How the world's largest telecom supplier secured its biggest sale to Nigeria and then cheated the man who won it for them.
You don't expect blatant unfairness from a public company. It's bad business.
Their stockholders are watching, as is the world press. Why then would a giant like Motorola, the world?s largest telecom company, secure its biggest sale to Nigeria and then try to cheat the man who won it for them? This is what I wanted to know.
BACK IN 2002, the global telecoms giant Motorola (Schaumberg, IL, MOT) was narrowly defeated twice in public bids to win their biggest contract to supply a GSM cellular telephone network to the Nigerian National Telecom, NITEL. Siemens, the German giant, publicly swaggered with suggestions that it gave $2 million in bribes to the country?s Vice President (Atiku Abubakar) to win a third of the $150 million contract. The Chinese suppliers (ZTE) and the Swedes (Ericsson) paid equal amounts to win their thirds.
But MOT was left out of the bidding, supposedly forced out of the under-the-table bidding war because of the U.S. Foreign and Corrupt Practices Act. Everyone from the former Chairman (Mike Galven), CEO (Mike Zafirovski), EVP (Adrien Nemchek), VP (Margaret Rice-Jones), and VP (Jeff Cherif) were anxious to win the deal worth $55 million as the company plummeted in global sales and its stock fell into junk bond status. But how could they win in the world?s dirtiest country, well known as the global bribery capital where no executive feared to tread.
Enter Robert Stewart, a Canadian executive and former CEO living in Switzerland who was introduced to Cherif by an employee, Amooti Binaisa, whose Father had deposed Idi Amin in Uganda. A rare President, Binaisa like Olesegun Obasanjo of Nigeria, knew how to fight corruption in his own country. Stewart met Cherif in October 2002 in London and for the next six months sent over 100 E-mails back-and-forth to each other to confirm a last attempt to overthrow the corrupt bid, and secure a winning contract for MOT. Cherif sent a contract which Stewart signed that would pay him +$1 million if he could overthrow the others and win.
Stewart arrived in the Nigerian capital Abuja in March, 2003 and immediately set to work. He had been the keynote speaker at the Nigerian Investment Summit in 2001, sitting beside President Obasanjo, and declared that the only method of securing foreign investment for Nigeria was to clean up corruption. At a similar speech to the United Nations (UNCTAD) in Lyons, in 1997, Stewart told 2000+ senior government leaders from 195 countries that corruption, war, disease and mismanagement had to be averted before any serious investment flows would come to the Third World.
For 37 years, Stewart had worked in every major country in Africa, including the construction of the national airport in Lagos, Nigeria (Murtalleh Mohammed), the construction of a sugar refinery (Savannah Sugar), a large dam (Kiri Dam), hotels, and other infrastructure. In Uganda and Oman he worked on copper mines, in Zimbabwe he built a 5 star hotel, in the DR Congo he chaired the largest cobalt mining company in the world. In Tanzania he had started the billion dollar Songo Songo gas-to-electricity project.
In short, he had become "Mr. Africa" to the outside world, desperately trying to hold the line on corruption and mismanagement after the decolonization period
throughout the continent. He knew his time was running out. There was little room left in Africa before the whole continent would implode in a sea of debt, disease, self destruction and disheveled industrial projects.
Back in 1968, he was the first man to circumnavigate the world overland. In a small Land Rover, he criss-crossed the whole of Africa from Casablanca to Cape Town and back to Cairo. From there, he struck across Asia through Syria and Lebanon, to Afghanistan, Viet Nam and Singapore before continuing on through Australia and the rest of the inhabited world.
On his first journey through Nigeria, he saw the Biafran civil war from roadblock- to-roadblock along the highways, outback savannahs and jungles. He met President Yakuba Gowon in Lagos and Col. Ojuku leading the rebel Igbo's in Port Harcourt. Suddenly his TV images of starving children with distended bellies vanished as he was told how Swiss Public Relations companies reaped millions in public donations from their staged pictures to finance the war with caches of AK 47?s, rockets and other military arsenal.
Stewart crossed the entire war-torn country, once meeting Major Obasanjo, then head of the Signals Corps for the Nigerian Army, who gave him a UN sticker to put on his car to get through the roadblocks faster. They would meet ten years later when Stewart returned to complete the National Airport contract for him. Obasanjo replaced the assassinated President Murtalleh Mohammed.
Throughout Obasanjo?s first Presidency (1975-79) Stewart would succeed in completing four of the largest and most important infrastructure contracts in the country, bursting at the seams with oil money and new found independence from Britain. When Obasanjo gave up his first term as President, the ceiling fell on corruption and collapsed Nigeria into one of the worst periods of plunder in any developing country.
