making adequate
and satisfactory investigation in respect of applica-
tions received. If the policy and practices explained
to us by the various officials of the Corporation who
testified before us were rigidly pursued a sound
financial institution would be developed.
The laid down procedure as set out in Exhibits
BOA.1 and BOA.2 can be summarised as follows:
On receipt of the application form, the applicant is
invited by the officials of the Corporation, usually by
the Secretary or the Senior Assistant Secretary, for a
preliminary interview at which an attempt is made to
assess the following points:
(a) Is the project one the Corporation will assist?
(b) Is there a market for the products of the
project?
(c) If there is a market, is there room for the
project within the market?
(d) Applicant's previous business experience.
(e) Applicant's other interests.
(f) Age, education, health and intelligence of
applicant.
(g) Applicant's organisation, technical expertise
and managerial ability.
(h) Applicant's own capital contribution.
(i) Security to be offered for the loan.
If the application has no merit it will be rejected
ab initio by the Corporation's staff, otherwise it will
be submitted for technical investigation to the
Ministry of Agriculture and Natural Resources,
Ministry of Trade and Industry or the Corporation's
field staff, depending on the nature of the project.
If the technical report is favourable the securities
offered will be valued by the Corporation Valuation
Officers and a memorandum will be prepared
embodying the results of the various investigations
and submitted to the appropriate Committee. The
Corporation has three such Committees, namely
(a) Industrial Committee; (b) Agricultural Committee;
and (c) General Purposes Committee. If the Com-
mittee recommends the loan, the application is then


submitted to the full Corporation for confirmation.
Aina informed us that only when the legal documents
had been completed would the Corporation make the
loan available.1 He also said that the usual practice
was to pay direct to the suppliers of machinery, where
the loan was intended to be used in buying machinery,
and to the bank, where an existing loan or overdraft
was being retired out of the advance made by the
Corporation.2
Exhibits BOA.1 and BOA.2 show that personal
guarantee is acceptable in respect of loan not exceed-
ing 500 but any loan above this amount must be
secured by mortgage on real property, other than
that, if any, to be erected with the loan.
For the smaller agricultural loans the Corporation
operates through its various Local Loans Board,
the organisation and functions of which are described
later in this Part of the Report. Under cross-exami-
nation, the Senior Accountant, Egunjobi, agreed that
normally under the rules of the Finance Corporation,
loans would not be issued to any Loans Board Area
unless the percentage of indebtedness was less than
10 per cent. The Corporation's policy, Egunjobi
explained, also aimed at granting agricultural loans
in such a way as to encourage diversification in the
agricultural economy of the Region.
The funds from which the Corporation grants
loans were derived from the former Western Region
Development (Loans) Board and the Colony Deve-
lopment Board. No interest is payable by the Cor-
poration for the use of these funds, totalling about
649,571. In respect of funds made available by the
Western Region Government, totalling 2,905,000,
the Corporation has to pay to the Government 3
percent interest per annum on 550,000 and 5 per
cent interest per annum on the balance, that is
2,355,000. The Western Region Marketing Board
also made a loan of 1,200,000 to the Corporation at
the United Kingdom Bank Rate of Interest. This
latter loan was provided for the acquisition of the
shares of Arab Brothers Motors Limited for which
the Corporation paid 1,100,000. We were told by the
witness Egunjobi that the Corporation laid down
rules regarding rates of interests on loan granted by it,
and Exhibit AAE.9, setting out these rates, was
tendered.4
Appendix 39 sets out in detail sources from which
the Corporation has derived its funds from 28th
April, 1955 (date of commencement of the Law under
which the Corporation was set up) to 31st March,
1962 (up to which date audited and draft accounts
were available). Before discussing the uses to which
the Corporation has put its funds it is perhaps
apposite to summarise below the information shown
in Appendix 39.
Receipts from Liquidation of former Boards
Western Region Development Loans Board


On Capital Account ..
On Reserve Account:



. 495,000
.10,410 505,410


Colony Development Board


On Capital Account:
On Reserve Account


.. 113,125
.31,036


144,161


649,571


'Day 33, p. 94.
2 Day 33, p. 100.
a Day 40, p. 27.
4 Day 45, pp. 8-9.









Profits (Losses) during period

Normal: .. 30,667
Adjustments in Management
Fees, Interest, etc. .. .. 139,762

Arising from Acquisition of Epe
Boatyard Company, Limited
From Loans


Western Production Develop.
Board 1% p.a. (ex former
Board) 150,000 lent but
repaid in 1956/57:
Western Region Government at
3% p.a .. 5
interest not paid at 5% p.a. 1

2,3
2
Western Region Marketing
Board at U.K. Bank Rate of
Interest: .. 1,2i
Interest not paid: .



Total Funds available to 31-3-62:



50,000
04,324


tion, having been shown Exhibit EAB.8, admitted
that up to October, 1961, a total amount of 1,221,641
was outstanding, out of which 102,139 represented
judgment debts.1
170,429 It is obvious from the above that the Corporation is
fully aware of the irrecoverable nature of a substantial
part of the loans granted by it is unprepared to take a
realistic view of the position. Obviously, if the
41,049 Corporation is unable to collect its own outstanding
debts it will be unable to meet its obligations to the
Government and the Marketing Board-a situation
that will prejudice its chances of receiving further
financial assistance from these two bodies.


654,324


55,000
43,076 2,598,076


00,000
69,451 1,369,451

4,621,851

5,482,900


To the extent that the Corporation has failed to pay
interest due by it in respect of loans obtained from the
Western Region Government and the Western Region
Marketing Board, to that extent the Corporation has
access to additional funds. This situation is, however,
more apparent than real as the main reason why the
interest has not been paid over is because the Finance
Corporation is unable to do so. As against Cash and
Bank Balances of 115,402 at 31st March, 1962,
the Corporation has the following interest due to the
Western Region Government and the Western
Region Marketing Board:

31 W.R. Government Loan: .. 104,324
5 per cent W.R. Government Loan: .. 243,076
Western Region Marketing Board Loan: 169,451

516,851

As at that date also, an amount of 107,846 was
shown against creditors and other credit balances.
It is also necessary to observe that the amount of
normal profit shown as 30,667 may be thrown into
a substantial loss if appropriate provision is made for
bad and doubtful balances. In this connection the
witness Chief Babalola expressed the view that about
200,000 of the outstanding loans and interest can be
regarded as doubtful balances.'
Asked a question on the Corporation's bad and
doubtful debts position, Aina answered:
'In actual fact, Sir, we have not openly acknow-
ledged either doubtful or bad debts for the simple
reason that we feel it may be misconstrued as the
particular man whom we may class as doubtful may
belong to a particular political party or something
of the sort.'2
When we asked Egunjobi, the Corporation's
Senior Accountant, whether in his opinion there were
bad and doubtful debts, he replied:
'In my opinion, certainly there are quite a
number, those especially outstanding as far back as
1956-57 and so on, but were not paid.'3
Chief Babalola, a former Chairman of the Corpora-
1 Day 49, p. 56.
2 Day 42, p. 22.
3 Day 45, p. 14.


We can now consider the uses to which the funds
summarised above have been put. Appendices 40 and
41 give the relevant information covering the period
28th April, 1955, to 31st March, 1962, and a summary
is provided below:


Investments in companies as detailed
hereafter: .
Other Investment-Federation of
Nigeria Development Loan: .
Loans made less repayments Indus-
trial (direct): ..
Agricultural (Local Loans Boards):
Increase in fixed assets (less depcn.)
Stocks, staff advances & sundry items
Balances with Bankers & cash in hand


Less Creditors & other credit balances




2,279,875

500

1,309,081
1,484,288
347,584
54,016
115,402

5,590,746
107,846


5,482,900

Investments in companies include not only the
amount paid for the shares acquired but also loans
made to the companies and balances due by or to
them on current accounts. Balances due by these
subsidiary companies are not readily recoverable.
Loans figures shown include principal amounts
outstanding together with interest due but unpaid
by borrowers. Details of the investments are given
in Appendix 41 and some account is given in the
chapters which follow on each of the investments.
With regard to the loans it is not possible to give full
details because of the large number of the loans
granted by the Local Loans Boards. We have,
however, given as Appendix 42 a schedule of indus-
trial loans of 10,000 and over, granted by the
Corporation.
Between 1958 and 1962 the Corporation made the
following investments:
Amount paid
Arab Bros. Motors Limited-100 per
cent shareholding-issued capital-
50,000 shares .. .. .. 1,100,000
Epe Boatyard Company Limited-
100 per cent shareholding-issued
capital-60,000 shares 60,000
G. L. Gaiser (Nigeria) Limited 45.5
per cent shareholding issued capital--
550,000 shares-250,000 shares .. 250,000
Great Nigeria Insurance Company Limi-
ted-eighty per cent shareholding-
issued capital--50,000 shares-40,000
shares ... 40,000
Ikeja Arms Hotel Limited-5,000 71 per
cent Cum. Pref. Shares-
100' per cent holding 128,000
and 123,000 Ordy. Shares -
63 per cent holding. J
Ikorodu Ceramic Industry-including
interest at six per cent-pending in-
vestment .. .. .. .. 60,000
SDay 49. p. 54.









In addition to the above amounts invested in the
share capital of the various companies, the Finance
Corporation also made loans to some of the com-
panies for purposes of capital expenditure and to
provide working capital. There are also balances
standing in the current accounts maintained by the
Finance Corporation and representing in the main
management charges and loan interest due to the
Corporation. As previously mentioned, Appendix 41
shows these balances.
From evidence given to us the Western Region
Government has only been able to grant the Corpora-
tion about half of the amounts of loans budgeted
over the years 1956-57 to 1961-62. The witness Aina
informed us that the Western Region Treasury offi-
cials did not at first explain to the Corporation why all
the funds promised were not available but on the
contrary the Corporation was asked to try and re-
cover as much of the loans outstanding. It was sub-
sequently that the Corporation got to realise that the
finances of the Western Region Government were
in such a state that the Government could not just
afford to grant all the loans budgeted.1

Section 2. Business Operations
In its business operations the Corporation functions
through the machinery of its executive organisation
and through the meetings of its full Board members
and those of its Agricultural, Industrial and General
Purposes Committees. The establishment of Local
Loans Board, which have been set up throughout the
Region on the basis of Local Government Council
areas, has enabled the Corporation to administer the
large number of agricultural loans (but small in
amount) which farmers in the Region require.2
In the granting of loans by the Local Loans Board
efforts were made on the one hand by the Counsel
representing the N.C.N.C. Party, the Party in opposi-
tion in the Western Region, to establish that loans
were only granted to members of the Action Group,
the Party in control of the Western Government.3
On the other hand,. Counsel representing the United
People's Party (Chief Akintola's newly-formed
political party), tried to show during their cross-
examination of the witness Aina that the one-time
Chairman of the Western Region Finance Corpora-
tion, Chief Akin-Olugbade, discriminated in favour of
his constituency-Otta and Egba Federal-by grant-
ing more loans to the farmers there during the period
1st January, 1958, to 31st August, 1959, than to any
other constituencies.4 Aina in his own evidence also
referred to such discrimination on the part of Chief
Akin-Olugbade.5 In the set-up of the Local Loans
Boards the Law provides that at least two of the
members shall be farmers.
It would appear to us that most of the defects
complained of in connection with the Local Loans
Boards and which are discussed later in this Report
stem more from the extensive nature of the Board's
operations and the remote control existing between
them and the Corporation rather than in the powers
vested in the Boards. We were informed for instance
by the former Chairman of the Corporation, Chief
Babalola, and by Aina that considerable amounts of
the loans granted by these Local Loans Boards were in
arrears, that sharp practices prevailed among Board
members and staff, that loan recipients who were
not farmers were granted loans, and that in some
instances loans were applied for and granted to dead
persons.6 In all 209 local Loans Boards have been
established to date.
1 Day 4, pp. 85-6.
2 Exhibit EOO. 25.
SDay 43, p. 84.
SDay 41. p .47.
Day 66, p. 40.
6 Day 40, pp. 63-66; Day 47, pp. 112-113.


The Corporation has granted industrial loans of
various amounts, the largest single item being
the loan of 350,000 granted to Joseph Asaboro
Limited to enable the company pay off its bank
overdrafts which it had employed hitherto as long-
term finance and consequently had been invested
in plantation expenditure. Section 14 of the Corpora-
tion Law No. 9 of 1955 clearly sets out the powers
of the Corporation to grant industrial and major
agricultural loans so long as the enterprise is establi-
shed in the Region and is calculated to further the
economic development of the Region. As a policy,
however, the Corporation will only grant the loans
where it is satisfied that the enterprise will be viable.
As all the funds made available to the Corporation,
other than those represented by assets transferred to
it by the former Western Region Development (Loans)
Board and the Colony Development Board, are
interest-bearing, it is to be expected that the Cor-
poration will require rates of interest charged out
to its customers to exceed its borrowing rates. The
Corporation rates for industrial loans, which used to
be at about five percent, now range from between
seven per cent to eight per cent. When therefore loan
recipients fall in arrears of both principal and
interest, as has been abundantly established before
us in the evidence given by Aina, Egunjobi and Chief
Babalola, the Corporation found itself in the position
where it was unable to meet its obligations to Govern-
ment and the Western Region Marketing Board in
respect of interest payments.'
A number of witnesses who testified before us in
respect of the affairs of this Corporation referred to
difficulties in realising properties used as securities
against advances, especially where those properties
were situated outside the main commercial centres.2
It would appear from the cross-examination of Aina
that no properly laid down policy exists with regard
to the granting of advances by the Corporation to
companies in which it has one hundred per cent or
majority shareholdings. Aina indeed would appear
not disturbed by the fact that over 300,000 was
advanced to the Ikeja Arms Hotel Limited for capital
expenditure without the matter having previously
been discussed, recommended by the appropriate
Committee of the Corporation, and approved by the
full Corporation. He mentioned the existence of a
block approval for such advances but was unable to
produce relevant minutes of the Corporation in
support of his evidence.3
Apart from the granting of loans the Corporation
has from time to time made investments in the equity
share capital of limited liability companies, supporting
its action by the provisions of Sections 14 (b), 14(a)
and 14(b) of its Law. The investments in equity share
capital so far made are: G. L. Gaiser (Nigeria) Limi-
ted, Airport Hotel or Ikeja Arms Hotel Limited and
Arab Brothers Motors Limited. Epe Boatyard Limi-
ted was a legacy taken over from the Western Region
Government. More detailed discussion in respect of
each of these companies will be found later in this
Part of the Report. It is necessary to observe that no
investment in equity share capital would appear to
have been made without the Corporation referring the
proposal to the members, obtaining the report of
investigating accountants or panel of its own mem-
bers and officials, and obtaining either before or
ultimately Ministerial approval. Aina was asked if he
knew of any investment which the Corporation had
made and which had not received the approval of the
Government either before or after the investment
and he said there was none.4 The payment of 50,000
to the Ikorodu Ceramics Industries falls in a category
difficult to explain. The amount was treated by the
Day 41, p. 50; Day 45, p. 14; Day 49, pp. 54-55.
2 Day 42, p. 20 and p. 29.
a Day 38, p. 10 et seq.
4 Day 36, p. 70.









