How
Security Lapses Led to the Collapse of NAFCON
At
100% production, the NAFCON’s expected daily revenue from its installed
capacity of 1,500 metric tones of ammonia per day; 1,000 metric tones of urea
per day; and 1,000 metric tones of NPK per day was 100,000 USD (about N14
million per day, conservatively). When the National Fertilizer Company of
Nigeria (NAFCON) began production in July, 1987, it was producing between 110%
- 115% installed capacity and was adjudged Nigeria’s most successful indigenous
manufacturing company and the highest foreign exchange earner, after petroleum.
The
market for NAFCON brand of blended NPK was very large, because of the
recognition of its high quality and availability of multiple grades. By 1990,
when NAFCON’s workers salary was one of the highest remuneration packages in
Nigeria, the company’s total staff strength stood at 5,500 employees with 2,000
casual workers. By 1991, NAFCON was already a huge success and a monument of
national honour and pride. From 1989 – 1992, the company received several
international awards as best producers of urea products in the world. Its
premium ammonia and urea far exceeded world standard. NAFCON was therefore
declared self-reliant and self-sustaining.
Government
conflicting policies also contributed immensely to the early demise of NAFCON.
Supervision of the company by federal authorities looked unfocused as control
of the company oscillated among federal ministries, especially after the
completion of the Nigerianization process in 1991. From inception to 1995,
NAFCON was under the control of the Federal Ministry of Industries. Later in 1995, the supervision of NAFCON
shifted to the Federal Ministry of Agriculture, just because the company was
producing fertilizers for farming, and remained there till 1997 when
supervision of the company moved to the Presidency.
In
1998, the Federal Ministry of Agriculture once again took back the supervision
of NAFCON until 2001 when the company shifted back to the Federal Ministry of
Industries. For a successful company such as NAFCON, established with billions
of the tax-payers’ money, the apparently unending shift of supervision looked
unguided, unfocused, and uncertain.
At
the peak of its glorious days in 1992, the Federal Government of Nigeria, under
General Ibrahim B. Babangida, announced that NAFCON was among industries to be
privatized, but never advanced any reason(s) for the planned action.
Shortly
after the announcement, the Technical Committee on Privatization and
Commercialization (TCPC) made many trips to Onne to inspect and valuate the
company in readiness for privatization or outright sale.
Workers
of the company became worried, not sure of their fate. Management had no
explanation. In reaction, sabotage through over-invoicing of goods and inflated
prices of spare parts, duplication of form “M” and Letters of Credit as well as
splitting of contracts in favour of foreign companies, which did not service
them, became the order of the day. Management who ought to have helped to put
the situation under control began to get deeply involved in daily business in
NAFCON, in order to make quick gains before the company became privatized.
Following
this development, the fortunes of NAFCON nose-dived, leading to the first
management/union confrontation in June,1992 at some stage, the union held
management staff hostage for several hours in the company’s premises until
agreement was reached on staff benefits. While the situation above waited for
attention, the company was split into two, NAFCON 1 and NAFCON 11, on April 6,
1993.
This
situation suddenly polarized the staff, further deepening uncertainties among
the agitated workforce and heightening insecurity, increased widespread
suspicion, acrimony and malice. Staff accused of disloyalty were unfairly
treated and even retrenched. That laid the foundation for heightened union
activities and demands, acts of sabotage, forgery, pilfering and hostage taking
and eventual collapsed of the company. On the whole, NAFCON had four Managing
Directors in four years; and was enveloped by a cloud of uncertainties.
Although
from its inception till NAFCON stopped production, it produced a cumulative
total of 6,600,000mt (six million, six hundred thousand metric tones) of granular
fertilizer and 3, 500, 000mt (three million, five hundred thousand metric tones)
of ammonia, NAFCON potential to produce explosives, fibre glass (for boats),
glass-sheets, and plastics were untapped. In fact, NAFCON was the only company
in Nigeria that could produce high grade explosives at the time of its
operations. Management and workers in the urea plant were aware of the enormous
untapped potential of the company, but chose to concentrate on fertilizers and
depend on the revenue therefrom.
