Our African societies are very rich in proverbs, anecdotes and idioms. The
Yoruba people richly say: ‘The house built with the saliva as the mixing agent
cannot stand the seemingly feeble strength of Dew.”
This proverb fittingly describes the unwholesome deceit pervading the operations of the Nigerian National Petroleum Corporation (NNPC) and by extension, the Ministry of Petroleum resources. After his revelation of missing or unremitted $20Billion into the Federation Account by the NNPC, the President, Dr Goodluck Jonathan, under whose watch this malfeasance took place, suspended the CBN governor/ whistle blower, Mallam Sanusi Lamido Sanusi. Against unceasing, scurrilous attacks on his personality, Mallam Sanusi further alleged that NNPC’s account had not been audited since 2005! This, undoubtedly, is sacrilegious.
The original Legislation setting up NNPC on 1st April, 1977 stated in Section19: “The Corporation shall prepare and submit to the National Council of Ministers, through the Minister not later than 30th June in each financial year, a report on the activities of the Corporation during the immediately preceding financial year, and shall include in such report a copy of the audited accounts of the Corporation for that year and the auditors' report thereon.”
How did NNPC slide, from the original intent as a transparent institution, and lately, into the conduit pipe for larcenous endeavours of the existential powers in the land?
Understandably, the activities of NNPC must come into sharp focus because the Nigerian state is largely dependent on Oil exports for its survival.
In Nigeria’s fourth attempt at constitutional democracy that started in 1999, four refineries in not-optimal shapes were inherited. The PDP-led administration of Chief Olusegun Obasanjo found it necessary to increase pump price of fuel six times between 29th May, 1999 and 29th May, 2007; each time, justification for these increases was the imperative of increasing world crude prices.
But observers have always been quick to ask:
what happened to the time-honoured allocation of crude to the refineries for
Local consumption? Again, the buck-passing of refineries operating at less than
installed capacity was blamed for the non-utilization of this allocation. The
logical response from Citizens was, should the institutional inefficiency of
the NNPC in managing the refineries be visited on them?
However, the stench from the malodorous operation of the NNPC has not been as unbearable as from 2009 till date. The Thisday newspaper report of 27th February, 2014 captioned: “NEITI says NNPC didn’t disclose $22.8Billion in audit report.” An excerpt of the report reads: “Barely a day after the House of Representatives ad hoc committee commenced investigation of the report of the Swiss-based Non-Governmental Organisation (NGO), Berne Declaration, involving the Nigerian National Petroleum Corporation (NNPC) and Swiss-based companies, another weighty revelation by the Nigerian Extractive Industries Transparency Initiative (NEITI), has revealed that the sum of $22.8 billion was not disclosed by the NNPC in NEITI's audited financial statement on the corporation through alternative funding arrangement with its joint venture partners.
The Executive Secretary of NEITI, Mrs. Zainab Shamsuna Ahmed, disclosed this to the committee yesterday, explaining that the amount not captured in the report was, according to NEITI audit report of 2009 to 2011, supposed to be part of the corporation's financial statements through alternative funding arrangement with its joint venture partners. She debunked NNPC's denial that it did not connive with some Swiss oil dealers to deprive the federal government of oil revenue of $6.8 billion that should have accrued to it as a result of the crude oil lifting contract the corporation granted the companies. Ahmed further revealed that from 2009 to 2011, the country lost N98.3 billion to NNPC in exchange rates compared to Central Bank of Nigeria (CBN) official exchange rate in the year under review. She corroborated the subsisting allegation by the Bernes declaration report, which was the precursor of the ongoing investigation, saying:
"There is similarity in NEITI audit report and the Bernes Declaration report. The report (Bernes Declaration report) has a lot of substance in it. "If it is taken for what it is, then what we need to do is bring greater transparency and better disclosures. Then it will be a useful process." She even offered that her organisation "go back and link the Bernes declaration report with NEITI audit report. "Non-cash call items totaling $1.73 billion were financed from the CBN/NNPC/JP Morgan Chase Cash Call Dollar Account. This reduced the amount available for funding JV operations with the attendant implications of NNPC seeking alternative funding arrangements to fund cash call shortfalls." She, equally basing her submission on NEITI audit report of 2009-2011, picked holes in NNPC's allocation of 445, 000 barrels per day to local refineries. "The 445,000 barrels per day allocation should be reviewed to the actual refining capacity of the refineries," she suggested. Ahmed, who also alleged that $1.73 billion meant for Joint Venture cash calls have been diverted by NNPC, urged the federal government to consider the privatisation of refineries and ensure that pipeline security is enhanced.”
Dateline: 1st January, 2012: The Federal Government, through the recommendation of the Ministry of Petroleum resources, increased the pump price from N65 to N140.
