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).
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