Several companies in Nigeria that have won billions of naira contracts from the Federal Government are failing to file their annual returns with the Corporate Affairs Commission (CAC). This is based on their inactive status on the CAC portal.
Some of the firms are also listed as non-tax compliant, according to the Federal Government’s Bureau of Public Procurement (BPP) database.
In 2020, the CAC classified many of the companies as inactive due to their inability to submit audited financial transactions, Dataphyte findings showed.
According to the CAC, it costs N5,000 for one company to file its annual returns. However, other documents are required for filing returns beyond the annual returns fee. The filing confirms a company’s financial health, shows its viability, and promotes financial transparency.
The CAMA 2020 stipulates, “A business name must file its annual returns alongside financial statements not later than June 30, every year. Except for a single shareholder company, all companies must file annual returns alongside the audited accounts within 42 days after the annual general meeting.”
It further said, “Incorporated trustees are required to file a bi-annual return made up to 30 June and 31st December of each year.”
The CAC says that there are 3.1 million registered companies in Nigeria.
Additionally, between 2020 and 2022, based on the registration figure released by the CAC on its website, 334,403 new companies were registered.
In the same period, 974,557 business names were also registered by the CAC. The number of newly registered incorporated trustees stood at 47,074 in the same period.
Some sections of CAC annual returns form in Nigeria
Checks on govspend.ng, a platform that tracks payments made by the government, showed that a number of companies that had received monies running into billions of naira from the Federal Government had failed to file their annual returns.
Section 421 (1) of CAMA 2020 says that limited liability companies are required to file their annual returns with the CAC within 42 days after their annual general meeting.
Lawyers told Dataphyte that even if the CAC designated a company as inactive long after executing a government contract, it still amounted to a violation of CAMA to refuse or fail to file annual returns.
A company named Triacta Nigeria Limited received at least N29.396 billion from the government between November 2022 and June 2023 but is inactive on the CAC as of the time of filing this report (in July 2023). The organisation has received N1.544 billion in 2023 alone.
Similarly, Acute Options Limited received N5.629 billion from the Nigerian government between 2019 and 2023 yet remained inactive on the CAC portal as at the time of filing this story. In 2023 alone, the firm has received N820.940 million.
Stargro Nigeria received N7.845 billion between 2019 and 2023. It has got N3.068 billion from the government in 2023 alone.
Truetech Global Investment Services Limited is another organisation that received N7.257 billion from the government between 2019 and 2023, yet remained inactive on the CAC portal as at the time of filing this report. The organisation has received N1.989 billion from the government for a contract this year.
Writes Energy Limited got N5.554 billion from the government between 2019 and 2023 but was inactive on the CAC portal as at August 4, 2023. In 2023 alone, the firm has received N1.089 billion from the government for executed contracts.
Another company found to be inactive on the CAC is Jamec West Africa Limited. The firm got N6.850 billion from the government from 2018 to 2023. In 2023 alone, it has received N2.416 billion.
Another company, Assiamarz Nigeria limited, which got N6.088 billion from the government between 2021 and 2023, was inactive on the CAC portal a at the time of filing this story. The company has received N1.988 billion from the government for contracts in 2023.
Companies’ inactive on CAC and listed as not tax-compliant
Apart from being inactive, some of the companies have also been flagged for not being tax-compliant. Checks showed that First Independent Power Company Limited, which is inactive on CAC, was listed as non-tax compliant on the Federal Government’s BPP database as at the time of filing this report.
Elizade Nigeria Limited, which received N4.954 billion from the Nigerian government for contracts between 2018 and 2023, was also listed as inactive on the CAC portal. In 2023 alone, the firm got N499.299 million. from the government for contracts.
The firm, which has been supplying different vehicles to the government, is listed as non-tax compliant by the BPP database.
When contacted, an Elizade Nigeria Limited official, Mr Koledowo Omotayo, denied that the organisation was defaulting in tax payments.
“It is untrue that we are defaulting in taxes. We have been working with the auditor from the FIRS and this is strange to me,” he said,
Mr Koledowo promised to call back but did not. The reporter was unable to reach him as at the time of filing the report.
However, it was discovered that the company had filed its FIRS returns. Nevertheless, it was yet to file its returns at the CAC, which was why its status was inactive as at the time of filing the report.
Similarly, First Independent Power Company Limited got N6.077 billion from the Federal Government between 2021 and 2023, with N534.168 million received in 2023. However, it is inactive on the CAC portal and listed as not tax-compliant.
When contacted, First Independent Power Limited denied defaulting on tax payments.
A desk officer, Victoria Omodu, handed the phone to her line manager who is in charge of issues relating to taxes. The line officer, who did not identify herself, stated that the company would investigate the development.
