Nigerian Senate to probe lending to Transcorp

The Nigerian Senate has formally disclosed its decision to probe the lending of 75 billion naira (US$637 million) to Transnational Corporation (Transcorp) by a consortium of banks a few weeks after it bought a majority stake in Nigerian Telecommunications (NITEL), the national telecom operator.

The Senate Committee on Communications wants to know why Transcorp asked for loan less than a month after it bought a majority stake in NITEL in 2006, Committee Chairman Senator Sylvester Anyanwu said.

The probe will not delay the current plan to sell part of Transcorp's controlling share of NITEL, which will be preceded by a public hearing to ensure that only a company with both technical and financial know-how acquires the core stake.

According to media reports in 2006, Transcorp secured a 75 billion naira loan from a consortium of banks including Union Bank of Nigeria, Zenith and First Bank of Nigeria, to pay for the 10 percent deposit it made for the purchase of its 51 stake in NITEL.

The Senate Committee on Communications has written to the banks, accusing them of jeopardizing the federal government's efforts to secure a stable buyer for the moribund NITEL, Anyanwu said.

"We have written to the banks, reminding them of the recklessness of their actions, as it has put in jeopardy the activities of the Federal Government in finding a suitable technical investor for NITEL," he said.

The senate committee chairman noted that though it was on good faith that banks lent Transcorp funds for development of infrastructure in the public sector and that "we must all be careful to ensure that our good intentions are not marred by a lack of due diligence."

In addition, he said, that the committee is looking into the another 1 billion naira of unaccounted funds from NITEL SAT-3 cable services.

He pointed out that several corporate bodies were requested to submit memoranda to the committee detailing their utilization and payment for NITEL SAT-3 facilities. Though he expressed satisfaction regarding the responses from some companies, he also lamented that some businesses have failed to respond.

Copyright © 2008 IDG Communications, Inc.

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