Ruthless military dictators ruled from coup-to-coup stealing billions of dollars of the country?s newfound wealth. Obasanjo was jailed for treason and almost executed by former President Sonny Abacha, who had stolen billions of dollars from his country?s Treasury.
Stewart returned to Nigeria after a decade in a dozen other less hostile African nations, working on behalf of giant American, Canadian and British companies, each trying to find legitimate avenues of investing, contracting and supplying the new governments. He ran one of the most successful consulting companies in this endeavour, gave speeches to the World Bank and IMF about avoiding corruption in Africa, which largely fell on deaf ears.
In 2001, the august Commonwealth Society from London, former colonial masters and owners of Nigeria as well as half of Africa (on which the sun never set on the British Empire) held the first major investment conference in post-dictatorial Nigeria. Obasanjo had been democratically elected in 1999.
Stewart was his invited guest and gave his drop dead speech condemning corruption to hundreds of the country?s intelligentsia and financial community.
A standing ovation followed. Stewart later dined with Obasanjo at Asa Rock, the Presidential compound, where he was assured that any American company trying to build telecoms projects in Nigeria would be welcome, free from corruption. Stewart was assured by Obasanjo, sitting in his private library at the residence that he would intervene in the event any corruption derailed a serious project.
Obasanjo was trying to save his rotten continent, replete with corruption, war and despair. For three years running, he sat with President Bush and the G8 leaders at their annual summits where he promised to clean up corruption, not only in his native Nigeria, but across the continent. The pay off would be greater funding in aid and investment dollars crucial to the success of grinding their way out of poverty. Stewart had enumerated the formula many times to him before.
Upon arrival in Nigeria, Stewart found Obasanjo chairing yet another initiative to clean up corruption in Africa, while staying at the same Nikon Hilton Hotel in Abuja. They met on the first Friday afternoon in early March, 2003 and shared comments on Nigeria?s access to telecoms technology. Obasanjo agreed to overrule the corrupt cellular contract awarded to Siemens, and opened up bids again for the following Monday morning. The National Tender Board called the six international bidders from France, Sweden, two from China, and America (MOT) to present their bids again the following Monday. Stewart alerted Motorola headquarters and crushed together a final bid against those who had won previously on corrupt offers of millions to the Vice President.
Fearing that even Motorola could not be trusted in the process, Stewart visited the American Ambassador (Howard Jeter) at the US Embassy in Abuja. The two talked for an hour, closing with the promise that the Ambassador would dispatch the Embassy's Economic Officer to attend the Opening of Tenders on Monday. Steve Hrisic sat behind Stewart and two Motorola salesman as the bids were opened in front of a dozen senior government officials and all the competition.
Motorola appeared to lose every section of the Tender on price. As their local salesmen were getting up to leave, Stewart cautioned them to sit down and watch. He immediately challenged the Head of the Tender Board in the President?s office and asked for full explanations behind each bid. It was clear that different bids contained vastly different equipment, grace periods of payback, interest rates, and other terms and conditions for the deal. It took eight hours to negotiate the introduction of a comparison of interest rates and payback terms, but when all the dust had settled, Stewart walked off with the biggest deal ever won by Motorola with a government in Africa. This was Africa?s most populous nation where telecom connectivity ranked below 4% of the population of 130 million. Just think of the future market potential.
Billions of dollars of contracts awaited Motorola or any competitor who wanted to play the game straight and honestly. The Nigerian Government's chief anti-corruption unit was led by a former Harvard Graduate who fought to hold the same line as Stewart was pushing.
Stewart's own cell phone and computer whirred with congratulatory messages from all of Motorola?s Vice President?s eager to share in the spoils of the biggest deal that year. But just as the victory party was about to start, the Motorola salesmen sent to back up Stewart?s efforts, quickly left the capital. Stunned, Stewart demanded back-up to insure the contract would not be lost in a swirl of bureaucrat contract signing over forthcoming weeks. With three decades of experience, he knew this was the most vulnerable time in Africa when hard fought contracts were lost. Corruption offers to sway officials would be trumped up to astronomical levels to swing the deal in other directions. Stewart was left entirely on his own. For two more weeks, he lobbied Cabinet Ministers to have the deal confirmed by Government, then expedited the legal papers for signature.
But the Motorola back-up team had disappeared and took weeks to reappear. Finally the outside legal team arrived to sign the deal. Stewart prepared to leave, secure that the deal was safe and Motorola would receive full payment over the terms that had been won weeks before.