Understandably there were loud protests across the land. For the first time, Nigerians (in diaspora) joined their Compatriots in staging ‘occupy Nigeria’ protests at Nigerian embassies and consulates abroad. The protests in Lagos were the most organized and coordinated because of the Bakare-led Save Nigeria Group (SNG). After about two weeks of sustained protests, soldiers drafted from the 81st Division of the Nigerian Army in Lagos, and commanded by then Major-General Kenneth Minimah (now Lt-Gen and Chief of Army Staff) ensured the truncation of the protests. At the end of the protests, the Jonathan regime reduced the Pump price to N97, representing 49.23% increase of the original pump price!
The Nation’s consciousness was first aroused to the NNPC’s humongous oil subsidy payment scam by the Senator Bukola Saraki. Alleging that, though N240Billion was budgeted (meaning N20Billion/month), the expenditure thus far had outstripped the budget.
This led to discovery of huge can of worms. Eventually, the House of Representatives resolved, through its constitutional over-sight function, to probe the Fuel Subsidy regime (2009-2011).
Indeed, more sordid details were unearthed! In the adopted report of its ad-hoc committee led by Mr Farouk Lawan, the House informed the Nigerian public, inter-alia, that “payment of N999 million 128 times in 24 hours by the accountant general between 12th and 13th January 2009.” The Central Bank of Nigeria (CBN) further corroborated that assertion that the payments were made to PPPRA's account and further paid to 52 companies. With some tinge of prophetic candour, the House Speaker, Rt (Hon) Aminu Tambuwal announced at the adoption of the report: “We are fighting against entrenched interests whose infectious greed has (hurt) our people,” House Speaker Aminu Waziri Tambuwal said. “Therefore, be mindful they will fight back and they normally do fight dirty.” Mr Femi Otedola, Chairman of Zenon oil and a friend of the regime, alerted the Nation that Mr Farouk Lawan demanded for $3Million bribe from him in exchange of writing favourable report on his companies. He further averred that a sum of $620,000 had been collected from him in three installments. According to Thisday Newspaper report of 11th June, 2012, Mr Otedola gave his account of the bribery saga:
“Then a day before the report was to be submitted, Lawan called again, informing me that Zenon’s name had been included in the report. “I, of course, was very angry and asked him to desist from his course of action, but Lawan insisted that I must pay up as other oil marketers had done before me.” Otedola said he could not believe his eyes the next day when the report came out and Zenon’s name had been listed under the category of companies that had bought foreign exchange from the Central Bank of Nigeria (CBN) but had not imported petrol.
The amount ascribed to Zenon in the report was $232,975,385.13. The report had recommended that Zenon and 14 other marketers that had bought the foreign exchange be referred to the anti-corruption agencies to determine what they used the monies for. Otedola said at this point he again called Lawan demanding that Zenon’s name be removed from the list, as there was no way his company could have bought that volume of foreign exchange without importing products.
"I reminded him that the amount ascribed to Zenon was wrong as what the company bought was over $400 million for importation of products through the banks – Zenith, UBA and GTB – and that under Sanusi (CBN governor) there was no way anyone could have bought that quantity of foreign exchange and not imported the products having filled the Form M. “Sanusi will simply clamp down on anyone who tries to pull that kind of stunt,” he said. In spite of this, Otedola said Lawan still demanded that the members of the committee be given money in exchange for removing Zenon’s name from the report before it is considered in plenary by the entire House. Otedola said he then asked how much would be required to make the committee happy, to which Lawan responded $3 million. “I screamed at him, demanding to know why he was doing this to me. All he said was other marketers were paying up to keep their names out of the report so I should do likewise,” he said. Otedola revealed that it was this point he decided to involve the security agencies to catch Lawan and his committee with their hands in the till. According to him, “As a law-abiding citizen, I decided to involve the security agencies and they advised me to play along, which prompted me to offer to pay part of the money with the promise that I would pay the balance when my company’s name had been removed from the report." The security agencies, he disclosed, gave him serialised dollar bills for the sting job and there are call logs, video and audio recordings in the possession of the agencies to confirm all that had transpired between himself and Lawan.
He said on April 21, the Saturday before the plenary, Lawan came in person to his residence and collected $250,000 in cash, as the first installment, “then the next Monday night he came and collected another $250,000. “On Tuesday, at 9am, just before the House commenced seating, Boniface came and collected another $120,000.” Otedola confirmed that during the sting, Lawan and Boniface collected a total of $620,000 in three installments as part of the $3 million demanded from him. He added that with the $620,000 that had been extorted by Lawan and the committee, during the plenary, Zenon’s name was removed from the list of companies that had bought foreign exchange but did not import products. Otedola continued: “He (Lawan) now asked for the balance of $2.5 million, but when I told him that I had no money now that the money was in Lagos, he suggested that I should charter a plane to fly the money from Lagos to Abuja.”
