Hacking Niger’s Defence Budget


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Introduction
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As militant groups spread across the Sahel, the West African nation of Niger went on a U.S.-backed military spending spree that totaled about US$1 billion between 2011 and 2019.

But almost a third of that money was funnelled into inflated international arms deals – seemingly designed to allow corrupt officials and brokers to siphon off government funds, according to a confidential government audit obtained by OCCRP that covers those eight years.

The Inspection Générale des Armées, an independent body that audits the armed forces, found problems with contracts amounting to over $320 million out of the $875 million in military spending it reviewed. The U.S. contributed almost $240 million to Niger’s military budget over the same period.

The Inspection Générale’s auditors said more than 76 billion West African francs had been lost to corruption, which is about $137 million at the current exchange rate.

They discovered that much of the equipment sourced from international firms – including Russian, Ukrainian, and Chinese state-owned defense companies – was significantly overpriced, not actually delivered, or purchased without going through a competitive bidding process.


Case details
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Seller country: Russia, Ukraine, China
Seller company: Rosoboronexport, Ukrspecexport, Agacha Technologies, Etablissement Aboubacar Charfo, Brid A Defcon, EST Ukraine, Espace Soft Trading Limited, Defcon s.r.o.
Buyer country: Niger
Goods category: Aircraft, Missile Systems, Small Arms & Light Weapons, Tanks
Equipment sold: Two Mi-171Sh military transport and assault helicopters (included maintenance and ammunition) (Rosoboronexport); Two second-hand SU-25 fighter jets (Ukrspecexport); Military equipment to the armed forces, including weapons and ammunition, night vision goggles, and a trailer for transporting tanks (Etablissement Aboubacar Charfo/Agacha Technologies); Outfit of the presidential plane with an anti-missile system that was incompatible with the aircraft (Brid A Defcon); A specialized hangar for Nigerien President Mahamadou Issoufou’s official plane (Brid A Defcon); Armored personnel carriers (manufactured by China’s state arms company NORINCO) (Etablissement Aboubacar Charfo/Agacha Technologies); 30 buses (Agacha Technologies); Upkeep of MI-35s helicopter gunships and the second-hand SU-25 (EST Ukraine; Espace Soft Trading Limited); 80 trucks (manufactured by the Austrian firm Steyr) (Defcon s.r.o.); Miscellaneous arms supplies.
Deal value: Approx. USD 875 million
Start year: 2011
Outcome status: No legal Investigations Begun

Dramatis Personae
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  • Aboubacar Hima

  • Aboubacar Charfo

  • Brid A Defcon (now defunct)

  • Defcon s.r.o

  • Motor Sich (Algerian affiliate; Ukrainian based)

  • Aerodyne Technologies

  • Etablissement Aboubacar Charfo

  • Agacha Technologies

  • Espace Soft Trading Limited

  • Halltown Business

  • EST Ukraine

  • Steyr (manufacturer)


Summary of Corruption Allegations
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This is a summary of Niger’s U.S. backed military spending from 2011-2019; the Inspection Générale des Armées found problems with contracts amounting to upwards of $320 million over the period. The system was ‘seemingly designed to allow corrupt officials and brokers to siphon off government funds’ [read the full report here].

In one deal facilitated by Hima in 2016, Niger’s Ministry of Defense bought two Mi-171Sh military transport and assault helicopters from Rosoboronexport, Russia’s state-owned defense company. The purchase, which also included maintenance and ammunition, cost Niger 55 million euros, or $54.8 million – an overpayment of about $19.7 million, according to the Inspection Générale. The auditors noted that the prices had been inflated by fraud and corruption.

Through Hima’s political influence in the defense establishment, a company he had founded in neighboring Nigeria, TSI, gained power of attorney on behalf of the Ministry of Defense. This gave him the ability to approve weapons deals and issue end-user certificates, a type of document meant to ensure that weapons sold to one client are not passed on, or resold, to an unauthorized third party. Hima used other shady techniques, too. For the helicopter deal and others, companies under his control submitted fake bids to create fictitious and unfair competition, auditors noted.

The Inspection Générale audit shows that cost inflation and corrupt practices by Etablissement Aboubacar Charfo and Agacha Technologies, company linked to Charfo, cost the Ministry of Defense $24.7 million over what it would have paid with fair competition. The auditors probed five contracts won by Charfo’s two companies between 2014 and 2018. These included a $40 million agreement to purchase armored personnel carriers manufactured by China’s state arms company, NORINCO. Auditors found Charfo had inflated the price, overcharging the government by $8.2 million.