Corporation as 'An Advance' pending investment and
six per cent rate of interest was to be charged thereon.
No Ministerial approval would appear to have been
obtained therefore and in fact the Corporation's
Secretary, Aina, testified before us that the Corpora-
tion held the view about that time that it was not
under the Law required to obtain Ministerial approval
before making the investments.

Section 3. Management including
Staff Matters and Staff Relations
We have a considerable volume of evidence pro-
duced before us to show that'during the greater part
of the period when Chief Akin-Olugbade was Chair-
man of the Western Region Finance Corporation,
relationship between him and Aina, the Secretary
to the Corporation, was very much strained. In fact
Chief Awolowo while cross-examining Chief Adeyi,
the Minister of Trade and Industry, suggested to
him that several times he, Chief Awolowo, had asked
for the dismissal of Aina and that the request still
continued.1 Chief Akintola in his own cross-examina-
tion of Aina also referred to the strained relationship
and how he asked Aina to apologise in writing to
Chief Akin-Olugbade. There is no doubt that this
unsavoury situation in the Corporation led to the
somewhat unhappy relationship which developed
between Aina and some of his immediate Senior
Officials, such as Otitoju and Egunjobi, the Senior
Assistant Secretary and Senior Accountant respect-
ively. We are informed, however, that this strained
relationship has been resolved as a result of the
intervention of Chief S. L. Akintola and Chief
Babalola.
Questions of alleged corruption in the granting of
loans were put to the Secretary, Aina, and he denied
having received ten per cent commission on loans
granted, in particular the loan of 350,000 to Joseph
Asaboro Limited,3 Otitoju, Senior Assistant Secretary,
however, admitted that for a number of years there
was persistent rumour in the Region to the effect
that he and his staff were in the habit of collecting
ten per cent commission in granting loans to appli-
cants.4 Otitoju would not confirm a suggestion by
one of the Counsel that Aina's first house at Ibadan
was built for him by a Mr Y. O. Carew, without
Aina having to pay because Mr Carew was granted
a loan of 30,000 to put up the Green Spring Hotel.
Other allegations against the Secretary, Aina, but
denied by him, included delaying of cheques payable
to Gamon (Nigeria) Limited, the contractors of the
extension to the Ikeja Arms Hotel, until Aina was
in a position to hand the cheque over personally so
that he could collect his commission5.
Aina was severely cross-examined on his financial
interest in a private company called Harmony House
and Furniture Company Limited and he admitted
holding 2000 shares of 1 each in the company, for
which he paid in full in July, 1960. He denied being
a director and evidence was subsequently produced
to show that the four directors were I. O. Ajanaku;
V. W. Tandy; R. T. Freeman, and W. H. Veugen.
Aina admitted signing cheques on behalf of the
company since 1st July, 1962. Aina told us that this
private company undertook the contract for the
partitioning of the 12-storey office block of the
Western Region Finance Corporation but that the
contract was awarded to the company by the Archi-
tects, Design Group (Nigeria).6 Exhibit AAE.25,
tendered by the Corporation's Senior Accountant,
Egunjobi, was a letter, dated 16th May, 1961,
written by W. Veugen, Managing Director of Har-
1 Day 16, p. 89.
2 Day 48, p. 57.
3Day 39, p. 33.
4 Day 43, pp. 14-15.
'Day 39, p. 34.
6 Day 39, p. 47.


mony House Furniture Company Limited to Design
Group (Nigeria). Paragraphs 1 and 2 of this letter
read as follows:
'With reference to the letter 9-5-61 from the
Secretary of the Finance Corporation, Mr Aina,
requesting we take in hand such partitioning as
necessary for the twelve-storey office Block at
Ibadan.
'I am pleased to quote in unit prices as per your
detail drawing 112/35.'
It was therefore obvious that Aina was not telling
the truth when he said that the contract for partition-
ing was awarded by Design Group (Nigeria).
Aina was questioned as to whether he disclosed
to the Corporation his interest in this private company
and he said 'No' but that he mentioned his interest
orally to the then Corporation Chairman, Chief
Babalola.1 Chief Babalola, in his evidence, denied
that Aina ever mentioned that he, Aina, was interested
in that company. Chief Babalola claimed also that
he knew nothing about the company.
In this matter of award of contracts for partitioning
and for supply of furniture to the Corporation's new
office premises, amounting to over 12,000, to the
Secretary's private company, and the non-disclosure
to either the Corporation or its Chairman of his
interest, we form an opinion that Aina acted impro-
perly.
The witness Chief Babalola admitted that there
were cases of embezzlements on the part of the Local
Loans Board clerks working in the field and as a
check Senior Loans Inspectors, based mostly at the
Corporation Headquarters in Ibadan, were appointed
to supervise the activities of the field Loans clerks.2
In the granting of loans there was only one case
brought to our notice where substantial amount of
loan was approved to a private concern in which a
member of the Board of the Corporation was finan-
cially interested. This was the 120,000 granted to
the Nigerian Fishing Company in 1961, the loan
having been approved in the amount of 150,000
in 1959 when Chief Sonowo, the Managing Director
of the Company, was a member of the Corporation.
The Corporation has yet to evolve a properly
defined policy in respect of its relationship and
administration of those companies in which it holds
the whole of the share capital or substantial part of it.3
While these companies have separate boards of their
own, during part of the period of our Inquiry, 1954
to 1962, the Chairman of the Corporation was appoin-
ted Chairman of G. L. Gaiser (Nigeria) Limited,
Arab Bros. Motors Limited and Ikeja Arms Hotel,
and some members of the Corporation also acted as
directors of other 'subsidiary' companies of the
Corporation, namely Arab Bros. Motors Limited
and Ikeja Arms Limited. In spite of this close relation-
ship no conscious policy on matters of staff, manage-
ment and finance was put forward by the Corporation.
We have it in evidence, however, that staff relation-
ship in G. L. Gaiser (Nigeria) Limited and Arab
Bros. Motors Limited was not entirely satisfactory.
In fact, Aina gave evidence that Alli Arab, one of the
original owners of Arab Bros. Motors Limited,
before the Finance Corporation bought all the shares
and who had undertaken to carry on with the manage-
ment of the company for at least a period of one year,
was at one stage going to resign his appointment on
the spot because of disagreement between him and
his General Sales Manager.4
As regards G. L. Gaiser (Nigeria) Limited, the
witness Chief Babalola informed us that when he
attended the meeting of the directors for the first
1 Day 39, p. 45; Day 47, p. 118.
2 Day 47, p. 113.
3 Day 42, p. 50.
4 Day 35, p. 27.








time he found them quarrelling and there was much
confusion in the Board Room.1 This deteriorating
state of affairs in the hierarchy of the directorate of
G. L. Gaiser adversely affected staff morale and with
the approval of the Minister of Trade and Industry,
Chief Adeyi, a panel was set up to investigate the
affairs of G. L. Gaiser (Nigeria) Limited. This Panel
comprised: G. A. Onogoruwa, E. 0. 0. Osinbowale
and A. A. Egunjobi. An Interim Report dated 5th
March, 1960,2 and a Final Report dated 7th April,
1960,3 were submitted and both Reports would
appear not to have been placed before either the
Board of the Finance Corporation or that of G. L.
Gaiser (Nigeria) Limited for discussion. In its
Interim Report the Panel made the following recom-
mendations:
'1. That the present Managing Director (Chief
Sonowo) should be immediately replaced by a
caretaker Managing Director;
2. That arrangements be made forthwith to
appoint a General Manager of very high
calibre;
3. That something should be done immediately
to allay the fears of the present expatriate
staff and to assure them that their future is
certain;
4. That the appointment of a General Manager
with the portfolio of technical and engineering
matters should be immediately considered.'4
All through the two Reports serious allegations of
managerial incompetence, lack of experience and
sincere interest in the Company's affairs, were
investigated and found to be proved by the investigat-
ing panel.
When Chief Akintola gave evidence before us he
referred to both G. L. Gaiser (Nigeria) Limited and
Arab Bros Motors Limited as sources of headache
to the Government of Western Nigeria. He expressed
the wish to see the companies' management and policy
governed more by commercial rather than political
consideration."
We have no evidence to suggest to us that the
Corporation Secretary, Aina, or his Senior Officials
were appointed on political grounds. In fact Aina did
not enjoy the confidence of Chief Obafemi Awolowo,
Leader of the Action Group, the Party in power in
the Western Region. The Corporation Senior
Accountant, Egunjobi, was cross-examined as to his
political leaning and he resolutely denied being a
party member of the Action Group.
Copious references were made by various Counsel
to the Debates in the Western House of Assembly
when the Bill relating to the Corporation was being
discussed. Warnings were given by members on the
Government Bench and by the Opposition that the
highest degree of circumspection must be exercised
in the appointment of members and officers of the
Local Loans Boards.6 Chief Babalola admitted that
having regard to the abuses to which the Local Loans
Boards have lent themselves, he would be prepared
to admit that the warnings given in the Western
House of Assembly were justified.7
Section 4. Observations and
Recommendations
The Finance Corporation and Local Loans Boards
Law, 1955 as amended to date states in Section 5(1)
that:
'The Corporation shall consist of Chairman, an
Executive Director and such number of other
1 Day 47, p. 126.
SExhibit BOA. 67.
3 Exhibit BOA. 67A.
4 Exhibit BOA. 67.
6 Day 85, p. 108.
6 Day 48, pp. 64 and 69
7 Day 48, p. 71.


members being not less than six nor more than
ten (to be determined by the Minister), all of whom
shall be appointed by the Minister.'
The First Schedule to the Law stipulates that the
Chairman shall hold office for a period of five years
from the date of his appointment whilst the Executive
Director and other members shall hold office for a
period of three years from the date of their appoint-
ments. All the members hold their office at the
pleasure of the Minister.
Since the Corporation came into existence in
April, 1955, there had been three substantive Chair-
men appointed, namely Chief S. L. Akintola-1955-
1957; Chief Akin-Olugbade-1957-1959; and Chief
E. A. Babalola-1959-1962. For short periods of
time Dr A. S. Agbaje and Ayo Akinsanya acted
as the Corporation's Chairmen. Both the Chairman
and the Executive Director work full time in the
Corporation.
No special qualifications are required before
members of the Corporation are appointed. In the
course of the proceedings of this Commission of
Inquiry no evidence was given as regards the qualities
required in a member. We would like to observe,
however, that from Exhibits BOA.138, 147 and 148
that during the first three years of the Corporation
members included persons familiar with agricultural,
industrial and financial matters, and their contribu-
tions to the meetings of the Corporation in those
formative years must have been invaluable. It is
appreciated that three of these members were officials
of the Western Nigeria Government and that it might
not be considered desirable to include civil servants
among Statutory Corporation members. We can see
no justification for this view and in any case there is
no reason why equally qualified and competent
persons should not be put on the Board from outside
the rank of the civil servants.
The circumstances necessitating the change of the
Chairman between 1955 and 1959 on three occasions
are fully appreciated but the Law must obviously be
aware of the advantages in having continuity in the
post of Chairman-hence the fixing of his tenure of
office as five years. It is our view that as much as
possible a Chairman of this Corporation should be
allowed to run his normal term of five years before
a change is made.
No substantial evidence was given to show the
duties and functions of the Executive Director other
than that he had a seat on the Boards of some of the
'subsidiary' companies of the Corporation. If a bold
and properly defined policy regulating the relation-
ship between the Corporation and the companies
had emerged as a result of such representation, a case
might have been made out to justify the appointment
of an Executive Director. The witness Aina described
himself as the Chief Executive Officer of the Corpora-
tion and if he performed those duties the responsi-
bilities devolving on the Executive Director could
not be all that important.
Efforts were made by some counsel to establish
that only supporters of the Action Group, the Party
in power in the Western Region, were appointed as
members of the Corporation and that even J. S.
Olawoyin, who was not a native of the Western
Region, was appointed a member for the simple
reason that he was an Action Group supporter.
While it is regrettable that such appointments should
be based entirely on members' political affiliation,
it is natural to expect that the Government in power
would select only persons who will support its policy
at the Corporation's meetings. We feel, however,
that membership of Statutory Corporations should
be diversified to some extent.
In Section 1 of this Chapter and in Chapters 2 to
4 of this Part of the Report will be found full informa-








tion as to the manner and circumstances in which
monies made available to the Finance Corporation
have been used by that Corporation.
Chief S. L. Akintola, who was the first Chairman
of the Western Region Finance Corporation, esta-
blished to our satisfaction that G. L. Gaiser (Nigeria)
Limited had been his tenant since 1953 in respect
of his property at 3 Eletu Odibo Street, Abule-Ijesha,
Yaba, that is three years before the Co-operative
Organisation took over the company and about five
years before the Western Region Finance Corporation
acquired an interest in the company. In fact Aina
admitted under cross-examination that Chief Akin-
tola's attitude to the proposal for the Finance Corpora-
tion taking an interest in G. L. Gaiser was to the
effect:
'that the Corporation had just started and had
not yet laid its foundation. And you certainly were
not of the view that it should try to bite too much
at the time. In other words, Chief Akintola was
opposed to the acquisition of the Gaisers at the
time. .and in spite of the fact that the Gaisers
were his tenants. And this opposition on the part
of Chief Akintola continued until he left the
Corporation about August, 1957.'"
Aina; the Secretary of the Western Region Finance
Corporation since its inception, appeared to us a
very competent and bold official who was prepared
to say what he felt or thought about any particular
transactions undertaken by the Corporation. His
behaviour in the witness-box, during cross-examina-
tion by Chief Akin-Olugbade, a former Chairman
of the Corporation, gave us the impression that he
could be difficult and perhaps at times impertinent.
We are satisfied that for the greater part of the time
when he had to work with Chief Akin-Olugbade as
Chairman, staff relationship was very much strained
and staff morale was at a low ebb. We are not satisfied
that Aina, as Chief Executive Officer of the Corpora-
tion, did cause an investigation to be carried out in
connection with the persistent rumours of a 'ten per
cent commission' being paid by successful loan
applicants to the Corporation staff. Whilst we have
not been provided with any proof that this commis-
sion was in fact being paid, we recommend that for
the reputation of the Corporation the allegations
should be investigated.
We have in Chapter 1-Section 3 of this Report
referred to the award of partitioning and furniture
contracts in a private company, Harmony House
and Furniture Company Limited, in which Aina had
/2000 shares and we are satisfied that Aina was not
being truthful to us in his evidence when he said
that Design Group, the Corporation's Architects,
invited the company to tender and that the contract
was awarded by that firm of architects. We believe
that Aina invited his private company to tender for
this contract and that he actually made the award but
through the Design Group. We are also satisfied that
Aina did not disclose his interest in this company to
the members of the Corporation or to his then
Chairman, Chief Babalola. In this connection we
prefer the evidence of Chief Babalola on the matter.
We are not satisfied with Aina's evidence regarding
the loan of J'liiniIII made to the Ikeja Arms Hotel
to help in the extension works to the Hotel. We hold
that Aina should have brought the matter to the
appropriate Committee of the Corporation and there
after to the full Corporation meeting. It is true that
the loan was 'within the family' but the' amount
involved was too substantial to have been dealt with
so summarily, as Aina had done. As the company is
not wholly-owned by the Corporation, the other
partner should have been called upon to. make loan
finance available to the Hotel on a proportionate
1 Day 41, pp. 51-52.