We later got to know that it was the Directorate of State Security (DSS) that was involved in the supposed sting operation that turned blank because it did not lead to the arrest of Mr Farouk Lawan with the alleged marked money. The relevant questions are, did the DSS set out to arrest Mr Farouk Lawan or a Bigger fish in the House of Representatives? The follow up to this is, why did they have to leave their marked operation money with Mr Farouk Lawan for over 30 days before Mr Otedola announced the bribe allegation to the Nation? The prosecution of the case against has run into murky waters because Mr Farouk Lawan was not arrested immediately with the alleged bribe money.
What, perhaps, remains the most damning of the Fuel Subsidy regime was the KPMG report which the NNPC deliberately ensured was not in circulation for over a year.
According to the Premium Times, the 41-page report showed NNPC as a cesspool of monumental corruption and fraud. The report detailed the corporation’s sharp business practices, violation of laid down rules and regulations, illegal deductions of funds belonging to the state, and failure to account for several billions of naira that should go to the federation account. The agency, the report says, has also severely defrauded our country in subsidy claims.
Auditors found that between 2007 and 2009 alone, the NNPC over-deducted funds in subsidy claims to the tune of N28.5bn. It has not been able to account for the sum ever since. The over-deduction from its remittance to the federation account for 2010 and 2011, believed to be in several billions of naira, is not captured in the report. The Federal Government, through the Federal Ministry of Finance, hired KPMG and another Nigerian auditing firm, S.S. Afemikhe & Co., in July 2010, to look into the books of the corporation following allegations of “wrongful deductions at source by the NNPC to fund its operations” by the 36 state governors.
There were also concerns at the time that “the procedures for managing and reporting the country’s crude oil and gas revenues are opaque and characterized by gaps, overlaps and inconsistencies in the role of key parties responsible for the assessment, collection and reporting on these revenue streams.”
Officials of the petroleum ministry and the NNPC, a source at the finance ministry disclosed, developed cold feet after the auditors were sent in, and indeed tried hard to frustrate the representatives of the two audit firms by failing to supply evaluation criteria for commercial bids submitted in respect of petroleum products importation. Believing that would turn the auditors away, our source further explained, the corporation also failed to provide them with other relevant documents such as the criteria for allocation of products and product volumes to importers/suppliers and periodic prequalification list of approved products importers/suppliers. But in spite of the difficulty they faced, the auditors were able to determine that the NNPC had been anything but transparent in the management of our country’s oil resources.
The report that emerged from the audit was just too damning that the leadership of the petroleum ministry, the NNPC and some few other elements in the Federal Government have worked hard to keep it away from the 36 state governors and federal lawmakers in particular and Nigerians in general. In what is likely to anger state governors, the audit established that the corporation was in the habit of arbitrarily estimating subsidy claims and then over-deducting funds from proceeds of domestic crude sales. “For example,” the report said, N25bn was deducted as subsidy estimate for September 2009 from domestic crude sales proceeds while PPPRA approved a subsidy of N23.8bn. N35bn was also deducted as subsidy estimate fro November 2009 but PPPRA approved of N21.3bn.” The auditors’ analysis indicates “over-deduction for these two months amounted to N14.9bn. However, only N4.2.bn was swept into the Federation Account by the NNPC as adjustment for subsidy claimable in the two months.”
That is beside the N11.8bn subsidy claim the NNPC claimed it paid for imported products that didn’t reach consumers. State governors have always complained that the NNPC was shortchanging them through illegal deductions from revenues payable to the federation account. Over-deduction is however not the only way the corporation is defrauding the federal and state governments. According to laid down regulations, the NNPC is invoiced in dollars for domestic crude allocations but is expected to remit the equivalent naira value to the Federation Account. But auditors found to their chagrin that in doing that, the corporation used exchange rates far lower than those published by the Central Bank of Nigeria.
Using this “fraudulent underhand tactics”, the NNPC succeeded in cheating the three levels of government of a whooping N85.2bn in three years – N25.7bn in 2007, N33.8bn in 2008 and N26.7bn in 2009. When the auditors requested explanations for these exchange rate disparities, the NNPC claimed it obtained the exchange rates it used from the CBN via telephone. The report also severely indicted the NNPC over the shoddy and non-transparent manner it renews crude sale contracts every year. The auditors noted that “evaluation criteria for renewal of contracts are not clearly stated in the contract document”, and that the selection exercises were based on individual discretion and wrong assumptions and criteria.” The NNPC claims that renewal of contract was based on performance of off-takers (buyers). But the auditors observed that the basis and process for determining performance were not clearly defined. The auditors wondered why in 2007 and 2008, some companies not on the approved list of buyers for that year were allocated crude, a practice the examiners believe had led to crude being sold to non-credible buyers, even with relevant guarantees and safeguards not implemented. Specifically the auditors queried the allocation of crude to Ovlas Trading (2, 852,316 barrels in 2007 and 906, 269 barrels in 2008) Petrojam (2,818,914 in 2007), Oil Fields (950,166 barrels in 2007) and Zenon (906,000 barrels in 2008) even when they were not on the list of authorized buyers for that year. Contracts for the importation of products, the auditors wrote, were also routinely awarded without regard for approved guidelines and procedures.