According to available statistics, Nigeria
lost an average revenue of N336 million daily from the collapse of NAFCON between the time it was shutdown
till it was sold to O-secul
Nigeria limited in August
2005. Its 5,500 employees and 2,000 causal workers lost their means of
livelihood; over 350,000 households that NAFCON was providing livelihood by its
downstream and upstream activities lost their sources of income. As Kharbanda
and Stallworthy put it, “company failure affects not only those most immediately
concerned, those employed by and trading with the company but also industry in general, the overall economy and the well-being of the country in
general, the overall economy and the
well-being of the country or countries
where the company operates”.
Collapse of NAFCON
The
downturn in the fortunes of NAFCON began in 1995, when the company in the face
of numerous odds, surpassed the production target of fertilizer required for
the Federal Government to stop importation that year. After the bumper production, the company
could not undertake the necessary turnaround maintenance of the plant which was
then overdue because proceeds from the sales of fertilizer did not come on time
and when it did, it came in trickles.
The
last installmental payment from the 1995 sales was received in the year 2000,
five years after. The expected revenue from the 1995 sales was slashed in 1996
from N19 billion to N12 billion when government unilaterally fixed the prices
of NAFCON fertilizer products below the operating cost. This resulted in the
slow and steady decay of the plant and equipment as critical spares required to
keep the plants minimally on stream could no longer be produced.
On
July 7, 1999 the failure of the Waste Heat Boiler Tubes in the Ammonia plant
caused the entire facilities to be shutdown. Prior to the shutdown, the plants
had operated below 50% capacity utilization caused by the erratic operations of
the Water Treatment Units.
In
all, three proposals for completing the revamp work were received from
engineering firms and evaluated both by NAFCON and the Technical Board but no
directives were received from the supervising Ministry of Industries.
The
was low moral among the staff resulting from observed gross indiscipline of
some members of the upper management of the company and the failure of the
Ministry of Industries and the Technical Board to take disciplinary actions
based on several investigations.
The Federal Government
did set up a Commission of Inquiry followed by that of the Senate Committee on
Industries, bit the impacts of these investigations were never felt, thereby
compounding the moral problem among the staff.
Security in NAFCON
Available
documents indicate that before the commencement of construction of the company,
an Environmental Impact Assessment (EIA) was conducted by the Ministry of
Industries. There is nothing to show that SECURITY survey was ever carried out
in the company whether before construction, during construction or when fully
operational.
The
head of security in NAFCON was a retired Captain of the Nigerian Army, who
served as Security Manager and reported directly to the company’s Managing
Director. He had no formal training in Industrial Security. The security
department had about 50 policemen who worked under him in the department.
The
50-man security team was made up of policemen posted from the Rivers State
Police Command in Port Harcourt to NAFCON to help maintain security in the
company, and the Supernumerary Policemen (Spy Policemen), directly recruited by
NAFCON, were trained for three months in public policing at the Police Training
School at Nonwa in Tai Local Government Area of Rivers State, about 10
kilometers from the NAFCON plant. Again, they were not exposed to any training
in industrial security. The head of the Spy police, called, “OC SPY” had the
Security Manager as his direct boss and to whom he reported cases directly.
During
this period NAFCON premises did not have a wall or perimeter fence. NAFCON had
gates to the administrative block (the main office complex) and to the
production area but there were no electronic detectors and no effective access
control. In the production area, only workers in the area, contractors,
suppliers, or visitors cleared from within could gain entry, but this was not
very strict. The areas of NAFCON with some levels of access control were the
ammonia, urea and NPK (blending) plants.
There
were no closed circuit television (CCTV) installed in strategic locations in
NAFCON for surveillance and monitoring of intruders. Retrenchment of staff was
haphazardly done. Many workers were laid off without any reason or with flimsy
excuses. Accusations were not investigated before sentencing the suspected
culprits to punishment. At the same time, some persons recruited were not
properly screened, especially those in the junior and casual staff categories.
As a result, some staff earlier retrenched found their way back to the company
and were reemployed. Such people, surely, did not come back with their whole
heart to work for the progress of NAFCON, but on a reprisal mission to attack
the company through stealing and sabotage.