basis. We have no sufficient evidence on this matter
and we therefore recommend that the question be
investigated.
Aina was not only Secretary of the Corporation but
also its financial adviser in 1958 and 1959 and he
should have seen to it that the amount of 250,000
injected by the Corporation into G. L. Gaiser
(Nigeria) Limited to provide that company with
working capital was not used to pay up overdraft
balance due to the Co-operative Bank. Some satis-
factory arrangement should have been insisted upon
both before and after thd investment to ensure
that this 250,000 was employed for the purpose for
which the Finance Corporation was called upon to
provide the money.
We have already referred to the evidence given by
Aina, T inhi and Babalola, as conclusive proof
of the existence of substantial bad and doubtful
debts which the Corporation was still unprepared to
face and provide for. We strongly recommend an
early investigation into this matter so that the figures
shown as loan balances can be more realistically and
correctly presented. The Corporation appears to be
very short of funds and substantial- parts of the loan
finances promised to it by the Government are still
outstanding. It is also not easy for the Corporation to
make recoveries from its outstanding loans. Our
recommendation is that in view of the large amounts
of loans outstanding a re-appraisal of the Corporation's
loans policies be carried out and some consideration
given to consolidating the field so far won before
making any further advance.
We pointed out elsewhere that the first Chairman
of the Western Region Finance Corporation was
Chief S. L. Akintola who was succeeded in the post
by Chief Agbaje. We also expressed our views on
Chief S. L. Akintola and his performances in another
part of this Report. Chief Agbaje was succeeded as
Chairman of the Western Region Finance Corporation
by Chief O. B. Akin-Olugbade who gave evidence
before us. We have abundant evidence with regard to
Chief Akin-Olugbade on which to come to the
conclusion that during his tenure of office as Chair-
man of the Western Region Finance Corporation
staff relationship in the Corporation was all but
cordial. In particular, relationship between him and
the Secretary of the Corporation Mr Aina became so
difficult that he had to issue a query for Mr Aina
accusing him of various acts of insubordination.
We do not accept that Chief Akin-Olugbade was a
witness of truth and his performance in the witness
box was most disgraceful. It is a matter for regret
that a lawyer who ought to know better had gone into
the box and had demonstrated the most shameful
conduct, not only by his demeanour, but also by his
answers to questions put to him. We are not satisfied
that he gave satisfactory explanations of his conduct
with respect to the payments for Arab Brothers
(Motors) Limited and in particular as to the circum-
stances under which he travelled to the United
Kingdom on the same plane with one of the Arab
Brothers when he was proceeding to the United
Kingdom to cash the cheque for 450,000. The
various manoeuvres in the Western Region Finance
Corporation prompted by him with respect to the
opening of current accounts in London for the
Western Region Finance Corporation the suggestion
of identifying the drawee of the cheque to the bank,
the carriage of letters to and from the United King-
dom by Chief Akin-Olugbade himself, in connection
with this transaction, are all suggestive although they
do not constitute any conclusive evidence of dis-
honesty in this direction. We recall, however, that we
are not satisfied with Chief Akin-Olugbade's
supposed explanation of his own conduct and move-
ments with respect to this transaction. On the matter
of the purchase of Arab Brothers (Motors) Limited








we take the view that Chief Akin-Olugbade did not
bring to bear upon the transaction the normal busi-
ness experience which the ordinary man would
exhibit in his own business. We shall point out in
other parts of this Report how inflated the purchase
price of that business was, let alone the fact that no
investigation commensurate with the size of the
investment made in that project was ever carried out
before the payment of over 1 million to the pro-
prietors.
We have not received much evidence about the
performances of Chief Akin-Olugbade in G. L.
Gaiser (Nigeria) Limited but record that he was
such Chairman by virtue of his being as well the
Chairman of the Western Region Finance Corpora-
tion. It is significant that whilst he was Chairman of
the Board of Directors of G. L. Gaiser (Nigeria)
Limited the business in which along with Chief
Shonowo he was interested, i.e. the Nigerian Enginer-
ing and Transport Company was sold to G. L. Gaiser
(Nigeria) Limited at a cost of over 8,249. No
independent investigation took place about the affairs
of this company before the sale at which time the
company was sadly in debt and was indeed running
a heavy overdraft account in the Merchants Bank
Limited. This deal was not disclosed to the Board of
Directors of G. L. Gaiser (Nigeria) Limited although
Chief Akin-Olugbade got back his own share of the
capital contribution to the business, i.e. 700. We
consider that he was dishonest in not disclosing this
transaction to the Board of Directors of G. L. Gaiser
(Nigeria) Limited and we accept the evidence of
Chief Shonowo in this connection that he did apprise
Chief Akin-Olugbade of his proposals to sell the
business of Nigerian Engineering and Trading'Com-
pany to G. L. Gaiser (Nigeria) Limited.
Again we record that Chief Akin-Olugbade paid
a total amount of 20,000 described by him as
advances to Alhaji Gbadamosi on account of the
Ikorodu Ceramics Industries without obtaining any
document whatsoever to support the payment. No
written applications seem to have been made for this
loan; nor was Chief Akin-Olugbade able to satisfy
us of the circumstances in which he paid out the
money. It seemed as if he just could not remember
about it all. It is absolutely necessary that the con-
duct of Chairmen of Statutory Corporations should
be completely above-board and we sincerely wished
that Chief Akin-Olugbade had been so.
Chief Akin-Olugbade was succeeded as substantive
Chairman of the Western Region Finance Corpora-
tion by Chief E. A. Babalola. He also testified before
us and we take the view that by and large he was a
witness of truth. He re-organised the scattered feelings
of the staff of the Western Region Finance Corpora-
tion after Chief Akin-Olugbade had left and was
gratified to tell us of the improvement in staff rela-
tionship during his tenure of office. He appears to us
to be a diligent and competent worker with the ability
for the duties of a Chairman of a Statutory Corpora-
tion.
We are satisfied, however, that he knew of the
reasons why the report by Mr Egunjobi, the Accoun-
tant of the Corporation, on Chief Shonowo was not
discussed at the Board Meeting. The evidence is
abundant to the effect that that Report came to his
possession and that also in conjunction with Chief
Adeyi who was the Minister of Trade and Industry
the report was suppressed and withdrawn from the
records of the Western Region Finance Corporation.
We take the view that Party political considerations
influenced Chief Babalola and Chief Adeyi to do this
having regard to the popular position held by Chief
Shonowo in the Action Group.


He refused to pay Dr Maja's loan of 120,000 on
the grounds that no specific allocation of funds
existed to meet the loan, but later had to pay these
on the instructions of the Premier. We are satisfied
with regard to the attempts made by him to recover
some of the loans outstanding in favour of the
Western Region Finance Corporation and take the
view that if he was allowed to proceed with that
exercise in his own way, quite a substantial amount
of such debts would have been recovered.
The witness Mr B. O. Aina has been the Secretary
of the Western Region Finance Corporation since its
inception. He is also the Financial Adviser of the
Corporation. By and large he appears to us as a most
competent official of the Western Region Finance
Corporation having joined its predecessor as far back
as 1952 when he was the only permanent and full
time member of the staff. He had seen the Corpora-
tion grow to its present size and may perhaps be
described as the most knowledgeable official in the
Western Region Finance Corporation. He is qualified
both as a Chartered Secretary and as a Certified,
Accountant and was able to co-ordinate both these
sectors of the activities of the Corporation.
Nevertheless we record that he gave us no satis-
factory explanation about the loan to Harolds Limited
and the investments made in G. L. Gaiser (Nigeria)
Limited. As the Financial adviser to the Western
Region Finance Corporation it was clearly his duty
which equally clearly he did not perform, to advise
the Chairman about the impropriety of acquiring the
business of G. L. Gaiser (Nigeria) Limited except on
terms which will look after the heavy overdraft
account of that company and thereby avoid the
present situation characterized by a shortage if not
absence in that company of working capital. He
appears to us to have an answer to every question and
seemed to be capable of being difficult on occasions.
We take the view that as an Executive Officer of the
Corporation he should be in closer touch with the
subordinate members of the staff and he should give
greater scope for co-ordination of activities between
the various heads of sections in the Corporation. His
connection with the Harmony House Furniture
Company Limited is being discussed elsewhere in
this Report and we reject his attempts to suggest
that he made a clean breast of his actions with this
company to the Western Region Finance Corporation
and indeed to the Chairman, Chief Babalola. We
prefer and accept in this connection the version of
Chief Babalola and we think that considering the
position of Mr Aina with the Western Region
Finance Corporation and the duties of awarding
contracts of the type contemplated by this company,
Mr Aina had put himself in a position in which
his respective loyalties must and did clash.
We find nothing wrong with the other members of
the staff who gave evidence before us and indeed the
evidence is not sufficient for us to come to any proper
appraisal of their performances. We refer to Mr
Egunjobi the Senior Accountant and Mr Otitoju, the
Senior Assistant Secretary. Although these witnesses
gave evidence on what may for the most part be
described as matters of routine, yet they did assist us
in our probe by their evidence. Mr Otitoju failed to
advise the Western Region Finance Corporation
properly on the purchase of Arab Brothers (Motors)
Limited and therefore was a party to whatever loss
the Western Region Finance Corporation sustained
in that venture. Neither Egunjobi nor Otitoju has had
any appreciably long services in the Corporation, but
it is hoped that with the acquisition of experience
these two officials could prove their usefulness in
the management of the Corporation.








CHAPTER 2
INVESTMENTS
Section 1. Arab Brothers Motors Limited


Exhibit BOA. 122, tendered before us by witness
Aina shows the beginning of how the Western Region
Finance Corporation came to be interested in the
Arab Brothers Motors Limited. The Exhibit is
a letter dated the 12th May, 1959, written by H. Arab,
Director of the Company, and addressed to the Hon.
C. D. Akran, Minister for Economic Planning.
The witness admitted that at that time the Hon. C. D.
Akran was also acting as the Premier of Western
Nigeria.1 H. Arab estimated the value of his com-
pany's business at 1,400,000 and proceeded to set
out how he arrived at the figure:

Fixed assets at present value, as per
attached list, up to 1st May, 1962,
Approx. .. .. .. .. 890,000
New vehicles in stock at present, 1st
May, 1959 .. .. .. 113,000
Spare parts machinery and stock, etc.,
1st May, 1959 approx. .. .. 127,000
Debtors, approximately: .. 92,000

1,222,000
Goodwill, twenty per cent: .. .. 178,000

1,400,000

No mention was made about liabilities and it would
therefore appear that the owners of the business
would be prepared to pay the liabilities out of the
1,400,000 they were demanding.
From Exhibit BOA. 122, we were able to obtain
some information on the Arab Brothers Motors
Limited. It would appear that the company was
established in 1933 and was substantially owned by
two brothers, Hassib Arab and Ali Arab. Its main
business is the sale of cars and trucks, motor spare
parts and accessories. It also undertakes servicing
and maintenance of various types of vehicles. It had
at the date on Exhibit BOA. 122, that is 12th May,
1959, the sole distributorship in Nigeria of the
Rootes Group (the Hillman, Humber, etc. vehicles),
Chrysler Corporation of U.S.A. and the Dodge Bro-
thers of U.K: (De Soto Cars and Trucks); the
Perkins Engines and Pirelli Tyres and Tubes. The
company's headquarters was in Lagos and it had at
that time eight branches in Nigeria, namely Kano, Jos,
Ibadan, Kaduna, Zaria, Enugu, Aba and Port
Harcourt.
The offer from H. Arab would appear to have been
passed on by the Ministry of Economic Planning to
the Minister of Trade and Industry, who later
referred it to both the Chairman of the Western
Nigeria Development Corporation and the Chairman
of the Western Region Finance Corporation. The
Development Corporation Chairman considered it but
did not show undue enthusiasm whereas the Finance
Corporation Chairman wrote on the 8th June, 1959,2
to the Ministry of Trade and Industry that he felt
sure 'the acceptance of the offer, subject to expert
opinion and advice, would be worthy venture' and
suggested that the Finance Corporattion be provided
with sufficient funds to acquire, after all necessary
investigation, the Arab Brothers Motors Limited.
Chief Akin-Olugbade was the Chairman of the
Finance Corporation at that time and he set out in his
letter referred to above3 matters on which expert
opinion and advice would be required before the
business would be purchased, namely:
1Day 39, p. 25.
2 Exhibit BOA. 125.
3 Exhibit BOA. 125.


