Nigeria Customs: Court strikes out suit challenging legality of $3.2 billion E-Customs project 

The Federal High Court in Abuja has struck out a suit challenging the legality of the Nigeria Customs Service’s (NCS) concession agreement concerning the $3.2 billion e-customs project.

Justice Inyang Ekwo struck out the case on Wednesday, October 2, 2024, following a notice of discontinuance by the legal team of E-Customs HC Project Limited and Bionica Technologies (West Africa) Limited, in suit number FHC/ABJ/CS/848/2022.

The plaintiffs had sued the Federal Republic of Nigeria, the Attorney General of the Federation, the Minister of Finance, Budget and National Planning, the Infrastructure Regulatory Concession Commission, the Nigeria Customs Service, Huawei Technologies Company (Nigeria) Limited , Trade Modernization Project Limited, African Finance Corporation, Bergman Security Consultant and Supplies Limited, and Adani Mega Systems Limited.

The plaintiffs’ lawyer, Ahmed Raji SAN, contended that the deal should be voided, alleging that the concession was made in gross violation of the provisions of Section 2 of the Infrastructure Concession Regulatory Commission (Establishment) Act, 2005, which requires prior approval from the Federal Executive Council before the federal government or any of its MDAs can enter into any agreement under the Act.

The Customs Modernization or E-Customs Project Dispute 

The plaintiffs approached the court, insisting they are the approved and rightful concessionaires for the e-customs project, as allegedly approved by the Federal Executive Council at its meeting on September 2, 2020, not Trade Modernization Project Limited, Huawei Technologies Company (Nigeria) Limited, and others.

He submitted that Huawei, a Chinese firm, was a technical partner to E-Customs HC Project Limited on the e-customs project, regarding which an agreement was purportedly entered into between the NCS, Trade Modernization, Huawei, and others in May 2022.

The plaintiffs stated that towards the end of 2015, Bionica began to engage formally and informally with the NCS regarding the planned modernization of scanners and the entire ICT infrastructure of the NCS.

He added that Bionica made a presentation to the ICT and management teams of the NCS on its proposal for the complete overhaul, modernization, and computerization of the entire processes of the NCS, allegedly resulting in a recommendation from the NCS for Bionica to be pre-qualified to bid for the contract for the NCS modernization project, which would follow later in 2016.

“The plaintiffs aver that during the aforementioned presentations, Bionica introduced Huawei as its technical partner for the e-customs or customs modernization project. To this end, the plaintiffs aver that Bionica and Huawei subsequently entered into an MOU, in addition to which Huawei issued a written authorization to the second plaintiff, Bionica, to use Huawei’s products to tender for the 2016 capital project of the NCS,” he added.

The plaintiffs alleged that Bionica requested and obtained the approval of the NCS to conduct a detailed assessment of the NCS’s existing infrastructure across Nigeria, and the federal government ministries in question allegedly granted approval for the engagement of the consortium of the second plaintiff, Bionica Technologies [lead sponsor], Bergman Security Consultant and Supplies Ltd. [co-sponsor], African Finance Corporation, and Huawei [lead technical service provider] to establish a project-specific SPV to enter into a 20-year concession arrangement with the NCS and ICRC for the Customs Modernization Project (Establishment of digital/paperless customs administration).

He contended that infractions were eventually perpetrated in the discussions, as they later read in the news that the Nigeria Customs Service announced the execution of a concession agreement with Trade Modernization, Huawei, and others in respect of the e-customs project, sidelining his clients.

However, Huawei’s legal team, led by Davidson Oturu, filed a statement of defense denying each allegation of fact contained in the plaintiffs’ claim.

Oturu told the court that “it is not a technical partner to the E-Customs HC Project Limited and never entered into any agreement whatsoever with the first E-Customs HC Project Limited.” 

Huawei admitted, however, that it entered into a Memorandum of Understanding (“MoU”) dated July 12, 2016, with Bionica only for the purpose of conducting strategic cooperation on future businesses with the NCS.

“The E-Customs HC Project Limited was not a party to the MoU and was not incorporated at the time the MoU was executed by Bionica and Huawei,” he submitted.

He agreed that there were months of negotiations and deliberations which finally resulted in a full business case and draft concession agreement, but it did not enter into any agreement with the NCS or any of the defendants on or about May 30, 2022.

He asked the court to hold that the plaintiffs’ claims are baseless and disclose no reasonable cause of action against Huawei, while dismissing the suit with substantial costs.

What Transpired in Court 

At the resumed hearing on Wednesday, the plaintiffs’ legal team told the court that their clients wanted to discontinue and had filed a notice of discontinuance in September 2024.

Lawyers for the defendants stated they had no objection to the move to discontinue the matter.

“Leave(for discontinuance) is granted. The matter is struck out,” Justice Ekwo responded.

What You Should Know 

Nairametrics reported that the Nigeria Customs Service in 2023 stated its operations would become fully automated upon the completion of the $3.2 billion e-customs project.

The Comptroller-General of the NCS, retired Col. Hameed Ali, while inaugurating the project in Abuja at the time, said the service embarked on the project, handled by Trade Modernization Project Limited (TMPL), to strengthen the processes of the service and eradicate corruption. According to him, the project, which was started in 2015, will deliver state-of-the-art technology for the service.

Speaking on the processes leading to the inauguration of the project, former Minister of State for Budget and National Planning, Mr. Clem Agba, stated that the Federal Executive Council on April 20, 2023, approved the implementation of the e-customs project to a concessionaire.

The concessionaire is Bergman Securities Consultant and Suppliers Limited as the project sponsor, African Finance Corporation as the lead financier, and Huawei Technologies as the lead technical service provider.

The concessionaire, he said at the time, had furnished the government with $9 million (N4.135 billion) in security for the satisfactory performance of the project.

They had also executed a debt facility of $300 million (N138 billion) to finance the first phase of the project.

He noted at the time that the revenue-sharing arrangement is 45% of accruals to the comprehensive input service scheme going to the concessionaire and 55% going to the federal government, with 5% of what accrues to the Nigerian responsible action scheme, and 75% to the federal government.