In a 2017 deal, according to the Inspection Générale, Charfo’s Agacha Technologies won a $6.5 million contract to supply 30 buses to the Ministry of Defense. Over half of that total was lost to over-invoicing and wasteful spending, the auditors found.

In reality, the “competing” companies were either controlled directly by Charfo or linked to him. He and his associates benefited from “fake bids and the use of fake competition,” according to the audit.

In 2012, Ukraine’s state defense company, Ukrspecexport, won a contract to supply Niger with two second-hand SU-25 fighter jets built in 1984. Niger’s Ministry of Defense paid $12.5 million for both aircraft, including $1 million for insurance and delivery and $1.9 million for spare parts. The audit noted that the prices had been inflated and the additional cost of more than 350 spare parts appeared unnecessary and suspicious.

The Nigerien auditors also discovered an addendum to the SU-25 contract that appeared to facilitate a bribe. It stipulated that Stretfield Development, a London-based shell company with unknown owners, was to receive a $2 million commission on the deal in a “maneuver” the auditors described as “collusive” and “contrary to regulations.” The contract specified that the fee would be funded by the Nigerien Ministry of Defense, but paid through another London-based shell company, Halltown Business, which was shut down shortly after the deal was completed.

Details of the suspicious sale did not come as a surprise to Daria Kaleniuk, the head of the Anticorruption Action Centre, a leading Ukrainian advocacy group. “For many years, Ukrspecexport was known to be a very dodgy company which has a monopoly of trading weapons and army equipment abroad through secret sealed deals,” she said. The address in London where Halltown was registered belonged to a company formation agent and was used by over 400 other companies. Among these were four firms that were part of the Azerbaijani Laundromat, a vast money-laundering operation that benefitted elites from that country and was previously reported by OCCRP. Halltown’s ownership trail led to a Panamanian company with two Ukrainian directors.

Niger also signed separate maintenance deals with a firm called EST Ukraine. The defense ministry agreed to pay the company $4.3 million for the upkeep of its MI-35s helicopter gunships and the second-hand SU-25 jets it had bought from Ukraine’s state defense company. But EST Ukraine did not receive the payment. In fact, it was not even formally registered as a company. The company that received the payments — another Ukrainian firm called Espace Soft Trading Limited — was “not a party to the contract.”. The bids for these maintenance contracts had been rigged.


Timeline
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  • 2012

    Ukrspecexport won a contract to supply Niger with two second-hand SU-25 fighter jets built in 1984.

  • 2013

    Niger’s national security law allowed for some of Niger’s defense spending to be carried out in direct negotiations with any company, rather than putting it to public tender.

  • 2016

    Niger adopts the law that requires more transparent procedures for defence spending.

  • 2016

    Niger’s Ministry of Defense bought two Mi-171Sh military transport and assault helicopters from Rosoboronexport.

  • 2017

    Charfo’s Agacha Technologies won a $6.5 million contract to supply 30 buses to the Ministry of Defense.

  • 2014

    During the period between 2014 and 2018, the auditors probed five contracts won by Charfo's two companies, including a $40 million agreement to purchase armored personnel carriers manufactured by China’s state arms company, NORINCO.

  • 2017

    Throughout 2017-2018 Charfo received several contracts from the presidential administration. One of those was a 2017 contract to furnish the new headquarters of the Inspection Générale des Armée. Charfo also received contracts from the president’s office to supply military equipment to the armed forces, including weapons and ammunition, night vision goggles, and a trailer for transporting tanks

  • Between 2017 and 2018 Defcon s.r.o fulfilled a $33.6 million contract from Niger’s government to deliver 80 trucks manufactured by the Austrian firm Steyr.

  • 2018

    Hima issued Rosoboronexport an end-user certificate on behalf of Niger’s Ministry of Defense.


Investigation Outcomes
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  • “As far as the audit is concerned, I don’t think there’ll be any prosecutions,” said Hassane Diallo, head of Niger-based Centre d’Assistance Juridique et d’Action Citoyenne, an anti-corruption group.
  • “All the economic actors mentioned in the audit belong to the ruling party. They come from the same region as the president.”

References
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  • https://www.occrp.org/en/investigations/notorious-arms-dealer-hijacked-nigers-budget-and-bought-arms-from-russia