'(i) the healthy state of the company's account;
(ii) the proper value of its fixed assets and terms
of leaseholds;
(iii) proper evaluation of the stock of goods at the
time of sale;
(iv) prudent computation of its goodwill based
on the profits declared;
(v) reliable information regarding the company's
contracts with its customers locally and
abroad;
(vi) accurate or detailed figures of the net
profits for the past three years;
(vii) present relationship between management
and staff;
(viii) tenure and conditions of service of the
existing managers, engineers and so on'.
There can be no doubt that if the investigation envi-
saged by Chief Akin-Olugbade was carried out with
great care and highest professional skill and compe-
tence, such report as might be produced would be
invaluable in guiding the Finance Corporation as to a
fair and reasonable price that should be paid for the
shares of the company. With the points to be investi-
gated so lucidly set out, the Ministry of Trade and
Industry in their letter dated 25th June, 19591 directed
the Corporation to proceed forthwith with the investi-
gation proposed and:
'to submit a report accordingly to this Ministry
at the earliest opportunity.
2. The Honourable Minister has indicated that
he should want immediate action taken on this
subject and that he would like to have an interim
progress report.by the middle of July.'
All the witnesses who testified before us in con-
nection with the purchase of the Arab Brothers
Motors Limited admitted that the transaction was a
hurried business2 and responsibility for this rush
would appear to fall on the Ministry of Trade and
Industry, the responsible Minister at the time being
Chief Adeyi. The witness Otitoju, Acting Secretary
of the Corporation at the time of the negotiation,
testified before us that he was not pleased with the
way the negotiation was conducted 'because we
were being rushed. I told him (meaning the Chairman)
we were being rushed and that they should have
given us more time to investigate this business.'3
Two days after writing to the Finance Corporation
to proceed with the necessary investigation, J. O. I.
Longe, the Acting Permanent Secretary who also
wrote the letter of 25th June, 1959, sent another
letter to the Finance Corporation, dated 27th June,
19594 which reads as follows:
ARAB BROTHERS MOTORS LIMITED
I am directed to refer to paragraph 2 of my letter
ref. C.220/18 of the 25th June, 1959, and to state
that the Honourable Minister's request is that the
whole operation, i.e. the entire action on the points
enumerated in your paragraph 3(i) to (viii) should
be completed by the 15th of July, 1959.
2. I should be grateful if you would take imme-
diate action on this.
3. A copy of my letter under reference is
attached for ease of reference.'
Although it was suggested by Chief Akin-Olugbade,
while cross-examining the witness Otitoju that there
were competitors such as the United Africa Company
Limited and the Northern Region Development
SExhibit BOA. 126.
2 Day 39, p. 25; Day 42, p. 78.
3 Day 42, p. 77.
4 Exhibit BOA. 127.








Corporation who were interested in the purchase of
the business, no evidence was produced to substan-
tiate this suggestion.1 It is therefore difficult for us to
understand why in the investigation of a company
that would involve an investment of 1,100,000, so
little time should have been allowed by the Ministry
of Trade and Industry. We have it in evidence2 that
the firm of Accountants, Messrs. Z. O. Ososanya and
Company, employed to carry out the necessary
investigation were not instructed until 1st July, 1959;
so that on the basis of the Ministry's letter of 27th
June, 1959, only two weeks were allowed to the
investigating accountants to submit their report.
In a letter dated 17th July, 1959, addressed by the
Chairman of the Finance Corporation, Chief Akin-
Olugbade, to Messrs. Z. O. Ososanya and Company3
the investigating accountants were referred to their
first and detailed report and recommendations dated
the llth July, 195 ). and were requested to complete
their work on the reports of the Valuer and Chief
Engineer and forward their final report not later than
4 p.m. of the date of the letter, that is the 17th July,
1959. In the minutes of the Emergency Meeting of
the full Corporation held on the 20th July, 1959, and
tendered before us as Exhibit BOA. 113, Chief
Akin-Olugbade was quoted as having reported to the
meeting as follows:
'It had not been possible for some of the experts
appointed to investigate the affairs of the com-
pany to make full investigation because of the
shortness of the period.'4
It is correct that on the 30th June, 1959, H. Arab
wrote again to the Hon. C. D. Akran5 as follows:
'It is our wish to finalise this matter before the
end of July and if this is not accomplished we shall
with regret have to withdraw our offer'.
H. Arab's letter (Exhibit EOO. 10) was, however,
written three days after the letter of the 27th June,
1959, from the Ministry setting a deadline date to the
Finance Corporation for submitting the Report on the
investigation into the affairs of Arab Brothers Motors
Limited.
We do not propose to comment in detail on the
two reports submitted by Messrs. Z. O. Ososanya and
Company-the first, which is the main report is
dated llth July, 19596, and the other is dated 17th
July, 19597. The first report put the net worth of the
business at a figure of 1,161,815, including goodwill
valued at 171,474. The second report showed the net
worth as 1,341,429, including goodwill valued at
200,000 and revised valuation figures for furniture
and equipment and stock of spare parts and vehicles
as prepared by Van Hoof, who at that time was the
Chief Engineer of G. L. Gaiser (Nigeria) Limited. It
is necessary to point out that in the computation of
goodwill adjustments made to the net profits figures
for each of the five years to 31st March, 1959, were not
correctly made because errors of principles were
made in adjusting for stock under valuation. What
appears a serious defect in the investigation reports of
Messrs. Z. O. Ososanya and Company is the role
which the firm assumed by undertaking to value the
Company's freehold and lease land and buildings. In
Exhibit BOA. 54, the Accountants wrote:
'We called at the offices of a firm of Chartered
Valuers and Estate Agents to ascertain if the firm
could undertake a quick valuation of the present
values of the headquarters buildings of the com-
pany at Ebute-Metta in order to test whether the
opinion we had already formed about the book
1 Day 43, pp. 52-53.
2 Exhibit BOA. 54, p. 1.
3 Exhibit EOO. 13.
4 Day 38, p. 49.
6 Exhibit EOO. 10.
Exhibit BOA. 54.
7 Exhibit EOO. 17.


values of the company's headquarters was right or
wrong. Not only was the fee quoted prohibitive but
also the time limited given could not be complied
with.'
The Finance Corporation did in fact instruct one,
P. H. Abbey, B.s.c. (Est. Man.), A.R.I.S.C., A.A.I.,
to undertake the valuation of the company's pro-
perties at Lagos and Apapa. Abbey submitted his
report on the 15th July, 1959 and there is evidence
before us that Messrs. Z. O. Ososanya and Company
were sent a copy of this Valuation Report1. In
explaining why they rejected the report of this quali-
fied valuer, Messrs. Z. O. Ososanya and Company
wrote in Exhibit EOO. 17:
'We have also received the valuations of a
Chartered Surveyor in respect of the Lagos
Buildings of ARAB BROTHERS MOTORS LIMITED. In
our opinion, the valuations of the Chartered Sur-
veyor are grossly conservative even though we are
no Surveyors...... In the absence of detailed
calculations of how the Surveyor arrived at his
valuations, we are unable to accept his valuations.'
The basis of valuation adopted by the accountants
was to multiply the cost of the buildings at Denton
Street, 87 Griffiths Street, and 2 and 4, Coates Street,
namely 111,954 by 5, thus giving a valuation figure
of 559,770 for the headquarters building of the
company. These buildings were valued by P. A.
Abbey, a qualified valuer, at 300,000. In respect of
the buildings at Hall and Liverpool Roads, the cost
of 67,706 was multiplied by 4 in order to give the
figure of 270,824 used by the accountants in their
Investigation Report.2 When witness Ososanya, the
sole partner of Messrs Z. O. Ososanya and Company,
testified before us he attempted to explain why his
firm had to use the multipliers 5 and 4 by saying that
from his knowledge he was aware that the prices of
steel, sand and stones had gone up six or seven times
since the erection of the buildings under valuation
and that consequently if those buildings were to be
put up at the date of his firm's valuation they would
cost nothing less than the valuation figures used in
Report.3 We hold the view that the firm of Z. 0.
Ososanya and Company, Certified Accountants, were
wrong in rejecting the valuation figures provided by
P. A. Abbey and that they acted improperly in
multiplying the cost of the properties mentioned
above by 5 and 4. As professional accountants they
were not qualified to undertake the valuation of
landed properties. The Corporation Secretary, Aina,
who also is a certified Accountant, and the Senior
Accountant, Egunjobi, both agreed that faced with
the situation Ososanya and Company found them-
selves, they (witnesses) would have used Abbey's
valuation figures or adopted the values of the proper-
ties as shown in the audited balance sheet of Arab
Bros Motors Limited.4
With regard to the purchase price of the shares in
the company, the Finance Corporation eventually
paid the sum of 1,100,000 for the company's
50,000 shares of 1 each, fully issued and fully paid
up. The witness Aina considered that the shares
should not have been bought for more than 400,000,
and that is after allowing 100,000 for purposes of
outbidding any other competitors. Witness based his
valuation on the profit figure of 25,127 for the year
ended 31st March, 1959, and thought twelve years
purchase thereof, approximately 300,000, a reason-
able figure. He contended that as the purpose of
buying the business was to carry on the motor and
spare parts trade it was not necessary to value the
building properties as most of them were purely for
1 Day 42, p. 85.
2 Day 42, p. 85.
a Exhibit BOA. 54. p. 14; and Exhibit BOA. 56. p. 2.
4 Day 92, pp. 57-58.








residential purposes. 1 The Senior Accountant of the
Finance Corporation, Egunjobi, testified to the effect
that he would be prepared to pay 700,000 for the
shares of the company-in doing this he would be
accepting the valuation figures of stock and inventory
by Van Hoof and the balance sheet figures for the
landed properties. If, however, he had valuation by
experts of the landed properties he would be prepared
to accept such valuation figures. It is apparent from
his evidence that the witness Egunjobi was somewhat
confused as to the various figures put before him2
The business of Arab Bros. Motors Limited was
established in 1933 and the main activities were the
distribution of motor vehicles and sale, wholesale,
and retail, of vehicle spare parts, accessories, machi-
nery, tyres, grease and oil. The average profits of the
company for the five years ended 31st March, 1959,
amounted to 15,919 in accordance with the audited
Accounts of the company. This average annual profit
was considered by the investigating accountants,
Messrs Z. O Ososanya and Company, as having been
considerably understated by reason of wrong stock
valuation figure, excessive provision for depreciation
and a high level of directors' remuneration. Since
purchase of the company the net profits have been
as follows:


Year to 31st March, 1960: ..
Year to 31st March, 1961: ..
Year to 31st March, 1962: Loss


19,500
1,238
. (25,848)


The above results have been arrived at after adding
back management fees payable to the Finance Corpo-
ration and after revaluing the company's fixed assets
on the basis used by the investigating accountants
and calculating appropriate depreciation on the
enhanced figures. It is obvious that on the basis of
these adjusted profit and loss figures it would appear
that the Finance Corporation had paid too high a
price for the shares acquired.
Since the acquisition of the company the Finance
Corporaton had made only a loan of 35,000 to the
company. This amount of loan was not granted
directly by the Finance Corporation but by the
Western Region Government-in fact on the direc-
tion of the Acting Premier, Oba Akran. This loan was
used by the company in the purchase of a leasehold
landed property at Apapa on which a store was built.
The transaction apparently did not have the support
and approval of the Finance Corporation and would
appear to have been carried out on the direction of the
then Managing Director of the Company, Chief
Olukoya.3 It is worth mentioning that Chief Adeyi,
who was Minister of Trade and Industry, in his
evidence informed us that Chief Olukoya, who was
described as father-in-law to Chief S. O. Shonibare,
the Managing Director of the National Investment
and Properties Company Limited, was appointed the
Managing Director of Arab Bros. Motors Limited
at the request of Chief Obafemi Awolowo4
The payment of the purchase consideration of
1,100,000 to the vendors of the shares, Hassib and
Ali Arab, was made as to 650,000 in Lagos and as
to 450,000 in London. The cheque for 650,000
was sent to Chief Ayo Rosiji, then the Federal
Minister of Health, under cover of a letter dated
31st July, 1959,5 for delivery to Hassib Arab. The
explanation given was that Chief Ayo Rosiji's legal
firm held the retainer of Arab Brothers Motors
Limited in Ibadan. Leading Counsel for the N.C.N.C.,
in his cross-examination of witness Otitoju and wit-
ness Egunjobi, the Senior Assistant Secretary and
Senior Accountant respectively of the Finance
1 Exhibit BOA. 53; and Day 44, pp. 59 and 63.
2 Day 35, pp. 38 et seq.
2 Day 44, pp. 60-63.
SDay 49, pp. 49-50.
Day 16, p. 91.


Corporation, tried to establish that there was some-
thing sinister in forwarding the cheque for 650,000
. through Chief Ayo Rosiji, who was then Federal
Secretary of the Action Group.
With regard to the payment of 450,000 made in
London, Leading Counsel for the N.C.N.C. also
tried to establish that the procedure adopted was
not only abnormal but also mysterious. By a letter
dated 30th July, 1959,1 the National Bank of Nigeria
Limited, London, was required to pay the sum of
450,000 to Hassib Arab on identification. The
Chairman of the Finance Corporation, Chief Akin-
Olugbade, while admitting that he travelled in the
company of Hassib Arab to London, denied thrt he
identified Hassib Arab. He explained that the officials
of the National Bank of Nigeria Limited said that it
was unnecessary for Hassib Arab to be identified
before payment of the 450,000 was made to him.
Photostat copy of the cheque was tendered2 and this
shows that Cheque No. 4651 for 450,000 was
drawn on 4th August, 1959, by the National Bank of
Nigeria Limited in favour of Hassib Arab against
National Bank of Nigeria's Account at the National
Provincial Bank Limited, Overseas Branch. The
Cheque, which was crossed 'Not Negotiable,' would
appear to have been paid into Hassib Arab's Midland
Bank Account.
We formed the impression that there was nothing
wrong in the cheque for 650,000 being sentthrough
Chief Ayo Rosiji, although we agree that the procedure
adopted was unbusinesslike. We also do not think
that there was anything sinister in the payment of
450,000 to Hassib Arab in London; and we come
to the conclusion that the proposal to open an account
for the Finance Corporation in the National Bank of
Nigeria Limited, Lodon, with the 450,000 held
by that Bank for payment to Hassib Arab arose from
confused thinking on the part of the officials of the
Corporation.
We observe that Chief Akin-Olugbade had himself
prepare the Vending Agreement3 in respect of the
purchase by the Finance Corporation of the shares
of Arab Brothers Motors Limited. It is a matter for
regret, however, that the Agreement of Sale did not
require the former directors to undertake to serve the
company for at least a period of three years instead
of the one year provided for.