“This issue you mentioned is news to me, but we are investigating. Give us time,” she demanded.
Dataphyte was, however, told that the company was working on the filing of annual returns after our correspondent called the company for the second time.
However, the veracity of this claim could not be confirmed, as the company was still inactive on the CAC portal as at the time of filing this report.
A BPP staff member, Mr Bassey Emmanuel, told Dataphyte that checks on the BPP database showed that First Independent Power Pompany was non-compliant with taxes.
More so, Omotosho Electric Energy Company Limited received over N13.360 billion from the Federal Government of Nigeria between October 2021 and June 2023, yet it remained inactive on the CAC portal at the time of publishing this story. In 2023 alone, the firm has got N3.879 billion.
Checks on the federal contractors’ portal powered by the BPP showed that Omotosho Electric Energy Company Limited has no tax compliance record on its portal.
The company’s directors include Pacific Energy Limited and Adedeji Tajudeen Adeleke.
Tax losses
Nigeria loses billions of dollars to tax evasions. In 2021, Nigeria lost $178 billion to tax evasion by multinational companies.
Dataphyte gathered from different sources within the BPP that some of the companies might have paid necessary taxes but failed to approach the BPP to update their records to reflect their tax payments. This will then make them eligible to work with the government.
“Some of these companies usually present tax payment documents. However, they are meant to approach the BPP to update their records to show that they have paid taxes. This then makes them eligible to do business with the government,” a source in the BPP, who did not want to be named, noted.
Dataphyte, in earlier reports using data sourced from Anfani, had exposed how contracts in states such as Oyo and Ebonyi were awarded to companies despite their inactive status.
Contracts won by these companies ran into hundreds of millions of naira.
Violation of procurement laws
Section 8 (d) of the Public Procurement Act states that bidders may be denied contract awards if they are in arrears regarding payment of due taxes, charges, pensions, and social insurance contributions unless such bidders have obtained lawful permits in respect to allowance, the deference of such outstanding payments or payment thereof in instalments.
The Public Procurement Act further states in 6 (a) that companies that are awarded contracts must have the financial capability, meaning that by these provisions that companies that have failed to carry out any operations or have viable financial statements for two rolling years may not have been suitable to execute contracts running into hundreds of millions.
To further strengthen the importance of paying taxes and meeting government standards, in its bulletin announcing COVID-19 procurement procedures, the BPP states thus, “Procuring Entities shall ensure that all Contractors invited possess requisite technical and financial capacities to undertake such projects and are eligible to do business with Government.”
Why defaulting firms must be punished
A lawyer, Mr Awosusi Kehinde, told Dataphyte that the government was losing money to companies failing to file annual returns and pay taxes.
“The law stipulates that companies must file annual returns. It is criminal and illegal for an organisation to default in filing these returns, confirming their activeness and financial transparency,” he noted.
Barrister Awosusi further faulted the BPP and other relevant agencies for the problem of non-filing of annual returns.
“The CAC remains the ultimate body to determine the capacity of an organisation and its activeness, but when regulatory bodies fail to confirm the status of companies, it becomes an issue. Many companies do not regard filing annual returns,” he noted.
A policy expert, Mr Samuel Atiku, told Dataphyte that it was illegal for companies not to file annual returns.
“It is a big red flag for organisations not filing annual returns. It is clearly stated by the law that regardless of an organisation’s status, filing annual returns is sacrosanct.”
He wondered why companies doing business and rendering services would be found wanting regarding filing returns.
“It is something to be investigated, that companies carry on businesses with the government but flout the critical part of the law that harps on annual returns,” he noted.
He opined that while there were penalties against businesses that failed to file annual returns, it was minimal compared to the offence.
The Company Income Tax Act says that, “any company that fails to file returns or files returns late shall be liable to N25,000 in the first month and N5000 in subsequent months in which the failure continues.”
Companies that also fail to pay tax are quoted to be liable to “a penalty at 10% and interest at the Central Bank of Nigeria monetary policy rate.”
The Country Director of Accountability Lab, Mr Odeh Friday, told Dataphyte that the development was a loss of revenue for the government.
“For these companies to carry on businesses with the government despite flouting an important part of the law shows that they are being enabled to do so.”
He charged the CAC to ensure that beneficial owners of these companies were called out.
“The CAC is the custodian of the beneficiary owners database, and it is only key that they ensure that the owners of these companies are known. If an organisation does not support the cause of growth for the country, it is an issue,” he stated.
The Chief Executive Officer of the Centre for Promotion of Private Enterprise, Dr Muda Yusuf, noted that agencies responsible for ensuring returns filing should act according to the law to punish defaulting companies.
“The government should know the law and uphold it,” he noted.