"We observed that contracts for the importation of petroleum products were awarded to companies and suppliers not listed in the approved prequalification list used for the fourth quarter 2008 importation,” the report noted.
The auditors specifically queried the award of contracts in that manner to Astana Oil Corporation Limited, Natural Energy and Oando, when they were not prequalified for patronage that year. Among other forms of misdemeanour, ranging from poor accounting to shoddy record keeping, the auditors also indicted the corporation for leaving its own storage facilities, unused, and then proceeding to incur additional cost from leasing of third party storage facilities.
The auditors reported that DPK tanks (with storage capacity of 18,000 cubic metres) at the PPMC depots within the Mosimi Area had not been used for three years even though they were in good condition. Yet the corporation, the examiners added, had been leasing storage facilities from third parties.
NNPC, as a roguish institution, is not in short supply of credible consultants to launder its besmirched reputation. In 2012, at a Lagos Town-meeting, a media PR stunt put together by one its consultants, some notable Nigerians made presentations to argue for or against the existence and need for a subsidy regime.
The CBN governor, Mallam Sanusi Lamido Sanusi, argued that there was, indeed, existence of subsidy Payments because he had seen $8Billion payments twice, totaling $16Billion. Amongst the presenters that day was a popular Human Rights Activist and Senior Member of the Nigerian Bar, who made compelling arguments about the anomalies of the management of the subsidy payments. This Lagos outing was exactly the opportunity to ingratiate himself into the PR consultancy of the NNPC. When the CBN governor, Mallam Sanusi was suspended by the President, in what is still a subject of contention at the Court, this bloke was part of the ‘crucify him’ lynch mob that the NNPC put together to fight its war.
And the reason for his position, “Sanusi talks too much.” The question is, what has Sanusi’s loquacity got to do with Nation’s monetary policy of managing Inflation and interest rate? Is this the normal Nigerian style of ‘if you cannot controvert the message, shoot down the messenger’?
What is very perplexing in Nigeria at this time is that the President seems, from all intents and purposes, to be providing ‘steely shield’ to the egregious malfeasance in the NNPC. In June 2013, the President demanded some explanations based on the observations raised by the Financial Reporting Council of Nigeria (FRCN). These were promptly responded with the proviso that further clarification could be provided if needed.
There was no response from FRCN. In September, the CBN governor, Mallam Sanusi , wrote the President that there was documentary evidence to show that NNPC had not been remitting all accruable revenue from oil exports to the Federation Account. Three months later, the former President wrote an angry missive to Mr President; the corruption and fraudulent practice in NNPC came into focus. The President was irked and demanded Sanusi’s resignation and the latter refused, citing the CBN Act as not giving the President sole authority to sack him. Miffed by sheer audacity of the CBN governor in challenging his authority, he sought for ways to shove the irritant out of the way. Yes, the weapon of suspension! This was deployed on Justice Ayo Salami, the retired Court of Appeal, who could have embarrassed the President at the Presidential Elections Petitions Tribunal in 2011 with a judgment on INEC, the electoral umpire for its taciturnity in availing the Petitioner with relevant electoral materials against the earlier order of the Court. Less than a week before he could give his Judgment of the Motion, he was suspended indefinitely and never returned to his office until he clocked the mandatory three score and ten years, thus quietly retired.
The President has honed his skill in using this option for those that his office cannot unilaterally sack without concurrence by the Senate. So, in February, 2014, Sanusi was suspended on the basis of the dusted FRCN report and a petition by a former Bank chief, Mr Erastus Akingbola. Against the Law of natural justice, the President gave the order for Sanusi’s suspension. Thinking that Sanusi would force his way into his office after his suspension, a contingent of Police men was deployed to keep ‘peace’ around the CBN premises. The unmistakable message is that an imperial president is on the throne and, with a readiness to crush all opposition with impunity. For the avoidance of doubt, any attempt to disrupt the ceaseless flow of slush funds from NNPC shall equally be crushed. In his response to the President’s suspension letter vis-à-vis the issues raised by FRCN, Mallam Sanusi admonished the President:
"Having provided detailed explanations, backed by verifiable documents, it is my sincere wish that His Excellency, Mr President, in line with his adherence to fairness and justice, will apply the same rationale and rigour to other agencies of the Federal Government that have had serious allegations and queries levied against them, and prevail upon them to provide responses and explanations with the same level of clarity and transparency.”