Section 2.-Epe Boatyard Company Limited
The Epe Boatyard was transferred in April, 1958,
by the Western Region Government to the Western
Region Finance Corporation and the business was
then formed into a limited liability company. Up to
31st March, 1962, the Finance Corporation had
invested the following amounts in the Company:


60,000 ordinary 1 shares at par ..
Loan Account
Current Account (unpaid loan interest
and advances for payment of wages
and other expenses)



60,000
13,300


4,482


77,782

The witness Aina stated that the Western Region
Government passed on the Epe Boatyard to his
Corporation as 'a dead baby' to be enlivened by the
Corporation4 Mr Jackman who was recruited from
the Federal Department of Commerce and Industries
managed the Company from 1958 until August, 1961,
when he had to be dismissed for gross mismanage-
ment, after which it was discovered that a deficit of
26,000 had been incurred by the company. The
1 Exhibit OA. 310.
2 Exhibit BOA. 129.
3 Exhibit OBAO. 12.
4 Exhibit BOA. 131.








main reasons for this phenomenal loss was partly
due to lack of proper costing system and consequently
the sale of boats at uneconomic prices.
A new Manager, Mr B. Wilkes, has now been
appointed and proper job costing introduced.
Here again we find the effect of the failure on the
part of the Finance Corporation to define precisely
its policy in dealing with its subsidiary undertakings.
The exercise of proper control on the affairs of the
Epe Boatyard Company Limited by calling for
regular financial and operating reports from the
management of this company would have helped in
finding solutions to some of its problems at a most
appropriate time.

Section 3. G. L. Gaiser (Nigeria) Limited
We were informed by the witness Aina that the
Finance Corporation were invited by the Co-opera-
tive Group of Western Nigeria in 1957 to participate
in the equity share capital of G. L. Gaiser (Nigeria)
Limited with a view to providing the company
with working capital. The Co-operative Group had
taken over in 1956 250,000 shares of the issued 250,000
shares of 1 each in the company after the proprietor,
Rolf H. E. Brettschneider had gone bankrupt in
Germany late in 1955.1 Aina gave as the second
reason why the Finance Corporation considered it
necessary to invest in the company the fact that at the
time of making the investment his Corporation had
given out about 250,000 in loans to bus operators
and considerable difficulties were being experienced
by these bus operators in having their vehicles pro-
perly serviced and maintained, with consequential
effect on the operators' ability to repay their loans
and meet their interest payments. As G. L. Gaiser
(Nigeria) Limited were distributors of motor vehicles
and maintained workshops, considerable benefits
would be derived by the Corporation's bus loan
recipients.
The Corporation was allotted 250,000 shares out of
the unissued shares at par, the relevant resolution
for the acquisition of the shares dated 23rd January,
1958, were as follows:
'Resolved that the negotiations concluded on
behalf of the Corporation by which the Corporation
could purchase 250,000 shares in G. L. Gaiser
(Nigeria) Limited at the rate of 16s. each on condi-
tion that all shareholders could be subsequently
called upon to pay 4s. on each share be and they
are hereby approved and that the Chairman and the
Secretary be and they are hereby authorised to
perfect all details regarding the investment.'
Professional valuation of the worth of the shares as at
31st March, 1957, based on the audited balance sheet
of G. L. Gaiser (Nigeria) Limited was carried out and
this valuation showed a price per share of 19s.11ld.
The valuation report contained the following para-
graph:
'No periodical Balance Sheet and Trading and
Profit and Loss Accounts are prepared by G. L.
Gaiser (Nigeria) Limited and although a Trial
Balance at 30th September, 1957, has been supplied
to us, no information is available as to the value of
stock held at that date. It has therefore not been
possible to calculate the value to be placed on the
shares at a date subsequent to 31st March, 1957.2
When the company's audited balance sheet at
31st March, 1958, was available it showed a loss for
that year of 72,427, thus suggesting that the
Finance Corporation should have paid about 14s.10d.
for each 1 share if it had purchased on the basis of
the balance sheet as at 31st March, 1958. In our
view the Corporation should have insisted on up-to-
1 Day 36, p. 79.
SDay 35, p. 70.


date accounts being made available to it before
deciding on the purchase price of the shares rather
than relying on valuation figure based on a balance
sheet which was ten months old at the date of
acquisition of the 250,000 shares in the company.
We have already mentioned that one of the main
considerations which led to the Finance Corporation
investing in G. L. Gaiser (Nigeria) Limited was to
provide working capital for the company. It was in
evidence before us that out of the amount paid in by
the Corporation about 177,000 of it was utilised
directly or indirectly in redeeming the bank over-
draft due by G. L. Gaiser (Nigeria) Limited to the
Co-operative Bank of Western Nigeria.1 We are
satisfied that the Chairman of the Finance Corpora-
tion and his members were not informed that it
was the intention of the Co-operative Group to have
this substantial overdraft balance paid up out of the
money made available by the Corporation, especially
as the bank overdraft was owing to an institution with-
in the Co-operative Organisation. We hold the view,
however, that Aina knew the intention of Bateye,
Chairman of G. L. Gaiser (Nigeria) Limited and
a representative of the Co-operative Organisation in
the company to apply the greater part of the money
paid in by the Finance Corporation to wipe off the
overdraft. There would therefore appear to be justi-
fication in the strong protest which the Chairman of
the Finance Corporation seemed to have made on.
knowing what the position was.2 It is difficult also to
resist coming to the conclusion that part of the
reasons for the adverse trading position of the com-
pany after the investment by the Finance Corporation
was due to the use of 177,000 in redeeming the
bank overdraft, thereby leaving the company short
of working capital.
The witness Bateye who negotiated the original
purchase of G. L. Gaiser (Nigeria) Limited on
behalf of the Co-operative Organisation admitted
that his Organisation paid altogether 76,000 for
the 250,000 shares of the company.3 In Exhibit
OB.2-'A Report into the Organisation, Working
and Financial Condition of the Co-operative Supply
Association Limited-Western Nigeria' submitted
by a team of three from the Co-operative Whole-
sale Society Limited, in the United Kingdom- the
following statement appeared on page 29:
'The March 1957 accounts of Gaiser Limited are
not yet audited and as only the Lagos trial balance
was submitted to us for examination we were
unable to form a precise opinion as to the worth of
the shares but it would appear that at the date of
purchase, the net assets of the company were
worth considerably more than the purchase price.
Gaiser Limited has a good reputation in Nigeria as
an old-established company and the object of the
purchase was said to be to provide a technical
arm to the Co-operative Movement. At present
Gaiser Limited is handicapped by insufficient
capital.. .'
It is a matter for regret that when the witness
Bateye was negotiating for the issue of fresh capital
to the Finance Corporation he failed to disclose the
cost of the original 250,000 shares bought by the
Co-operative Group. We consider that such disclo-
sure was necessary as both the Co-operative Organisa-
tion and the Finance Corporation were arms of the
same Government.
We come to the conclusion that in respect of the
purchase of the shares in G. L. Gaiser (Nigeria)
Limited the Finance Corporation should have insisted
on properly audited accounts being prepared as near
to the date of purchase of the shares as possible and
1 Exhibit BOA. 103, para. 8.
2 Day 37, p. 78.
3 Day 37, pp. 78-81.









not have relied for their guide, as Aina put it, only
on a valuation based on the balance sheet dated 31st
March, 1957.1
Knowing that the Corporation was being invited to
help provide additional working capital for the
company and bearing in mind that both the Corpora-
tion and the Co-operative Organisation are arms of
the same Government, Bateye should have disclosed
to the Corporation how much the original issued
shares of 250,000 had cost the Co-operative Organisa-
tion and negotiation could then have been carried out
with the Finance Corporation in full possession of all
the material facts.
In view of the dire need of the company for working
capital, the Finance Corporation should have seen to
it that existing creditors of the 'family group', such
as the Co-operative Bank, undertook not to press for
their debts. The Finance Corporation having failed to
ensure this, Bateye, as Chairman of G. L. Gaiser
(Nigeria) Limited should have consulted the Corpora-
tion before the appropriation of 177,000 to redeem
the bank overdraft due to the Co-operative Bank of
Western Nigeria.
From 2nd February, 1959, to 31st March, 1960,
Chief M. A. K. Sonowo, who was one of the witnesses
who testified before us, was the Managing Director
of G. L. Gaiser.2 Evidence was given to show how
Chief Sonowo extended the credit facilities available
to the company and the company's agencies.3 Evi-
dence was also produced to show that without con-
sultation with or approval of the board of directors of
G. L. Gaiser (Nigeria) Limited, Chief Sonowo sold
to that company, on the 27th October, 1959, a private
partnership business in which he and Chief Akin-
Olugbade, at that time Chairman of both G. L.
Gaiser (Nigeria) Limited and the Finance Corpora-
tion were interested.4 This partnership was called
Nigerian Engineering and Trading Company and
all its assets would appear to consist of three
Maugarius Deutz lorries, head pans and shovels
together with a shed built on a plot of land at
100, Agege Motor Road, Idi-Oro, and in respect of
which land two years' rents at the rate of 300 per
annum were paid with effect from 22nd November,
1958.6 The three vehicles were bought in December,
1958, and cost as follows:


Purchase price of vehicles:
Insurance:
Licences: ..


5,938 10 0
307 16 0
195 -

6,441 6-


When the business was sold to G. L. Gaiser on the
27th October, 1959, Chief Sonowo received a cheque
of 8,249. 16s. 7d., which he explained to us was
made up as shown below:


The amount owing the Mer-
chants Bank or overdraft
in the Merchants Bank:
Rent paid on the leasehold
properties:
Capital paid in by Chief
Sonowo:
Capital paid in by Chief
O. B. Akin-Olugbade


5,949 16s 7d

600 -

1,000 -

700 -


8,249 16s 7d
Chief Sonowo admitted that all earnings from the
business were paid into the business current account
at the Merchants Bank.6 The total of these lodgements
1 Day 37, p. 75.
2 Day 82, p. 43; and Day 35, p. 84.
3 Day 45, pp. 27-28.
4 Day 82, p. 54.
Day 82, pp. 54-57.
6 Day 82, p. 78.


according to Folio 238 of Merchants Bank Ledger'
was 1,236. 19s. 7d. It was suggested to the witness,
Chief Sonowo, that this partnership business could
not have been profitable if over a period of tenmonths
total earnings did not amount to more than 1,236.
19s. 7d. paid into the bank.2 The witness was ques-
tioned as to depreciation on the vehicles and was
referred to page eight of Exhibit BOA. 69, being the
Report of the Auditors, Messrs. Cassleton, Elliott and
Company, on the accounts of G. L. Gaiser for the
year ended 31st March, 1960. In this Report, the
Auditors remarked that after spending 700 on
improvements to the three vehicles, the company
had to write down the value of the vehicles brought
into the books of G. L. Gaiser at 8,149, to 2,000
as at 31st March, 1960.
The witness, Chief Sonowo, said he considered
insurance and licence on the vehicles as capital
expenditure, and therefore properly recoverable
from G. L. Gaiser without any apportionment when
the vehicles were transferred but he agrees that rents
for the unexpired period of ten months, amounting
to 250, should not have been charged to and
claimed from G. L. Gaiser. The witness also admitted
that included in the amount of 8,249-16s-7d were
two items of 717-2s-5d and 273, that is a total of
f990-2s-5d, paid to a Mr Pringle, building contractor.
This sum of 990-2s-5d was not a proper charge to
G. L. Gaiser for taking over the business of the
Nigerian Engineering and Trading Company.3
As to the reason why the business should at all
have been transferred, the witness explained that
G. L. Gaiser had in the past to pay heavy transporta-
tion charges in moving its consignment of cement
from the Customs wharf and by this transfer of his
own private business to the company, he was saving
Gaiser some expenses.4
Chief Akin-Olugbade admitted that Chief Sonowo
informed him of the sale of the partnership business
to G. L. Gaiser and that the business was making
profits but he did not see any accounts prepared for
the business.5 He did not know how Chief Sonowo
arrived at the figure of 8,249-16s-7d. All he reques-
ted Chief Sonowo to do was to refund the money he,
Akin-Olugbade, paid in, namely 700, which Chief
Sonowo did. Chief Akin-Olugbade explained that
the 700 he invested in the business belonged to a
client of his, a Mrs Akerele, who at that time was
anxious to invest the money in some commercial
enterprise.6
It is of interest to note that on the 4th May, 1960,
the Chief Accountant of G. L. Gaiser addressed a
letter to Chief Sonowo7 requiring Chief Sonowo to
make an immediate refund of 2,394-11s-7d to the
company, being difference in the cost of the vehicles
and the amount paid to Chief Sonowo. Up until the
time of this Commission of Inquiry Chief Sonowo
had not made any such refund to the company.
We are satisfied that if, on the basis of the figures
presented in evidence before us and contained in
Exhibits PJO.52 and PJO.53-Merchants Bank
Ledgers-accounts are prepared and proper deprecia-
tion on the vehicles calculated, the business of the
Nigerian Engineering and Transport Company would
show a substantial loss.
We therefore come to the conclusion that by the
transfer of this business to G. L. Gaiser at the price
of 8,249-16s-7d without disclosing the transaction
either before or after to the board of G. L. Gaiser,
Chief Sonowo, as the then Managing Director of
SExhibit PJO. 53.
2 Day 82, p. 81.
SDay 82, pp. 83-87.
4 Day 83, p. 8.
SDay 72, p. 15.
6 Day 72, p. 15.
Exhibit MAKS. 13.