NAFCON
jetty, through which fertilizers were exported to international market, was not
properly protected resulting in the conveyor-belt conveying fertilizer from the
production plant for loading into a waiting ship berthed at the jetty slacking
and some bags of fertilizer felling into the river. The river became polluted
and killed fishes which were found floating the next day. The Onne and Okochiri
communities who live by the river protested and were settled by the management
of NAFCON.
This
apart, NAFCON was a big polluter. Poisonous fumes from NAFCON plants were not
released into the atmosphere, but piped underground to a nearby creek. As a
routine, the pipeline was cleansed every month and the effluent released into
the creek, resulting in the death of fishes and some other aquatic life. Because
of pollution caused by NAFCON, the company witnessed several conflicts with its
host communities – Onne (Eleme) and Okochiri (Okrika).
Fertilizer
is a highly toxic/poisonous chemical. It is recommended the world over that
people should not work in a fertilizer company for more than five years and
should not work at the plant more than six months. It is also recommended that
persons beyond the age of 45 should not work in a fertilizer company because of
the toxicity of the environment.
But
NAFCON management which adopted the policy ab initio apparently did not
encourage the workers of the production department to observe this policy.
Instead, they pampered them with sizeable allowances, beverages and milk. With
this, the plant workers viewed themselves as special workers deserving special
packages and were satisfied with that.
My
investigations revealed that several plant workers died while NAFCON was still
producing, but management would not give the minutest information as to the
cause of their death, but only shoulder the cost of burial and give
“maintenance packages” to the bereaved families. According to the National
Network Newspaper (a Port Harcourt based tabloid) in September, 2005 “before
the laid-off NAFCON staff were paid their entitlements, more than 500 members
of NAFCON had died since the company stopped production as a result of their
exposure to ammonia gas”.
Workers
at the plants (production department) were at liberty to use facilities and
materials meant for production the way they liked. It was therefore easy for
them to manufacture mirrors, glass sheets, etc. to few interested buyers
without management detection. These workers were also in charge of the urea
plant where explosives could be produced.
As
a safety precaution, workers in the bagging area were supposed to wear
protective armours, but even when they were provided with the items, they
preferred to sell it and make quick money and then exposed themselves to
danger.
The
technical audit carried out by M. W. Kellogg, the original builders of NAFCON
between August, 1995 and May, 1999revealed the dilapidating state of the
company. A company that was barely 8 years old was said to technically 15 years
old. The Turn Around Project (TAP) which is the same as Turn Around Maintenance
(TAM) were not genuinely executed. The plant engineers merely collected money,
ordered few spare-parts and did not do any thorough job. Besides, the plant was
over-flogged, having been made to produce at 110% - 115% above installed
capacity. The report also added that the staff strength of NAFCON should not be
more tha 800 people. But NAFCON had 5,500 workers.
NAFCON
witnessed many management-employee conflicts which were often protracted.
During lock-outs, hostage-taking and other forms of protest by the workers,
management invited soldiers and mobile policemen with live ammunition to try to
arrest the situation.
Misappropriation
of funds was common at the slightest opportunity. Theft cases were never
properly investigated. These prepared grounds for flagrant cases of sabotage
against the company.
There
were some dilapidated buildings in and around NAFCON that were not manned in
any way by security personnel. They constituted hide-outs for criminals who
from time to time went into the company to steal fertilizers and spare-parts
from the warehouses and food from the catering stores.
Above
all, there was massive waste in NAFCON. Top management and supervisors openly
engaged in over-invoicing huge sums of money, obviously because of what they
stood to gain in monetary terms. My investigations also revealed that huge
heaps of raw materials that could have conveniently taken care of NAFCON’s
production at least for several months were left lying waste at various points
in the production department. In the same vein, equipment ordered for millions
of dollars were left to waste at the Oil and Gas Free Zone, Onne.
