Investigations: How Kano pilgrims lost N460m to accommodation scam

When Kano State Deputy Governor Hafiz Abubakar told intending pilgrims on July 16, 2016 during a workshop that the state government had paid N460 million accommodation subsidy for them, they were all elated.

The 5,600 pilgrims were even happier when he said “all the houses secured for the pilgrims are close to the Ka’aba in Mecca. This will give our pilgrims the opportunity to stay closer to the Mosque as required.”

“But our excitement turned to disappointment when we finally got to Mecca, and we were accommodated in some poorly equipped buildings far away from the Holy Mosque,” Muhammad Mustapha,one of the state pilgrims who was present when the deputy governor made the announcement, told Daily Trust on Sunday.

“The irony was that, we were accommodated in good hotels two minutes walk to the Holy Mosque in Medina only to come to Mecca and be lodged in hotels over 30-minutes walk from the Grand Mosque despite the subsidy,” another pilgrim Bilkisu Sadiq said.

“Thirty minutes trekking from the accommodation to the Grand Mosque under scorching sun was not easy at all. Many pilgrims resorted to praying only dawn and evening prayers in the Grand Mosque, particularly those who couldn’t stand the sun and afford the exorbitant transport fares,” Mustapha said.

Investigations by this newspaper have shown that these pilgrims were among the 2,405 Kano pilgrims whose Mecca accommodation was provided by a Saudi-based Nigerian service provider, Island Economic Group.

This service provider, owned by Ibrahim Suleiman Yusuf, lodged the pilgrims in three accommodation facilities thus: Saifuddeen Burhanuddeen 1, with a 714 pilgrims capacity; Saifuddeen Burhanuddeen 2 with 836 capacity and Saifuddeen Burhanuddeen 3, with 855 capacity.

Official documents analysed by our reporters revealed that Mr Yusuf, popularly known as Ibrahim Sabo Lagos, was one of the beneficiaries of the N460 million accommodation subsidy paid by Kano State.

His company, Island Economic Group, was paid 1.54 million Saudi Riyals (N185 million)  by Kano State government, on June 9, 2016, about seven days before the deputy governor announced the accommodation subsidy.

The Kano State Pilgrims Welfare Board paid the N185 million cash to the company, “being government subsidy in respect of 2016 Makkah accommodation” on June 9, 2016. The company acknowledged receipt of the money through a receipt voucher with a number: 4031059023.

The permanent secretary of the Kano State Pilgrims Welfare Board, Malam Abba Yakubu, confirmed this payment to Daily Trust on Sunday, saying the state is working hard to recover the fund from the company.

How the scam was perpetrated

Findings by our reporters said some officials of the state pilgrims’ board in collusion with the service providers arrange and create an accommodation bill.

This they did “by tricking the state government to wade in by contributing to augment the fees paid by the pilgrims under the guise of subsidy,” a Kano state pilgrims board official, who didn’t want to be named, said.

Further findings show that Kano State government was paid N36 million in 2011 and N66 million in 2012 as accommodation subsidy.

The state also augmented the cost of accommodation with N127 million in 2013, N202 million in 2014, and N367 million in 2015.

The National Hajj Commission of Nigeria (NAHCON), as apex hajj regulatory agency, is responsible for the payment of all service providers on behalf of the state pilgrims boards.

But findings show that these subsidies are paid directly to the service providers without going through NAHCON.

“At the end of the day, the state officials colluded with the service providers to defraud the state of those subsidies money, and lodged pilgrims in low-cost accommodation far below the announced cost,” the official said.

The official said “instead of allowing NAHCON benchmark to take precedence, some officials of the pilgrims’ board expended an additional SR 2500 on each pilgrim, thus spending between N169,840,000 million to N185,280,000 million on accommodation of pilgrims at the prevailing rates of N120/SR1 last year.”

Findings revealed that the service providers hire houses from real owners at prices less than SR2,000 and collected SR4000 from the pilgrims and outrageous subsidy from states.

In the case of Island Economic Group, the company hired houses at SR2500 but collected SR4000 from NAHCON and additional SR1.54million from Kano State as subsidy for accommodation.

The official said the company got about SR5000 for each bed space for the Shahrul Mansoor accommodation even though they hired it from the landlords at SR2500. But the company was paid SR4000 by NAHCON and SR1.54 million from the state.