With the President’s decided biased slant, it is doubtful if all the humongous irregularities in the NNPC shall be visited with the same level of rigour and scrutiny that the CBN has been subjected to lately. However, what we have noticed is that NNPC, under this regime, has become a citadel of institutionalized opacity and deceit. As Nationals, we shall continue to shout from the housetops, where is the $20Billion which Sanusi said was never remitted to the federation account? There are verifiable that need to be stressed:
The $8.7Billion allegedly expended on kerosene subsidy was not appropriated by the National Assembly!
$20Billion is the equivalent of Enugu State’s Federal Allocation for 84 years (using November 2013 FAAC Figures)!
$20Billion can provide any of these for Nigeria:
· 20,000 kilometers of roads (world class).
· 1,666 world-class hospitals.
· 20,000 Megawatts of Electricity, which easily dwarfs the less than 4,000Megawatts currently generated!
· Pay 160,000 Teachers for 50 years.
· Pay 53 million poorest and most-economically vulnerable Nigerians N5,000 in a year. This is why we shall continue to demand for our money from the powers governing NNPC.
Where is our Money, our common Patrimony? Definitely, this house of deceit MUST fall!
Engr. Rotimi Fashakin.
Email: rotfash@yahoo.com
(0803-302-5866).
However, the stench from the malodorous operation of the NNPC has not been as unbearable as from 2009 till date. The Thisday newspaper report of 27th February, 2014 captioned: “NEITI says NNPC didn’t disclose $22.8Billion in audit report.” An excerpt of the report reads: “Barely a day after the House of Representatives ad hoc committee commenced investigation of the report of the Swiss-based Non-Governmental Organisation (NGO), Berne Declaration, involving the Nigerian National Petroleum Corporation (NNPC) and Swiss-based companies, another weighty revelation by the Nigerian Extractive Industries Transparency Initiative (NEITI), has revealed that the sum of $22.8 billion was not disclosed by the NNPC in NEITI's audited financial statement on the corporation through alternative funding arrangement with its joint venture partners.
The Executive Secretary of NEITI, Mrs. Zainab Shamsuna Ahmed, disclosed this to the committee yesterday, explaining that the amount not captured in the report was, according to NEITI audit report of 2009 to 2011, supposed to be part of the corporation's financial statements through alternative funding arrangement with its joint venture partners. She debunked NNPC's denial that it did not connive with some Swiss oil dealers to deprive the federal government of oil revenue of $6.8 billion that should have accrued to it as a result of the crude oil lifting contract the corporation granted the companies. Ahmed further revealed that from 2009 to 2011, the country lost N98.3 billion to NNPC in exchange rates compared to Central Bank of Nigeria (CBN) official exchange rate in the year under review. She corroborated the subsisting allegation by the Bernes declaration report, which was the precursor of the ongoing investigation, saying:
"There is similarity in NEITI audit report and the Bernes Declaration report. The report (Bernes Declaration report) has a lot of substance in it. "If it is taken for what it is, then what we need to do is bring greater transparency and better disclosures. Then it will be a useful process." She even offered that her organisation "go back and link the Bernes declaration report with NEITI audit report. "Non-cash call items totaling $1.73 billion were financed from the CBN/NNPC/JP Morgan Chase Cash Call Dollar Account. This reduced the amount available for funding JV operations with the attendant implications of NNPC seeking alternative funding arrangements to fund cash call shortfalls." She, equally basing her submission on NEITI audit report of 2009-2011, picked holes in NNPC's allocation of 445, 000 barrels per day to local refineries. "The 445,000 barrels per day allocation should be reviewed to the actual refining capacity of the refineries," she suggested. Ahmed, who also alleged that $1.73 billion meant for Joint Venture cash calls have been diverted by NNPC, urged the federal government to consider the privatisation of refineries and ensure that pipeline security is enhanced.”
Dateline: 1st January, 2012: The Federal Government, through the recommendation of the Ministry of Petroleum resources, increased the pump price from N65 to N140.
Understandably there were loud protests across the land. For the first time, Nigerians (in diaspora) joined their Compatriots in staging ‘occupy Nigeria’ protests at Nigerian embassies and consulates abroad. The protests in Lagos were the most organized and coordinated because of the Bakare-led Save Nigeria Group (SNG). After about two weeks of sustained protests, soldiers drafted from the 81st Division of the Nigerian Army in Lagos, and commanded by then Major-General Kenneth Minimah (now Lt-Gen and Chief of Army Staff) ensured the truncation of the protests. At the end of the protests, the Jonathan regime reduced the Pump price to N97, representing 49.23% increase of the original pump price!
The Nation’s consciousness was first aroused to the NNPC’s humongous oil subsidy payment scam by the Senator Bukola Saraki. Alleging that, though N240Billion was budgeted (meaning N20Billion/month), the expenditure thus far had outstripped the budget.
This led to discovery of huge can of worms. Eventually, the House of Representatives resolved, through its constitutional over-sight function, to probe the Fuel Subsidy regime (2009-2011).