G. L. Gaiser, betrayed the trust reposed on him by
his co-directors. As an agent of the company he was
not expected to make an undisclosed or secret profit.
In this transaction we are satisfied that he did make
such profit and that at all material time he intended
and did keep the profit. That he should have asked
the company, G. L. Gaiser, to pay a total sum of
990-2s-5d which he himself admitted should not
have been included in the amount of 8,249-16s-7d,
Chief Sonowo would appear to have collected money
improperly from G. L. Gaiser.
We hold the view that Chief Akin-Olugbade as
Chairman of G. L. Gaiser should have insisted on
Chief Sonowo bringing the matter for discussion at
the first meeting of the board of G. L. Gaiser after
he was informed of the transaction. That he failed to
do this suggested that he himself had something to
hide and in this case we find that he has committed
a breach of trust reposed on him as Chairman of the
company by the shareholders.
In the interim and final reports of the investigating
panel made up of G. A. Onagoruwa, E. O. O, Osin-
bowale-both of the Co-operative Organisation-and
A. A. Egunjobi of the Finance Corporation1 various
allegations, apart from the one already dealt with
above, were made against Chief Sonowo during the
period 2nd January, 1959, to 31st March, 1960,
when he was the Managing Director of G. L. Gaiser.
Perhaps the most serious of these other allegations
was the employment of a Mr Van Hoof, Chief
Engineer of G. L. Gaiser, by Chief Sonowo to work
for another private company owned jointly by Chief
Sonowo and Dr Akinola Maja and which was known
as the Nigerian Shipping and Trading Company
Limited. Chief Sonowo himself admitted this under
cross-examination and pointed out that his company
was eventually required to pay a sum of 6,097-12s-8d
to G. L. Gaiser for the services rendered by Mr Van
Hoof to his private company when the latter was still
an employee of G. L. Gaiser.2 Here again we come
to the conclusion that Chief Sonowo's conduct in
this matter fell short of what is expected of a Managing
Director of a company, particularly a company that
required so much assistance by way of proper
management.
Other allegations against Chief Sonowo related to
the depositing of 40,000 by G. L. Gaiser in Mer-
chants Bank on current account against which Mer-
chants Bank gave the company guarantee to import
goods up to 120,000.The Merchants Bank, now in
liquidation, was a bank in which Chief Sonowo was
financially interested as a shareholder and he was
also Chairman of the bank. Chief Sonowo informed
us that the whole of this 40,000 had been repaid
to G. L. Gaiser.3 It was pointed out to us that
G. L. Gaiser had to increase its overdraft with the
National Bank of Nigeria Limited in order to be
able to pay this sum of 40,000 into the Merchants
Bank.4 We do not attach any special importance to
this transaction and hold the view that as Chief
Sonowo disclosed the transaction to his board of
directors, he acted in the best interest of G. L. Gaiser.
We were also told that the investigating panel com-
mented on certain agency arrangements which Chief
Sonowo negotiated with overseas concern-Storhaug
-on behalf of G. L. Gaiser and on which he was to
receive ten per cent commission. The witness Chief
Sonowo told us that when the first consignment
under this agency was received it was found that the
goods were secondhand. Chief Sonowo explained
that G. L. Gaiser rejected the goods and Storhaug
had to arrange for their sale in Nigeria. It would
appear that Storhaug was still owing G. L. Gaiser
between 4,000 to 5,000 on this transaction as the
1 Exhibits BOA. 67 and BOA. 67A.
SDay 83, p. 45.
3 Day 83, p. 38.
4 Day 45, p. 75.


bills covering the goods, namely 7,288 and 2,000
expenses were paid by G. L. Gaiser.1 Without
adverting to the question of ten per cent commission
payable to Chief Sonowo, and which he stated he
had waived on the advice of Chief Akin-Olugbade,2

this transaction would appear to have involved
the company in a loss unless Storhaug paid up the
balance of 4000 to 5000 outstanding against him.
Mention was also made in the Reports, Exhibits 67A
and 67B, of the loss of Freedestein Tyre Agency,
offered to the company because Freedestein refused
to grant additional 11 per cent secret commission to
Chief Sonowo. Chief Sonowo explained to us that
G. L. Gaiser rejected the Freedestein Tyre Agency
because the prices were not as competitive as those
of Fulder tyres and Fulder Tyre Agency gave the
company 90 to 120 days' credit whereas Freedestein
was only prepared to give ninety days' credit terms.3
In our view it was wrong that the interim and final
reports of the investigating panel should not have
been discussed at both the board meetings of the
Finance Corporation and G. L. Gaiser.4 It was not
enough for the Managing Director to have been
asked to resign his appointment; it was essential that
he should have been called to defend himself against
the very many and serious allegations made against
him. We think the Minister of Trade and Industry,
Chief Adeyi, and the then Chairman of the Finance
Corporation and also of G. L. Gaiser, Chief E. A.
Babalola, acted improperly in condoning some of the
actions of the Managing Director, which if brought
to light could have led to a criminal prosecution being
instituted against him.
The witness Aina informed us that the trading
results of G. L. Gaiser (Nigeria) Limited since the
Corporation invested in it in 1958 are as follows:


Year ended 31st March, 1958: Loss
Year ended 31st March, 1959: Loss
Year ended 31st March, 1960: Loss
Year ended 31st March, 1961: Loss
Adjustment to previous years ..



72,426
50,468
152,371
56,040
18,163


During the year ended 31st March, 1960, Chief
Sonowo was the Managing Director. Aina also
testified to the effect that the company was believed
to be running currently at a profit, following the
improvements introduced by the new Management.5
The authorised share capital of the company was
increased from 500,000 to 1 million some time in
1958 and a third partner, Dizengoff (West Africa)
Limited, who supplied the present Management, has
acquired 50,000 shares in the company, making a
total issued capital of 550,000.6
Section 4. Harolds Limited (Ikeja Arms Hotel)
At the invitation of the Ministry of Trade and
Industry in 1957 and 1958 the Finance Corporation
investigated the prospects of investing in Harolds
Limited, the proprietors of the Ikeja Arms Hotels, and
in July, 1959, the Corporation acquired a majority
shareholding in the company by acquiring:7
5,000 7 per cent Cumulative Pre-
ference Shares of 1 each at par: 5,000
123,000 (out of 145,000) Ordinary
Shares of 1 each at par: 123,000

128,000

The Hotel was established at its present site in
Ikeja by J. Harold in 1948 and he has 37 per cent
1 Day 82, pp. 131-133.
2 Day 82, p. 130.
3 Day 83, pp. 33-34.
4 Day 48, p. 10.
Day 35, p. 84.
6 Day 35, p. 87.
SDay 35, pp. 57, 65 and 66.








interest in the equity of the company whilst the
Finance Corporation has 63 per cent interest. The
cumulative preference shares are wholly held by the
Corporation. J. Harold continued to run the Hotel in
the capacity of Managing Director and until the
declaration of a state of emergency, Chief E. A.
Babalola, by virtue of his position as Chairman of the
Corporation, was also the Chairman of the Hotel.
Before the acquisition of the shares by the Finance
Corporation investigations were conducted by mem-
bers of the Corporation. A Chartered Surveyor,
P. H. Abbey, was instructed to undertake the valua-
tion of the buildings and the 32-acre land on which the
Hotel stood. The Senior Accountant of the Corpora-
tion also reported on what in his opinion should
be regarded as fair valuation for the shares of the
company, just before the date of the Corporation's
investment. 2
Since the acquisition of the shares in the Hotel
by the Corporation i four-storey annexe consisting
of a hundred rooms had been added, substantial part
of which was completed to meet the Independence
Celebrations of October, 1960. For the purpose of this
extension two witnesses, Aina and Chief Babalola,
said that the loan granted to the company amounted to
over 300,000.3 The witness Aina maintained that as
the loan was made to a subsidiary company, formal
Board or Ministerial approval was unnecessary.
Chief Babalola on the other hand said that he kept
the Minister of Trade and Industry fully aware of
developments regarding the Corporation's expendi-
ture on the extension to the Hotel although he did not
make any formal application in writing to the
Minister for approval.4 It is, however, of interest to
know that on the 30th June, 1960, Chief A. O. Adeyi,
Minister of Trade and Industry, addressed a letter
to Chief Babalola, Chairman of the Finance Cor-
poration, as follows:
'I am informed that your Corporation has
authorised the construction of a large extension to
the Ikeja Arms Hotel estimated to cost well over
half-a-million, that firm commitments have been
entered into in respect of some 400,000 worth
of this work and that the work itself has actually
commenced.
'2. Please let me know at once if this information
is correct, and if so I would wish to know how
such a decision, involving substantial funds which
your Corporation has not at present available,
came to be taken without any reference to me.5
In his reply, Chief Babalola maintained that he had
been in constant oral discussions with the Minister
over every phase of the development of the Ikeja
Arms Hotel. The witness Aina was unable to show us
any minutes of the Finance Corporation under which
approval was given for the advance made to the com-
pany for the extension work.A
We think it is improper for the Chairman and
Secretary of the Finance Corporation to agree as
between themselves to grant so substantial an
advance to a subsidiary company without the loan
having been formally placed before the members of
the Corporation and approved by them. We also
hold the view that since the Minister of Trade and
Industry must determine the broad overall policy
of the Corporation and arrange for funds to be made
available to it, the Corporation had a legal and moral
obligation to seek Ministerial approval before granting
so substantial a loan as 300,000, notwithstanding the
1 Exhibit BOA. 63.
2 Day 35, p. 60.
3 Day 36, p. 74; and Day 48, p. 17.
a Day 48, pp. 17-18.
5 Exhibit BOA. 108.
Day 38, p. 15.


fact that it was being made to a subsidiary company.
Of the purchase consideration of 128,000 for
the shares 88,000 was deposited by J. Harold in
an account opened for him by the Merchants Bank
on the 8th July, 1959. On the 9th July, 1959, from
this account 60,000 was drawn in cash by .three
separate cheques of 10,000; 10,000 and 40,000.
On the 10th July, 1959, 15,000 was transferred to
the Midland Bank Limited, Bath, United Kingdom,
and on the 17th July, 1959, 12,900 was paid into the
Bank of West Africa. The account was closed on 12th
October, 1959, by a cheque made payable to Patrick
Adim for 56. 9s. 8d. Chief Shonowo who assisted in
the investigation of the Hotel before purchase, and
was at the time of acquisition of the shares a member
of the Finance Corporation, admitted taking J.
Harold to the Merchants Bank to open an account
but denied any knowledge of the transactions sub-
sequent to the depositing of the cheque for 88,000
in the Bank. Whilst the operation of this account by
J. Harold appeared unusual, we had no evidence that
any part of the 88,000 was paid to Chief Sonowo
personally or to the Action Group, as some Counsel
suggested to Chief Sonowo.1
It is worth mentioning that both before and after
the acquisition of the shares in the company by the
Finance Corporation profits have been made and one
of the reasons for the success which had attended the
company so far would be found in the fact that the
original owner continued to have financial interest
in the venture and remained at the helm of its manage-
ment and control.


Section 5. Great Nigeria Insurance Company
Limited
The establishment of this company followed
decision of the Western Executive Council in 1959.
The company, which has an authorised capital of
100,000 and an issued and paid-up capital of
50,000, was incorporated as a joint venture between
the Finance Corporation, which subscribed 40,000
of the issued capital, and Messrs Tandy and Free-
man, who between them subscribed for 10,000
shares.

The Management of the company is in the hands of
Mr Tandy, who is the Managing Director, and Mr
Freeman, who lives in Ghana but makes regular
visits to Nigeria. Investigation as to the establish-
ment of the company was conducted by Chief Akin-
Olugbade, the Corporation Secretary, Aina, and
Mr Braithwaite. Visits were paid to Ghana with a
view to consulting with Tandy and Freeman.2

The comptmy's principal business is life insurance
and since its formation, it has been operating at a loss,
a situation which is not unusual with newly-establish-
ed insurance companies in their first few years.


Section 6. Ikorodu Ceramics Industries

We were informed by witness Aina that the
Ikorodu Ceramics Industries was a partnership
business and that the three partners were Alhaji
Gbadamosi, R. A. Allison, and Dr Akinola Maja3
all of whom were members of the Action Group.
On the liquidation of the Colony Development
Board the loans transferred to the Corporation
included loan principal and interest due from the
Ikorodu Ceramics Industries and amounting at 31st
March, 1958, to 46,045-1 s-8d, made up as follows:4
SDay 82, p. 112.
SDay 35, p. 64; and Day 36, pp. 108-110.
3 Day 34, p. 37.
4 Day 33, p. 103; and Exhibit BOA. 4.








Loan Principal outstanding not yet
due: .. .. .... 24,369 11 8d
Loan Principal overdue: 15,145 9 10d
Interest overdue: 6,530 10 2d

46,045 11 8d

The Ceramics factories, which was built at Ikorodu
on the main Lagos-Shagamu-Ibadan road, came into
production in 1952 and according to a Report pre-
pared by officials of the Western Region Production
Development Corporation1 the factory had sustained
considerable losses owing to bad advice and teething
troubles. These losses had amounted to 124,627 by
31st May, 1957. In the memorandum prepared by the
former Colony Development Board on loans trans-
ferred to the Finance Corporation, the following
paragraphs occur:
'(iii) A letter dated 1 th June, 1954, was received
from the firm (Ikorodu Ceramics Industries) stating
that a Consultant would be flying from the
United Kingdom to Lagos in July to study the
factory layout, etc.
'Until this is done I do not propose to pursue
the question of the loan. You will certainly be
hearing from me in August 1954' wrote Mr S. 0.
Gbadamosi, the present Manager and Director.
'Since then, no further communication was
received from the firm.
(iv) The Audit Report on 31st March, 1958,
showed a total outstanding balance of 46,045. 1ls. 8d
No effort has been made to settle any of the annual
equated areas of repayments due since 1952, and
the annual progress reports have been ignored, even
on demand.'2
This part of the memorandum has been quoted in
full to provide a background to the tardiness with
which the firm dealt with the requests made to it by
the Finance Corporation, after payment of 50,000
by the Corporation to meet the factory's urgent requi-
rements. These requests included the appointment
of some experts to investigate the affairs and re-
quirements of the factory and make appropriate
recommendations and to convert the firm into a
limited liability' company as a step to the Corpo-
ration investing in the venture.
In a letter dated 17th January, 19583 addressed to
the Ministry of Trade and Industry, the firm
put forward the following propositions to the Govern-
ment of Western Nigeria:
'That your Government considers the advisabi-
lity of coming into partnership with us on a fifty-
fifty basis in the running of the Ceramic project.
(2) That your Government takes fifty per cent
of the money already outlaid.
(3) That the factory be taken over by the pro-
posed joint partnership, to be incorporated into a
limited liability concern as soon as possible.'
The Ministry of Trade and Industry then requested
the Western Region Development Corporation to
investigate the venture with a view, apparently, to
participating in it. The Development Corporation
did investigate and submitted a report but regret-
ted that the Development Corporation's finances
were completely committed and that the terms under
which further loans were to be made to it by Govern-
ment were such as to make it impossible for the Dev-
elopment Corporation to invest any amount so borro-
wed in the Ikorodu Ceramics Industries.4
On the 27th February, 1958, the Ministry of
Trade and Industry wrote to the Finance Corpora-
1 Exhibit BOA. 8.
2 Exhibit BOA. 3.
3 Exhibit BOA. 19.
SExhibit BOA. 9.