In
2003, the Management of NAFCON at the time discovered a cartel in the company
that specialized in duplicating Form “M” and Letters of Credit as well as
splitting of contracts in favour of foreign companies which did not service
them. Forty-four such Letters of Credit were detected and out of these, one of
the foreign companies had 20 Letters of Credit. Precisely, on 28th
October, 2003, the management of NAFCON wrote a letter reference
MMD/FP/ABJ/C10/2003-003 to the Central Bank of Nigeria, requesting the
cancellation of Letters of Credit fraudulently issued to some foreign companies
which did not service them, an economic crime against the Federal Republic of
Nigeria. The Letter of Credit amounted to USD 1, 235, 855.70 (One million, two
hundred and thirty-five thousand, eight hundred and fifty-five dollars seventy
cents).
From the foregoing, we
can briefly deduce the following security blunders as being the core cause of
the collapse of NAFCON:
1.
NAFCON
was a case of total neglect of security.
2.
The
company was established and commenced operations without security survey.
3.
Its security department was manned by
commercial policemen, headed by a retired army captain, none professionally
qualified and none had formal training as security practitioner.
4.
There
was total absence of relationship between covert and overt security.
5.
Security principles were violated ignorantly.
6.
Security
programme/designs were never given attention.
7.
Management
attitude towards security was indifferent thus enforcement of security rules
suffered.
8.
Management
was exemplary only in fraudulent acts and wastes paving the way for vandalism,
terrorism, theft, embezzlement and eventual collapse of NAFCON.
It has been estimated that Nigeria loses almost N166
billion annually (excluding human lives, sufferings, and pains that cannot be
quantified appropriately in monetary terms) to vandals, fraudsters, and other
categories of criminals. A breakdown of this figure reveals volumes. According
to the NNPC, the annual lose inflicted on the corporation by oil theft,
vandalism and repairs arising therefrom is put at N150 billion. The Nigerian
Extractive Industry Transparency Initiative (NEITI) also reported huge annual
lose of over N10.9 billion to criminal activities. While the annual lose
suffered by other industrial and commercial concerns is said to be over N5.5
billion.
This is not only
threatening the sustainability of the socio-economic development of the
country, but also posing great threat to national security, business operations
and individual welfare. It also discourages labour, investments and genuine
investors. The menace cut across both the public and private sectors.
Organizations such as NNPC, PHCN, SPDC, NAOC, to mention but a few, have
several tales to tell about what criminals have done to their facilities and
activities.
The basic aim of
security in business is to contribute to business profits, reduce or eliminate
preventable crime and losses; evolve and maintain an environment of peace and
tranquility; and boost staff moral and public confidence. This, security does
by providing effective protection services; interfacing between the
organization and its publics; creating and maintaining a peaceful and serene
environment devoid of crime or fear of crime, which enables the business to
survive, be in service, generate incomes, and meet its obligations to the various
publics.
A security programme
for any business undertaking must define its underlying motivations for
effective security and this must incorporate the following:
1. Desire
for reduce losses;
2. Desire
to create employee’s awareness of the consequences of violation of policies;
3. Desire
to inform employees of their responsibilities for assets protection;
4. Desire
to involve employees in loss prevention actively;
5. Desire
to modify values, behaviour, or attitude while on the job;
6. Desire
to provide job enhancement; and
7. Desire
to sustain serene environment with the company publics.
In other words, a
business security programme must as of necessity provide realistic answer to
the following basic questions:
a. How
can the security function enhance profitability?
b. What
must be done to protect the main interests of the facility or company?
c. What
programmes are essential to provide required protection?
d. How
much staff is needed to carry out required tasks?
e. How
much money is needed to fund required programme?
All security programmes
must be based on a hierarchy of needs, which addresses corporate, facility,
personnel and environmental issues. It must identify and place a series of
barriers between what the company wants protected and what the company wants
protected from. That is what I called total solution for a total problem.
NAFCON management was badly
informed of the fact that there is no security without some methods of
establishing accountability. For many numbers of reasons some people will steal
and a few items missing each day could amount to a staggering sum. Hence it is
an economy necessity to prevent losses no matter how small they appeared at
first. All loss problems start small, and if they are not controlled or
prevented at the infancy stage, they grow and become serious problems, which
may threaten the efficiency, effectiveness and the very survival of the
organization.
NAFCON therefore, is case
of losses that start small and eventually grown to become the cancer that
killed the company. Those who neglect security always pay dearly for.
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