Indeed, more sordid details were unearthed! In the adopted report of its ad-hoc committee led by Mr Farouk Lawan, the House informed the Nigerian public, inter-alia, that “payment of N999 million 128 times in 24 hours by the accountant general between 12th and 13th January 2009.” The Central Bank of Nigeria (CBN) further corroborated that assertion that the payments were made to PPPRA's account and further paid to 52 companies. With some tinge of prophetic candour, the House Speaker, Rt (Hon) Aminu Tambuwal announced at the adoption of the report: “We are fighting against entrenched interests whose infectious greed has (hurt) our people,” House Speaker Aminu Waziri Tambuwal said. “Therefore, be mindful they will fight back and they normally do fight dirty.” Mr Femi Otedola, Chairman of Zenon oil and a friend of the regime, alerted the Nation that Mr Farouk Lawan demanded for $3Million bribe from him in exchange of writing favourable report on his companies. He further averred that a sum of $620,000 had been collected from him in three installments. According to Thisday Newspaper report of 11th June, 2012, Mr Otedola gave his account of the bribery saga:
“Then a day before the report was to be submitted, Lawan called again, informing me that Zenon’s name had been included in the report. “I, of course, was very angry and asked him to desist from his course of action, but Lawan insisted that I must pay up as other oil marketers had done before me.” Otedola said he could not believe his eyes the next day when the report came out and Zenon’s name had been listed under the category of companies that had bought foreign exchange from the Central Bank of Nigeria (CBN) but had not imported petrol.
The amount ascribed to Zenon in the report was $232,975,385.13. The report had recommended that Zenon and 14 other marketers that had bought the foreign exchange be referred to the anti-corruption agencies to determine what they used the monies for. Otedola said at this point he again called Lawan demanding that Zenon’s name be removed from the list, as there was no way his company could have bought that volume of foreign exchange without importing products.
"I reminded him that the amount ascribed to Zenon was wrong as what the company bought was over $400 million for importation of products through the banks – Zenith, UBA and GTB – and that under Sanusi (CBN governor) there was no way anyone could have bought that quantity of foreign exchange and not imported the products having filled the Form M. “Sanusi will simply clamp down on anyone who tries to pull that kind of stunt,” he said. In spite of this, Otedola said Lawan still demanded that the members of the committee be given money in exchange for removing Zenon’s name from the report before it is considered in plenary by the entire House. Otedola said he then asked how much would be required to make the committee happy, to which Lawan responded $3 million. “I screamed at him, demanding to know why he was doing this to me. All he said was other marketers were paying up to keep their names out of the report so I should do likewise,” he said. Otedola revealed that it was this point he decided to involve the security agencies to catch Lawan and his committee with their hands in the till. According to him, “As a law-abiding citizen, I decided to involve the security agencies and they advised me to play along, which prompted me to offer to pay part of the money with the promise that I would pay the balance when my company’s name had been removed from the report." The security agencies, he disclosed, gave him serialised dollar bills for the sting job and there are call logs, video and audio recordings in the possession of the agencies to confirm all that had transpired between himself and Lawan.
He said on April 21, the Saturday before the plenary, Lawan came in person to his residence and collected $250,000 in cash, as the first installment, “then the next Monday night he came and collected another $250,000. “On Tuesday, at 9am, just before the House commenced seating, Boniface came and collected another $120,000.” Otedola confirmed that during the sting, Lawan and Boniface collected a total of $620,000 in three installments as part of the $3 million demanded from him. He added that with the $620,000 that had been extorted by Lawan and the committee, during the plenary, Zenon’s name was removed from the list of companies that had bought foreign exchange but did not import products. Otedola continued: “He (Lawan) now asked for the balance of $2.5 million, but when I told him that I had no money now that the money was in Lagos, he suggested that I should charter a plane to fly the money from Lagos to Abuja.”
We later got to know that it was the Directorate of State Security (DSS) that was involved in the supposed sting operation that turned blank because it did not lead to the arrest of Mr Farouk Lawan with the alleged marked money. The relevant questions are, did the DSS set out to arrest Mr Farouk Lawan or a Bigger fish in the House of Representatives? The follow up to this is, why did they have to leave their marked operation money with Mr Farouk Lawan for over 30 days before Mr Otedola announced the bribe allegation to the Nation? The prosecution of the case against has run into murky waters because Mr Farouk Lawan was not arrested immediately with the alleged bribe money.
What, perhaps, remains the most damning of the Fuel Subsidy regime was the KPMG report which the NNPC deliberately ensured was not in circulation for over a year.
According to the Premium Times, the 41-page report showed NNPC as a cesspool of monumental corruption and fraud. The report detailed the corporation’s sharp business practices, violation of laid down rules and regulations, illegal deductions of funds belonging to the state, and failure to account for several billions of naira that should go to the federation account. The agency, the report says, has also severely defrauded our country in subsidy claims.