He packed his bags and prepared to leave the next day. Prior to departure he received a call from the President?s Office suggesting that Obasanjo wanted to say goodbye, thank him for the honest efforts, and bid him farewell. Stewart jumped into the chauffeured car for the drive over to Asa Rock. As they entered the Presidential compound, the car suddenly swung into the front gates of the dreaded State Secret Security (SSS), notorious for shaking down foreign businessmen for bribes to win contracts for large government deals.
Stewart quickly called the US Ambassador on his Motorola cell phone. No answer. A call came in from the Canadian Ambassador, whom he had met several times during his stay. He explained quickly and briefly where he was headed. The Ambassador said he would come looking for him if he heard nothing further in the next few hours. Both knew that some peril and possibly death lay ahead. This was Stewart?s first experience with the darkest side of Nigerian affairs.
For the next three days, Stewart was illegally deprived of his freedom, held without food or water, and beaten consistently by thugs who sought out bribes on behalf of the Vice President for the Motorola deal. Stewart refused to give in a penny. On the third day, the Canadian Ambassador managed to contact the President who was traveling up-country in the next Presidential elections. He was freed in minutes with no charges, explanation or excuse for the behavior. After a debriefing with the Ambassador, Stewart decided the contract had been won and would be honored by Obasanjo. As the SSS was run by the Vice President Atiku Abubakar, recipient of the biggest bribes in the government, Stewart was satisfied that he had neither lost the contract nor given into corruption.
He flew out that night to return home. Seated next to him was the Head of the Nigerian Bar Association who said that he received news of hundreds of similar cases every day. He was lobbying hard to fight the government and retain some legal independence above the state-run corruption, which harmed every Nigerian. He apologized for his government?s criminal behavior.
Next week, Motorola signed the formal contract and were paid 15% of the contract price. Over the next two years, they would complete the construction of the government cellular network adding millions of customers to the country?s system. On a contract turnover of $55 million, they boasted of clearing $20 million on the deal.
Back at home, Stewart opened his mail. Instead of receiving the signed contract back from Motorola that had been promised in dozens of E-mails to confirm his work for them, he received a letter from the legal department proclaiming "they had inadvertently forgotten to sign his agreement". In the next sentence, they refused to pay him for his efforts. Following several meetings, protest letters and trying to seek explanation, Stewart was subjected to three years of obfuscation while they received their regular and full payments from the Nigerian Government for the project he won for them.
In March 2006, the company finally agreed to meet under the International Committee of the American Arbitration Association in Chicago. Up against five Motorola lawyers and additional outside counsel, he listened as they suggested he was never in Nigeria and never had a visa to enter the country. Nor did he attend the Tender board hearing or any meetings with the President, and had nothing to do with winning the contract. He had never heard a bigger snow job while a blizzard blew outside downtown Chicago.
It took nine hours for him to convince the Motorola legal team with the help of the official Arbitrator, a notable lawyer from Chicago (Stuart Widman) with two years experience inside Nigeria, that Mr. Stewart was certainly in the country and won the bid for Motorola. But in more time than it took him to win $55 million for Motorola, they failed to offer more than $75,000 of the $1.2 million promised in compensation.
Since 2003, all the senior executives of Motorola mentioned above have been fired, replaced, moved laterally or removed from the company including the Nigerian file, from the Chairman down to regional Vice Presidents. Other executives from Motorola have admitted that many of these people were engaged in corrupt practices and stole from their own company, not dissimilar to politicians in Nigeria stealing from the State. Ed Zander came in from Sun Microsystems to run the company. Cherif, who never stepped foot in Nigeria, left the company under a cloud and now sells refrigeration systems in Schaumberg. Adrien Nemchek, CEO of the cellular division was thrown out of the company in June. Rice-Jones was dispatched to another continent. Zafirovski now ruins Nortel in Canada. Stewart was never paid a penny.
It took Motorola six months to make a press announcement proclaiming this as their biggest deal of 2003. But somehow they failed to pay the piper. Stewart was never compensated and still awaits a check that covered the greatest deal Motorola ever made to the Government of Nigeria. He comments that if it hadn?t been for the Canadian Ambassador, he might have been left to die in the SSS detention cell, illegally detained for a bribe. He did lose his wife, children and home in Switzerland, thanks to a failure to honor his contract.
It seems a sad fate to pay for the biggest deal that put Motorola back in the global telecom game, restored their stock prices and gave employees confidence they could continue in the ferocious competition of the telecom world. Justice sometimes takes more time to apply to some crimes, but eventually there may be a payback for Mr. Stewart. While he never tarnished his reputation over 40 years in dealings with Africa and its decline, he still maintains his sanity and his friends. He can still look in the mirror every morning and say he hasn?t gained from the crimes that others perpetrate at his expense.
With echoes of Enron still bellowing around corporate America, this chimes in volumes of inquiry