tion' forwarding the Report by the Development
Corporation, and requesting the Finance Corporation
to examine the Report 'with a view to deciding
whether the Corporation would be interested in such a
project. It seems that capital in the nature of 50,000
or more would be required for a half share in this
plant.' The Chairman of the Finance Corporation,
Chief Akin-Olugbade, replied to the Ministry of
Trade and Industry on the llth March, 1958, and
stated that it appeared certain that capital required
should be wholly risk capital bearing no interest
whatsoever as it might take some five to ten years
before the business could break even. Chief Akin-
Olugbade further commented that the capital of
50,000 mentioned by the Ministry would appear
inadequate and that the Ministry intended 150,000.
He concluded his letter as follows:
'Much as the Corporation would wish to deter-
mine urgently what form its interest in the venture
should take and offer some concrete suggestions, it
'is felt that categorical proposals in writing should
come forth from the Proprietors of the Industries.'2
The witness Aina in his evidence tendered Exhibit
BOA. 12, part of which summarised his preliminary
report on the Ikorodu Ceramic Industries for con-
sideration by the General Purposes Committee at its
meeting held on the 25th March, 1958. Aina's report
reads as follows:
'Corporation has been invited to take a half-
share interest in this enterprise. This would involve
expenditure of nearly 200,000 and would require
thorough investigation. A look at the operating
figure appears to suggest that it will take some time
for this industry to break even. It will be extremely
difficult to expect any return whatsoever from this
investment for some time.'
The General Purposes Committee did meet on 25th
March, 1958, and Exhibit BOA. 12, referred to above,
also contained extracts from the Minutes of the
meeting. These extracts showed that the Committee
decided that Aina's statement that 'it will be extre-
mely difficult to expect any return whatsoever from
this investment for some time should be deleted and
that the Committee felt that although the Ikorodu
Ceramic Industries might have had difficult times in
the past the proprietors had since become wiser and
past mistakes were not likely to be repeated. The
Committee further considered the industry as essen-
tial to the economy of Western Nigeria and that if,
after thorough investigation, it was decided to
participate, the Finance Corporation could probably
assure profitability within a remarkably short period.
The Committee also felt that 'investment in the
Ceramics Industry could probably require another
50,000.' Then followed on the llth April, 1958, a
meeting of the Industrial Committee which decided
to recommend to the full board of the Corporation
that it should agree in principle to invest in the
project subject to the following conditions:
(a) An expert report of an independent engineer
on the value of plant, machinery and assets;
(b) An independent auditor should report on the
accounts of the venture at a date more recent
than the 31st May, 1957;
(c) Trade contracts by the venture to be exa-
mined closely to ascertain credit-worthiness,
distributing arrangements for the finished
products, etc.
(d) Government to be asked to provide interest-
free capital for investment in the venture;
(e) Government to provide for arrangements
ensuring technical or other assistance as well
as scholarship awards in ceramics techniques;
SExhibit BOA. 8.
SExhibit BOA. 10.









(f) Government should seek ways of providing
protection to the industry until it has been
efficiently rationalised;
(g) The venture to be registered as a limited
liability company.'
When the above conditions were placed before the
meeting of the full corporation held on the 15th April,
1958, the meeting felt that the 'eight conditions
could not be considered as strictly necessary in view
of the fact that the production Board (subsequently
known as Development Corporation) had conducted
exhaustive investigations and would have invested
in the Industry, if funds were available.2 We were
told by the witness Aina" that members of the
Industrial Committee were all member of the full
Corporation and that Chief Akin Olugbade, who
was then the Chairman of the full Corporation, was
also chairman of the Industrial Committee. We
therefore are unable to understand why the full
Corporation meeting- should have concluded that the
conditions laid down by its Industrial Committee
before making an investment in the venture 'could
not be considered as strictly necessary.'4
On the 18th April, 1958, the Finance Corporation
advised the Ministry of Trade and Industry of the
Corporation's decision to invest in the Ikorodu
Ceramics Industries with a 'view to setting it on its
feet.' A copy of this letter was endorsed to Alhaji
S. O.'Gbadamosi, as Managing Director of the firm.5
The reply of the Ministry of Trade and Industry,
dated 26th April, 1958, was clear, unambiguous and
precise. It read as follows:
'.... I am to request you to submit a proper
memorandum on what your Board proposes to do
in connection with the proposed investment in the
Ikorodu Ceramics Industries. 1 should be glad if
you would give me at the same time an idea of
the viability of the enterprise generally for consi-
deration by Government. You realise, no doubt,
that these points would have to be given careful
consideration before Government could give its
approval for financial participation in any industries
by the Finance Corporation.'6
The Chairman of the Finance Corporation, Chief
Akin-Olugbade, replied to the Ministry's letter on
the 8th May, 1958, and explained that what the
Corporation had done so far was to approve in
principle an investment in the enterprise, leaving
it to its Chairman and Secretary to work out the
details which would involve investigations into the
various matters, referred to above as the conditions
laid down by the Industrial Commitee before an
investment could be considered in the Industry.7
It is clear, therefore, from Chief Akin-Olugbade's
letter of the 8th May, 1958, that the Corporation had
decided to invest in the business but that before
doing so thorough and exhaustive investigation
would need to be carried out, as suggested by the
Industrial Committee and in spite of the views
expressed by the full Corporation at its meeting of the
15th April, 1958. It is also clear from the letter of the
18th April, 1958, a copy of which was endorsed to
Alhaji S. O. Gbadamosi, that the Corporation had
intimated to him its intention to invest money in the
Ikorodu Ceramics Industries.
Encouraged by the promise of an investment, it
would appear to us that Alhaji Gbadamosi had
discussion on the 12th May, 1958, with the Chairman
of the Finance Corporation, Chief Akin-Olugbade,
1 Day 34, p. 35.
2 Exhibit BOA. 15.
SDay 34, p. 40.
4 Day 34, p. 40.
6 Exhibit BOA. 17.
6 Exhibit BOA. 20.
'Exhibit BOA. 21.


as a result of which a letter from Alhaji Gbadamosi
followed on the 15th May, 1958, asking for an
interim advance of 5000, which was to be converted
later as part of the Corporation's investment in the
venture.' An itemised list of the use to which the
5000 was to be put was submitted. We are satisfied
from the evidence before us that the payment of this
advance of 5000 was made at the instruction of the
Chairman, Chief Akin-Olugbade, and without the
prior approval of the Corporation. Subsequent pay-
ments totalling 20,000 were made to the Ikorodu
Ceramic Industries between 1st August, 1958, and
5th September, 1958.2 The evidence before us showed
that no written requests for this amount of 20,000
were made nor were details provided to show on
what items the monies were to be spent and that
approval was given by the Chairman, Chief Akin-
Olugbade. Request was also made in a letter dated
15th January, 1959, for additional advanceof 25,000
and this was placed before the Joint Meeting of the
Industrial and General Purposes Committee held on
the 28th January, 1959. The Committee approved the
first advances totalling 25,000 and the additional
advance of 25,000 on condition that interest would
be paid on the total amount of 50,000 so far advanced
at the rate of six per cent per annum until the Corpora-
tion made investment in the project.
It is of interest to note that at the time the Corpora-
tion had before it request for additional fund of
25,000 in January, 1959, the Chairman of the Finance
Corporation, Chief Akin-Olugbade, knew of the
recommendation of a Mr W. W. Russell, of the
Commonwealth Development Finance Company,
Limited, contained in a report dated 30th October,
1958, on the Ikorodu Ceramic Industries.3 This
report recommended as follows:
'(a) That a ceramics firm of repute, working in
similar conditions and for a similar market,
be asked to make a report on all aspects of the
Company's work.........
(b) That pending such an investigation, no
further money be invested by the Western
Region Government or any of its agencies, in
the Company.'
Chief Akin-Olugbade minuted at the last page of the
report on the 4th November, 1958, as follows: 'Held
a meeting with the Minister of Trade and Industry
at his request at 11 a.m. Promised to find out from
the Minister of Economic Planning who authorised
the investigation by Mr Russell and inform me of
developments.' Chief Akin-Olugbade should have
brought Mr Russell's report of 30th October, 1958,
to the notice of the Joint Industrial and General
Purposes Committee meeting held on the 28th
January, 1959, to recommend the additional advance
of 25,000 to, be paid to the Ikorodu Ceramic
Industries.
With regard to the appointment of an expert in
ceramics industry to investigate various aspects of the
factory, we are satisfied from the evidence before us
that the Managing Partner, Alhaji S. O. Gbadamosi,
adopted a dilatory attitude. He did not co-operate
with the officials of the Ministry of Trade and
Industry and of the Finance Corporation, including
Chief Babalola, who became Chairman in December,
1959, to ensure that necessary investigations were
carried out so as to safeguard monies so far paid to
the firm by the Finance Corporation and the balance
of the previous loan from the former Colony Develop-
ment Board. In this connection we recall the memo-
randum prepared by the Colony Development
Board in 1958/59 and referred to earlier in this Sec-
tion of our Report in which it was stated that 'a letter
1 Day 49, p. 117.
SDay 34, p. 93.
3 Exhibit BOA. 26.
Day 49, pp. 126-128.









dated llth June, 1954, was received from the firm
stating that a Consultant would be flying from the
United Kingdom to Lagos in July to study the
factory layout, etc. You will certainly be hearing
from me in August, 1954,' wrote Mr S. O. Gbadamosi.
Since then no further communication was received
from the firm.
In his evidence before us, Alhaji Gbadamosi
claimed that he considered that the ceramics experts
from Czechoslovakia whose services he was able
eventually to secure satisfied his requirement better
than the Indian expert, Mr Bhagat, suggested by Mr
W. W. Russell of the Commonwealth Development
Finance Corporation and recommended by the
Ministry of Trade and Finance. According to the
witness, the Czechoslovak experts would not only
report on the technical requirements of the factory
but would also supply machinery on credit terms and
prepare production figure projection and guarantee
such figures. On the other hand, Mr Bhagat would
only report on the factory and make appropriate
recommendations.
Even as recent as 29th January, 1962, a letter
written by Alhaji Gbadamosi to the Industrial
Promotions Commission, Ministry of Trade and
Industry, Ibadan, typified the dilatory attitude which
the witness had adopted all along in the matter
of expert investigation. The letter1 reads as follows:
'Many thanks for your letter Ref. IPC.158/9 of
the 26th instant, and we appreciate the successful
effort you have made to get the Swedish company
of ceramic manufacturers to propose participation
on partnership basis. Until the result of the investi-
gation being conducted by the two Czech experts
is known and the terms and conditions under which
they will work with us are put across to us, we do
not consider it prudent to say yes or no to the
Swedish offer. We suggest that a letter couched in
ambiguous language is addressed to them and thus
keep the offer in suspense pending the final result
of the investigation now in progress.'
Alhaji Gbadamosi mentioned that the Czech experts
had submitted their Report and that he received it in
July, 1962. This was tendered as Exhibit SOG.23.2
In respect of the loan transferred from the Colony
Development Board, the balance of which as previous ly
mentioned amounted to 46,045. 1 s. 8d. at the date
of transfer to the Finance Corporation, some of the
securities had been realized and compensation received
from the Lagos Executive Development Board. An
amount of 22,325. 16s. 8d. paid over to the Finance
Corporation out of a total compensation of about
60,000 was appropriated in part settlement of the
loan and interest outstanding up to 31st March, 19591
In view of the fact that the compensation of 60,000
paid covered properties other than those mortgaged
to the former Colony Development Board and since
no evidence was produced to us to show that a higher
proportion of the compensation money should have'















1Exhibit BOA. 169.
Day 53, p. 19.
SDay 34, pp. 10-11.


been appropriated to meet the balance due to the
Corporation, we cannot express any opinion as to the
fairness or otherwise of,such part of the loan as had
been discharged. In Exhibit SOG.3, tendered by
Alhaji Gbadamosi, the Finance Corporation advised
him on the 19th August, 1958, that 'the loan made by
the Colony Development Board which would shortly
be passed over to this Corporation would be converted
into part of the preference share-holding.'

In respect of both the 50,000 'Advance' on which
the Corporation was to charge 6 per cent interest per
annum and the balance of the old loan transferred
24,369. 11s. 8d, the Ikorodu Ceramics Industries
had made neither payment of interest nor repayment
of principal. The witness Aina, while giving evidence
as Secretary of the Finance Corporation, admitted
that his Corporation did not send out any demand
note for interest payment to the Ikorodu Ceramics
Industries in respect of the 50,000 6 per cent
advance, giving as reason the fact that his Corporation
was not clear as to whether the advance was
a form of loan or an investment.' We think the
decision of the Committee of the Corporation on the
matter was clear and the letter communicating the
decision to charge interest at 6 per cent per annum
to Ikorodu Ceramics Industries was equally clear.
As the terms when interest is payable were not
settled, we do not think any blame attaches to any of
the officials of the Corporation.
With regard to the lack of co-operation on the part
of the firm to provide necessary facilities for the
investigation of the factory's requirements, we have
in evidence before us that a letter dated 26th May,
1958, tendered as Exhibit BOA.7 and setting out in
very great detail matters that would need to be investi-
gated in the venture, was asked to be recalled by
Chief Akin-Olugbade because it was premature.
We were told by Aina and this was confirmed by
Alhaji Gbadamosi that after the issue of the letter
of 26th May, 1958, by the Finance Corporation,
Chief Awolowo who was then Premier of the Western
Region summoned a meeting at his office, attended by
Chief Akin-Olugbade, Alhaji Gbadamosi, Chief
Adeyi, the then Minister of Trade and Industry,
Alfred Rewane and Aina. Chief Awolowo instructed
Chief Akin-Olugbade at that meeting and indirectly
Aina to withdraw the letter of the 26th May, 1958,
written to the Ikorodu Ceramics Industries by the
Finance Corporation". We are satisfied that the
subsequent lack of co-operation shown by the
Ikorodu Ceramics Industries to bring about early
investigation of the running of the factory and to
define the precise form the investment of the
Corporation in the venture would take stemmed to a
large degree from the support given by Chief Awolowo
in seeing that so important a letter as that of the 26th
May, 1958, was to be treated by the Ikorodu Ceramics
Industries as not having been issued and therefore
discountenanced.