Auditors found that between 2007 and 2009 alone, the NNPC over-deducted funds in subsidy claims to the tune of N28.5bn. It has not been able to account for the sum ever since. The over-deduction from its remittance to the federation account for 2010 and 2011, believed to be in several billions of naira, is not captured in the report. The Federal Government, through the Federal Ministry of Finance, hired KPMG and another Nigerian auditing firm, S.S. Afemikhe & Co., in July 2010, to look into the books of the corporation following allegations of “wrongful deductions at source by the NNPC to fund its operations” by the 36 state governors.
There were also concerns at the time that “the procedures for managing and reporting the country’s crude oil and gas revenues are opaque and characterized by gaps, overlaps and inconsistencies in the role of key parties responsible for the assessment, collection and reporting on these revenue streams.”
Officials of the petroleum ministry and the NNPC, a source at the finance ministry disclosed, developed cold feet after the auditors were sent in, and indeed tried hard to frustrate the representatives of the two audit firms by failing to supply evaluation criteria for commercial bids submitted in respect of petroleum products importation. Believing that would turn the auditors away, our source further explained, the corporation also failed to provide them with other relevant documents such as the criteria for allocation of products and product volumes to importers/suppliers and periodic prequalification list of approved products importers/suppliers. But in spite of the difficulty they faced, the auditors were able to determine that the NNPC had been anything but transparent in the management of our country’s oil resources.
The report that emerged from the audit was just too damning that the leadership of the petroleum ministry, the NNPC and some few other elements in the Federal Government have worked hard to keep it away from the 36 state governors and federal lawmakers in particular and Nigerians in general. In what is likely to anger state governors, the audit established that the corporation was in the habit of arbitrarily estimating subsidy claims and then over-deducting funds from proceeds of domestic crude sales. “For example,” the report said, N25bn was deducted as subsidy estimate for September 2009 from domestic crude sales proceeds while PPPRA approved a subsidy of N23.8bn. N35bn was also deducted as subsidy estimate fro November 2009 but PPPRA approved of N21.3bn.” The auditors’ analysis indicates “over-deduction for these two months amounted to N14.9bn. However, only N4.2.bn was swept into the Federation Account by the NNPC as adjustment for subsidy claimable in the two months.”
That is beside the N11.8bn subsidy claim the NNPC claimed it paid for imported products that didn’t reach consumers. State governors have always complained that the NNPC was shortchanging them through illegal deductions from revenues payable to the federation account. Over-deduction is however not the only way the corporation is defrauding the federal and state governments. According to laid down regulations, the NNPC is invoiced in dollars for domestic crude allocations but is expected to remit the equivalent naira value to the Federation Account. But auditors found to their chagrin that in doing that, the corporation used exchange rates far lower than those published by the Central Bank of Nigeria.
Using this “fraudulent underhand tactics”, the NNPC succeeded in cheating the three levels of government of a whooping N85.2bn in three years – N25.7bn in 2007, N33.8bn in 2008 and N26.7bn in 2009. When the auditors requested explanations for these exchange rate disparities, the NNPC claimed it obtained the exchange rates it used from the CBN via telephone. The report also severely indicted the NNPC over the shoddy and non-transparent manner it renews crude sale contracts every year. The auditors noted that “evaluation criteria for renewal of contracts are not clearly stated in the contract document”, and that the selection exercises were based on individual discretion and wrong assumptions and criteria.” The NNPC claims that renewal of contract was based on performance of off-takers (buyers). But the auditors observed that the basis and process for determining performance were not clearly defined. The auditors wondered why in 2007 and 2008, some companies not on the approved list of buyers for that year were allocated crude, a practice the examiners believe had led to crude being sold to non-credible buyers, even with relevant guarantees and safeguards not implemented. Specifically the auditors queried the allocation of crude to Ovlas Trading (2, 852,316 barrels in 2007 and 906, 269 barrels in 2008) Petrojam (2,818,914 in 2007), Oil Fields (950,166 barrels in 2007) and Zenon (906,000 barrels in 2008) even when they were not on the list of authorized buyers for that year. Contracts for the importation of products, the auditors wrote, were also routinely awarded without regard for approved guidelines and procedures.
"We observed that contracts for the importation of petroleum products were awarded to companies and suppliers not listed in the approved prequalification list used for the fourth quarter 2008 importation,” the report noted.
The auditors specifically queried the award of contracts in that manner to Astana Oil Corporation Limited, Natural Energy and Oando, when they were not prequalified for patronage that year. Among other forms of misdemeanour, ranging from poor accounting to shoddy record keeping, the auditors also indicted the corporation for leaving its own storage facilities, unused, and then proceeding to incur additional cost from leasing of third party storage facilities.
The auditors reported that DPK tanks (with storage capacity of 18,000 cubic metres) at the PPMC depots within the Mosimi Area had not been used for three years even though they were in good condition. Yet the corporation, the examiners added, had been leasing storage facilities from third parties.
