Alison-Madueke, systemic rot and the NNPC – The Punch Newspaper


TORRID tales of massive looting perpetrated through the Nigerian National Petroleum Corporation and the stupendous wealth allegedly accumulated by Diezani Alison-Madueke have gripped a global audience. Investigations into the murky deals that enriched the former petroleum resources minister and a clutch of wheeler-dealers while draining billions of dollars from the treasury are ongoing in three continents. Unless the Nigerian state immediately dismantles and replaces the system that allowed abuses on such a massive scale, the looting spree will persist.

The rottenness of that system, the opaqueness, the wide discretionary powers given to the president and the minister facilitated that massive fraud, kept the country under-developed and the majority of the people poor. President Muhammadu Buhari should move now and reform the oil industry. We restate our position that the reforms should start with the dismantling of the NNPC, a cesspool of fraud and corruption and a veritable cash dispensing machine for successive administrations since the mid-1980s. Also ripe for the chopping-board is the Ministry of Petroleum Resources and its Department of Petroleum Resources, the ineffective and compromised industry regulator.

Revelations over the years show how terrible the NNPC and the ministry have become. In London, the United Kingdom National Crime Agency in August froze £10 million worth of property linked to Alison-Madueke. In the United States, authorities have launched a process to recover $144 million worth of assets allegedly purchased for her by two businessmen who are being sought for questioning. Back home, courts have ordered the forfeiture of various sums of money and property in millions of dollars and billions of naira, including real estate she allegedly paid $37.5 million in cash for in Ikoyi, Lagos; 58 other houses in Lagos, Abuja, Port Harcourt and Yenagoa and N9 billion traced to some banks to which no one laid claim. Authorities in the three countries cite these as proceeds of graft, a claim denied by the former minster from her London home. In the latest twist, EFCC is said to have traced $1.5 billion in Swiss banks and property in Dubai worth N7billion linked to her.

The Acting Chairman of the Economic and Financial Crimes Commission, Ibrahim Magu, says assets found so far represent no more than 15 per cent of what Alison-Madueke acquired during her stint as minister.

In his report on the 2015 Federation Account, the Auditor-General for the Federation detailed how the minister allegedly withdrew N59.44 billion from the NNPC accounts at the Central Bank of Nigeria and in foreign banks in violation of the rules. The report specifically cited how she and the then president, Goodluck Jonathan, authorised $289.2 million to be sent in cash directly to the director-general of the National Intelligence Agency ostensibly for “urgent national security challenges”.

In 2013, the then CBN Governor, Lamido Sanusi, said discrepancies between oil production/sales data and remittances to the NNPC and government accounts showed a shortfall of $11 billion (down from initial summation of $49 billion and $20 billion). A later audit by PricewaterhouseCoopers was damning: though it found $1.48 billion unremitted to the government, it declared its findings unreliable as NNPC refused to avail it of all the necessary information for a proper examination. Three other reports – by the Idika Kalu panel; the Nuhu Ribadu panel and the Nigerian Extractive Industries Transparency Initiative audits – detailed a litany of abuse, fraud, impunity and active collusion by the Presidency.

The NNPC spends money as it deems fit, runs secret accounts, withholds dividends, bonuses and oil sales proceeds and pays itself subsidy that it unilaterally calculates. Up to $21.7 billion and N316 billion were withheld from the Federation Account and unaccounted for from 2000 to 2014, said NEITI. A joint parliamentary committee found that between 2014 and 2011, NNPC failed to remit N3.08 trillion due to the federation account and $3.67 billion false claims made on behalf of multinationals. NEITI said $12.9 billion dividend from NNPC’s 49 per cent holding in Nigerian Liquefied Natural Gas was not remitted in 2004-2013.

The system that allowed the dubious joint venture agreements with unqualified firms in the award of oil blocks and oil lifting contracts by the president and the minister using discretionary powers without foolproof checks should end. Buhari should fulfil his campaign promise of breaking up the NNPC into two entities: one to serve strictly as a holding company and another as an investment firm with substantial private sector equity. Government should exit the mid-stream and downstream oil and gas sectors and initiate liberalising reforms embedded in the original Petroleum Industry Bill, a distorted version of which was passed by the decadent National Assembly. There should be an accelerated programme to privatise NNPC’s 14 subsidiaries.

Corrupt officials, as done elsewhere, should be identified and flushed out of both the NNPC and the ministry. A long-running scandal at Brazil’s state-owned Petrobras and other bribe cases had by August 2015 produced 117 criminal indictments and have since embroiled a former president, caused the impeachment of another, while the incumbent now faces indictment. A former head of China’s biggest oil firm, Jiang Jiemin, was among many officials jailed for corruption in 2015. Mexico launched major reforms in 2013 after years of scandal at state-owned Pemex, culminating in a widely applauded bid round in 2015 that saw greater transparency and private sector participation.

Refineries and petrochemicals, retail services like depots and filling stations should be immediately privatised. NNPC’s track record of losses of N197 billion in 2016 and N39.3 billion in the first four months of this year will change to profitability when loss-making assets are sold and replaced by professionally structured investment in profitable ventures to raise investible funds.

Reforms should be preceded by a fresh round of audits; returning long-serving apparatchiks to run the NNPC is counterproductive: it needs a new broom to sweep the filthy system clean. With less than two years to new elections, Buhari should get cracking today while the EFCC should step up its investigations. Ultimately, Alison-Madueke should be brought to justice, no matter where this takes place.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.