1 Day 34, p. 105.
SDay 34, pp. 56-58.
SDay 50, pp. 52-53.








CHAPTER 2
Section 7. Observations and Recommendations


We have dealt at great length in Section 1 of this
Chapter with the manner and circumstances in
which the Western Region Finance Corporation
acquired for a consideration of 1.1 million the
whole of the equity share capital of Arab Brothers
Motors Limited. We have also made some comments
on the valuation reports prepared by the firm of
accountants of Messrs. Z. O. Ososanya and Company
and we come to the conclusion that the valuation was
substantially affected by the valuation figures placed
on the properties of the company by the firm of
accountants. We are satisfied that this firm acted
improperly in undertaking to value properties and it
would therefore appear to us that the Finance
Corporation was made to pay too high a price for the
shares acquired.
We hold the view that the rush by which this
transaction was carried through and the loan for the
payment of the purchase consideration was obtained
from the Western Region Marketing Board suggested
that there was more in this transaction which the
evidence produced before us had not elicited. We
are satisfied that Chief Akin-Olugbade knew more
about the purchase than he had testified before us. It
would also appear to us that Chief Adeyi, then Mini-
ster of Trade and Industry, in Asking that the matter
of investigation be speeded up did not suggest that the
investigation should not be thorough and exhaustive.
Chief Akin-Olugbade should have advised Chief Ade-
yi of the impossibility of completing the investigation
within the time laid down by the Ministry. That he
failed to do this is most regrettable and leads us to
the conclusion that he failed to exercise the degree of
prudence expected of a person occupying the post of
Chairman of so important a Corporation and
which was making for the first time its largest in-
vestment in a private family concern, involving an
expenditure of public funds to the tune of 1.1
million.
We observe that the audited accounts of Arab
Brothers Motors Limited since the date of acquisi-
tion of the shares in 1959 have been presented with
the figures of leasehold and freehold land and build-
ings shown at the valuation figures adopted by
Messrs. Z. O. Ososanya and Company.' This explains
the reason why, even after adding back the manage-
ment charges payable to the Western Region Finance
Corporation, the profits shown have been negligible.
We think it is wrong to have done this without
submitting Messrs. Z. O. Ososanya and Company's
valuation figures to a qualified and independent valuer
for a check.
In view of the substantial amount of public funds
invested in the venture, we hold the view that a
Managing Director far more experienced, technically
and otherwise, on the lines of the business under-
taken by the company should have been appointed
instead of Chief Olukoya, referred to before us as
Chief Shonibare's father-in-law. The evidence before
us was that Chief Olukoya was formerly a Produce
Manager under the United Africa Company, Limited
and that his appointment was prompted by Chief
Awolowo. A mistake had been made in paying as
much as 1.1 million for the company; a greater and
more serious mistake was being made with the
blessings of Chief Awolowo by the appointment of a
most unsuitable person as Managing Director.
We recommend a' review of the Corporation's
policy with regard to the Epe Boatyard Company,
Limited with a view to ascertaining if the venture
would ever be viable. As the bulk of the funds
available to the Corporation attracts interest charge,
1 Exhibit BOA. 54.


a venture that is constantly making losses cannot be
carried on for any long time by the Corporation
without its own finances being seriously affected.
We consider that a more realistic approach would lie
in retracing wrong steps.
We have already mentioned that the shares in
G. L. Gaiser (Nigeria) Limited were acquired more
or less on the basis of the valuation figures at 31st
March, 1957, and that it would have been more
prudent for the Corporation to have insisted on
properly audited accounts being made up much
nearer to the date of purchase of the shares. We also
hold the view that Bateye should have disclosed to
the Western Region Finance Corporation the fact
that the original shares of 250,000 in the company
were bought by the Co-operative Organisation for
76,000 and that knowing the main reason why the
Finance Corporation was providing additional funds
to the company, he should not have allowed the bank
overdraft due to a member of the Co-operative
Organisation to have been paid to the detriment of
the working capital available for the day-to-day
operation of the company.
We are satisfied that the suppression of the interim
and final Reports of the investigating panel that
inquired into the affairs of G. L. Gaiser when Chief
Sonowo was Managing Director was intentional and
that both Chief Babalola and Chief Adeyi, the Minis-
ter of Trade and Industry, were privy to the suppres-
sion of the Reports. The reason for this was not fully
explained to us in evidence but it might be due to the
position of Chief Sonowo as a prominent member of
the Action Group.
We are of the considered opinion that both the
Finance Corporation and the Co-operative Organisa-
tion did not face the very serious problems presented
to them by the losses which kept mounting up in
G. L. Gaiser and that the quarrels and petty squabbles
at Gaiser's Board Meetings must have had adverse
effects on the morale of the staff of the company.
Judging by the experience -which the evidence
before us showed that Chief Sonowo had in running
a business, we do not think it was wrong to have
appointed him Managing Director of the company
but we are satisfied that Chief Sodowo was delibe-
rately dishonest in the way he had run G. L. Gaiser,
particularly on the question of the transfer of his
private business to the company. In this latter
connection it is our recommendation that Chief
Sonowo should be asked to pay back to G. L. Gaiser
at least a total sum of 3384--14s made up of f2394-
lls--7d shown in G. L. Gaiser's Chief Accountant's
letter of 4th May, 1960, addressed to Chief Sonowo'
and 990-2s-5d representing total amount paid to
H. M. Pringle and which Chief Sonowo admitted
before us was wrongly claimed by him from G. L.
Gaiser.
As we understand from the evidence given to us
that Dizengoff (West Africa) Limited has taken up
50,000 shares in G. L. Gaiser and that in fact the
present management staff were provided by that
company, we do not propose to make any further
recommendations regarding the company other than
to say that G. L. Gaiser has a good reputation in
Nigeria as an old-established company and given
managerial staff of the right calibre and necessary
working capital, the operating profits which we
understand are now being made should continue.
Consideration should be given at an early date to
evolving a scheme of close co-operation between
G. L. Gaiser and Arab Brothers Motors Limited.
1 Exhibit MAKS. 13.









We are satisfied that reasonable investigations were
carried out before the Western Region Finance
Corporation invested in the Ikeja Arms Hotel and
that the Corporation acted prudently in ensuring
that Mr J. Harold, the proprietor of the Hotel,
retains financial interest in the venture and continues
to manage it. No evidence was produced to us to
show in what way the company is undertaking the
training of Nigerians for responsible positions in the
Hotel, so as to ensure that adequate and satisfactory
managerial staff are available should Mr Harold
leave the services of the company. We recommend
that this matter be looked into.
As regards the Corporation's investment in the
Great Nigeria Insurance Company, Limited, it
would appear that some investigation was made by
the then Chairman of the Corporation, Chief Akin-
Olugbade, and the Secretary, Aina-both of whom
appeared also to have sought the professional advice
of a Mr Braithwaite. It is also in evidence before us
that the management of the insurance company is in
the hands of a Mr Tandy who works in collaboration
with a Mr Freeman; both these men would appear
to have financial interest in the venture. In view of
the technical nature of life insurance business we
recommend that early arrangements be made for the
training of such Nigerians as may be required even-
tually to run the business, should both Mr Tandy and
Mr Freeman no longer wish to continue with the
management of the company.
We are satisfied that the Western Region Finance
Corporation has committed itself in making an
investment in the Ikorodu Ceramics Industries but
that the extent of the investment has not been deter-
mined. We are also satisfied that an advance of
50,000 has been made towards this investment.
That the Ceramics Industry may not be of benefit
to the Region is not our primary consideration when
we attempt to review the manner and circumstances
in which this substantial amount of money was made
available to the firm. We know that the exhaustive
investigations that should have been carried out
are still to be undertaken and it is difficult at this stage
to say how much the Corporation may eventually be
called upon to put into the business. It was made
very clear to the Corporation members that the ven-
ture was of a nature that would not show profits for a
considerable period of time and that consequently
financing of the Corporation's investment in the
venture should come from non-interest bearing loan
from the Government or the Western Region
Marketing Board. Whatever might have been the
pressure put on Chief Akin-Olugbade, the Chairman
of the Corporation, at the material time, he should
not have agreed to making any advance to the
firm until he had obtained a definite assurance from
the Government that the Western Region Finance
Corporation would be provided with interest free
funds to meet the investment. Alhaji Gbadamosi,
Dr Akinola Maja, and Mr R. A. Allison, we are told,
are the partners in the Ikorodu Ceramic Industries
and they are all prominent members of the Action
Group.
We recommend that exhaustive investigations,
financial, technical and otherwise, be immediately
carried out into the Ikorodu Ceramic Industries, and
in this connection the Report of the Czech experts,
received by Alhaji Gbadamosi in July, 1962, and ten-
dered before us as Exhibit SOG.23, will provide a
useful guide.
The need for a proper co-ordination in the invest-
ment policies of the Western Nigeria Government
and its various agencies seems of paramount impor-
tance, and we are therefore of the opinion that every
encouragement should be given to the Industrial
Promotions Commission, set up by the Western
Nigeria Government, and which Aina informed us


undertakes the co-ordination of the investment
activities of the Region and decides on which of the
Government agencies should undertake a particular
investment.
In respect of the annual accounts of the Western
Region Finance Corporation required under Section
19(2) of Law No. 9 of 1955, it is recommended that
the operating results of each of the companies in which
the Corporation has more than 40 per cent interest
should be incorporated in the Annual Report laid
before the Western House of Assembly. The extent
to which the profits or losses made by these companies
have been taken up in the accounts of the Western
Region Finance Corporation should also be clearly
stated. If no part of the profits or losses has been so
taken up by the Finance Corporation in its own
accounts, a clear indication should be given of the
effect on the operating results of the Corporation
should these profits or losses have been taken up. In
this way Members of the Western House of Assem-
bly and those of the Corporation will be able to
judge the profitableness or otherwise of investments
undertaken by the Corporation.
We comment elsewhere on the activities and con-
duct of the other persons connected with the various
investments made by the Western Region Finance
Corporation. We did not then put forward our obser-
vations about the witness Chief M. A. K. Sonowo.
This witness had a second opportunity of giving
evidence before us and it is very difficult to say
whether or not the lapses which he exhibited pro-
ceeded out of callous dishonesty or crass ignorance
on the matters with which he was dealing. In one
respect we find that he was dishonest and that is
with respect to the sale and transfer of the business
of the Nigerian Engineering and Transport Company
owned by Chief Akin-Olugbade and himself to
G. L. Gaiser (Nigeria) Limited at a price of over
8249. We are informed that that business was
worth only three lorries and that the lorries were in
such an unsatisfactory state of repair that G. L.
Gaiser (Nigeria) Limited had to spend substantial
sums of money on them which were later written off.
At that time he was the Managing Director of G. L.
Gaiser (Nigeria) Limited and his partner, Chief
Akin-Olugbade, was the Chairman of the Board of
Directors of that company. No information whatso-
ever about the deal was communicated to the other
Directors and no evidence of any independent investi-
gation into the affairs of that company seemed to have
been made. Indeed Chief Sonowo told us that he
valued the business himself. At the time of the sale
the account of the Nigerian Engineering and Trans-
port Company in the Merchants Bank Limited was
heavily overdrawn and but for this clandestine sale
to G. L. Gaiser (Nigeria) Limited the proprietors of
the Nigerian Engineering and Transport Company
would have had no monies whatsoever to share
between themselves as they did after the payment
by G. L. Gaiser (Nigeria) Limited.
We are told that this witness was at one time a
member of the Western Region Finance Corporation,
and we take the view that he ought to have known of
the affairs of G. L. Gaiser (Nigeria) Limited before
the take-over by the Finance Corporation. He
appeared to us to be a shrewd and astute business
man with quite a substantial amount of latent
posJiblilitic.s although we regretfully ri-cord that we
are not satisfied with his explanations about some
aspects of his performances as Managing Director of
G. L. Gaiser. (Nigeria) Limited. One chord runs
throughout the whole story and that was the tendency
at all times to utilise some of the resources of G. L.
Gaiser (Nig ri.i) Limitdd for the 6firtli-ralnc,- of his
own private interests or other private enterprises.
In this connection we record that although Mr Van
Hoof was substantively employed in G. L. Gaiser
(Nigeria) Limited, Chief Sonowo had employed him







to work for the Nigerian Shipping and Trading
Company, Limited in which he was personally inte-
rested with Dr Maja. Other instances consist of the
purchase by him of some of the lorries belonging to
G. L. Gaiser (Nigeria) Limited at unfavourable
prices to that firm, and arrangements for the agencies
or franchises in respect of some of the other com-
modities in which G. L. Gaiser (Nigeria) Limited
deals. It is necessary that in the circumstances in
which Chief Sonowo was placed he should demon-
strate most clearly that his performances are not
hampered by the other personal interests which he
possessed.
We record our dissatisfaction at the valuation of
the properties of Arab Brothers (Motors) Limited by
Messrs Z. 0. Ososanya and Company. We pointed
out already that he had inflated the values of the real
properties of this company and express our surprise
that although he had been employed by the
Western Region Finance Corporation for this assign-
ment, he was inflating the values for his own clients.
Messrs Z. O. Ososanya and Company are also the
auditors for a few other companies or associations
connected with this Inquiry. They are the auditors


of the National Investment and Properties Company,
Limited. It is significant that although they appended
their certificate to the accounts of the National
Investment and Properties Company, Limited for
1958-1959 and that the accounts contained figures
relating to the purchase of Moba, no satisfactory
evidence was shown to them as to how the figure of
purchase price of Moba or the cost to the National
Investment and Properties Company Limited was
arrived at. In his own evidence Mr Ososanya of that
firm stated that they'were informed that the conve-
yance was being prepared. The real truth is that the
National Investment and Properties Company,
Limited had no conveyance on Moba until some time
in July, 1959. We think that certificates by auditors
should be more responsibly operated and that in this
case the certificate did not carry the authority which
it was supposed to carry.
Messrs Z. O. Ososanya and Company also audited
the General Accounts of the Action Group. Mr
Ososanya had no information to give us about the
other accounts of the Action Group and the informa-
tion in the General Accounts seems to us to be so
scanty as to have put the firm on the inquiry as to how
the various items were constituted.




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