NNPC, as a roguish institution, is not in short supply of credible consultants to launder its besmirched reputation. In 2012, at a Lagos Town-meeting, a media PR stunt put together by one its consultants, some notable Nigerians made presentations to argue for or against the existence and need for a subsidy regime.
The CBN governor, Mallam Sanusi Lamido Sanusi, argued that there was, indeed, existence of subsidy Payments because he had seen $8Billion payments twice, totaling $16Billion. Amongst the presenters that day was a popular Human Rights Activist and Senior Member of the Nigerian Bar, who made compelling arguments about the anomalies of the management of the subsidy payments. This Lagos outing was exactly the opportunity to ingratiate himself into the PR consultancy of the NNPC. When the CBN governor, Mallam Sanusi was suspended by the President, in what is still a subject of contention at the Court, this bloke was part of the ‘crucify him’ lynch mob that the NNPC put together to fight its war.
And the reason for his position, “Sanusi talks too much.” The question is, what has Sanusi’s loquacity got to do with Nation’s monetary policy of managing Inflation and interest rate? Is this the normal Nigerian style of ‘if you cannot controvert the message, shoot down the messenger’?
What is very perplexing in Nigeria at this time is that the President seems, from all intents and purposes, to be providing ‘steely shield’ to the egregious malfeasance in the NNPC. In June 2013, the President demanded some explanations based on the observations raised by the Financial Reporting Council of Nigeria (FRCN). These were promptly responded with the proviso that further clarification could be provided if needed.
There was no response from FRCN. In September, the CBN governor, Mallam Sanusi , wrote the President that there was documentary evidence to show that NNPC had not been remitting all accruable revenue from oil exports to the Federation Account. Three months later, the former President wrote an angry missive to Mr President; the corruption and fraudulent practice in NNPC came into focus. The President was irked and demanded Sanusi’s resignation and the latter refused, citing the CBN Act as not giving the President sole authority to sack him. Miffed by sheer audacity of the CBN governor in challenging his authority, he sought for ways to shove the irritant out of the way. Yes, the weapon of suspension! This was deployed on Justice Ayo Salami, the retired Court of Appeal, who could have embarrassed the President at the Presidential Elections Petitions Tribunal in 2011 with a judgment on INEC, the electoral umpire for its taciturnity in availing the Petitioner with relevant electoral materials against the earlier order of the Court. Less than a week before he could give his Judgment of the Motion, he was suspended indefinitely and never returned to his office until he clocked the mandatory three score and ten years, thus quietly retired.
The President has honed his skill in using this option for those that his office cannot unilaterally sack without concurrence by the Senate. So, in February, 2014, Sanusi was suspended on the basis of the dusted FRCN report and a petition by a former Bank chief, Mr Erastus Akingbola. Against the Law of natural justice, the President gave the order for Sanusi’s suspension. Thinking that Sanusi would force his way into his office after his suspension, a contingent of Police men was deployed to keep ‘peace’ around the CBN premises. The unmistakable message is that an imperial president is on the throne and, with a readiness to crush all opposition with impunity. For the avoidance of doubt, any attempt to disrupt the ceaseless flow of slush funds from NNPC shall equally be crushed. In his response to the President’s suspension letter vis-à-vis the issues raised by FRCN, Mallam Sanusi admonished the President:
"Having provided detailed explanations, backed by verifiable documents, it is my sincere wish that His Excellency, Mr President, in line with his adherence to fairness and justice, will apply the same rationale and rigour to other agencies of the Federal Government that have had serious allegations and queries levied against them, and prevail upon them to provide responses and explanations with the same level of clarity and transparency.”
With the President’s decided biased slant, it is doubtful if all the humongous irregularities in the NNPC shall be visited with the same level of rigour and scrutiny that the CBN has been subjected to lately. However, what we have noticed is that NNPC, under this regime, has become a citadel of institutionalized opacity and deceit. As Nationals, we shall continue to shout from the housetops, where is the $20Billion which Sanusi said was never remitted to the federation account? There are verifiable that need to be stressed:
The $8.7Billion allegedly expended on kerosene subsidy was not appropriated by the National Assembly!
$20Billion is the equivalent of Enugu State’s Federal Allocation for 84 years (using November 2013 FAAC Figures)!
$20Billion can provide any of these for Nigeria:
· 20,000 kilometers of roads (world class).
· 1,666 world-class hospitals.
· 20,000 Megawatts of Electricity, which easily dwarfs the less than 4,000Megawatts currently generated!
· Pay 160,000 Teachers for 50 years.
· Pay 53 million poorest and most-economically vulnerable Nigerians N5,000 in a year. This is why we shall continue to demand for our money from the powers governing NNPC.
Where is our Money, our common Patrimony? Definitely, this house of deceit MUST fall!
Engr. Rotimi Fashakin.
Email: rotfash@yahoo.com
(0803-302-5866).
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