Cost saving reform

Last year’s accommodation fraud forced NAHCON to eliminate middlemen and agents in the accommodation chain, saving $18.9 million this year.

The breakdown shows that $12.3 million was saved from accommodation services rendered in Madina, while an additional $6.532,745 million is estimated to have been saved in the leakages plugged in Makkah.

“We had direct contract negotiation with landlords which has saved Nigeria exportation of about 12.3m dollars,” NAHCON chairman Abdullahi Mukhtar Muhammed said during a visit to Media Trust headquarters in Abuja recently.

He said the elimination of agents will save money for pilgrims and save the states the payments of these subsidies for accommodation this year.

By this reform, the NAHCON chief said “pilgrims for this year’s hajj are expected to pay SR616 ($164 dollars) less than last year for accommodation in Medina due to the elimination of agents.”

He added that the reform also led to the securing reduced rate on accommodations which were at flat rates of SR4000 even when the facilities and proximity were not of the same values thus reducing the prices by as much as 50 percent.

By this new arrangements, state pilgrims board will deal with Saudi Arabia landlords directly, without going through any service providers such as the Island Economic Group.

Again, by bargaining directly with the accommodation owners, no state pilgrims board will pay any subsidy to anyone. This means that briefcase companies who relish on these subsidies are out of business.

Backlash from middle men

The elimination of accommodation agents, despite saving hundreds millions for pilgrims didn’t go down well with some beneficiaries of the state subsidies.

A Saudi-based group known as the Nigerian Arewa Foundation, chaired by the owner of Island Economic Group, petitioned the House of Representatives, accusing NAHCON chairman of corruption and describing its reform as attempt to sending them out of business.

“Our foundation members have no other means of living than this business and we are bonafide Nigerians who feel also that we deserve legislative fair hearing,” the chairman of Island Economic Group, said.

Yusuf said he was acting on behalf of “158 registered “ members of the “Nigerian business community” in Saudi Arabia, attaching  a four-page list containing names, phone numbers and signatures, but obviously without mentioning the names of their businesses. .

Our reporters spoke to about 35 people whose names and numbers were attached to the foundation petition. in the petition, picked randomly.

They said they were not hajj service providers, “but Nigerians living in Saudi Arabia who are recruited annually by NAHCON and other state pilgrims boards as adhoc staff.

The House of Representatives had since began investigation of the allegations and it had conducted a public hearing where both Yusuf and NAHCON appeared.

We’ll recover our money - Kano pilgrims board

The permanent secretary of Kano State Pilgrims Welfare Board, Malam Yakubu, confirmed that Kano State government had subsidised pilgrims’ accommodation with N460m during the last year’s pilgrimage.

He said following the discovery of the overpayment of accommodation fees, NAHCON has intervened and is currently investigating the matter with a view to recovering the balance of the money on behalf of Kano State government.

He lamented that Kano State government has been paying subsidy for its pilgrims for many years, saying “when I assumed office, I discovered that the state government has been paying millions of naira to agents as accommodation subsidy for its pilgrims. Government had on different occasions paid N242m and N367m to agents as accommodation subsidy respectively.”

However, he said the matter was raised by the NAHCON’s Chairman, Alhaji Abdullahi Mukhtar while addressing the NASS investigative panel and NAHCON has pledged to handle the matter on behalf of the affected states’ pilgrims’ welfare boards.

“The problem is not peculiar to Kano alone but all the states that are participating in hajj operation. The states are waiting for the outcome of NAHCON and NASS panel investigation which I am sure will vindicate the states and NAHCON,” he said.

EFCC must probe this scam’

Independent Hajj Reporters, a non-governmental organisation that monitors hajj activities in Nigeria and Saudi Arabia, said those involved must be prosecuted and the funds recovered and return to the state coffers.

“It has been the practice of some state officials over the years to hide under subsidy to service providers to defraud their states,” national coordinator of the organisation, Ibrahim Muhammed, said.

He said the the NGO will officially write to the Economic and Financial Crimes Commission (EFCC) and other relevant agencies to investigate this issue. “Any state officials or service provider involved in this N460million fraud must be prosecuted,” he said.

The NGO said it’s findings over the years revealed that state officials collude with some service providers to defraud their pilgrims and states, saying “this is fraud in the name of religion, it is unacceptable, despicable and must stop.”

Daily Trust