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26 June 2016 08:30 (South Africa)
Africa

How to lose $35 billion: A Nigerian handbook

  • Simon Allison
    AllsionBW
    Simon Allison

    Simon Allison covers Africa for the Daily Maverick, having cut his teeth reporting from Palestine, Somalia and revolutionary Egypt. He loves news and politics, the more convoluted the better. Despite his natural cynicism and occasionally despairing tone, he is an Afro-optimist, and can’t wait to witness and chronicle the continent’s swift development over the next few decades.

  • Africa
071112-Nigeria oil corrupt-Simon Allison

A top Nigerian anti-corruption crusader was asked to prepare a no-holds-barred report on the rotten state of country’s oil industry. He delivered. Nigerians now have a clear idea of just how much their government has squandered on inefficiency, mismanagement and personal bank accounts, and they’re not happy. By SIMON ALLISON.

In Nigeria, Nuhu Ribadu occupies the same position that Thuli Madonsela does in South Africa: an island of principle and moral backbone in a great dirty sea of corruption, waste and dysfunction. Whether either of them deserve this lofty reputation is beside the point: they have it, among large sections of the population, and because they do they are trusted in a way that other politicians and public figures can only dream of. This has proved important for Ribadu, and for Nigeria, over the past few weeks.

Ribadu earned his reputation as head of Nigeria’s Economic and Financial Crimes Commission, in which capacity he was responsible for claiming some big scalps – including his former boss, Police Inspector-General Tafa Balogun, convicted of corruption. During his tenure, Nigeria quietly cleaned up its act, getting itself removed from a global blacklist of high-risk, non-cooperative countries and earning the withdrawal of a US advisory warning financial institutions to steer clear of operating in the country. This cemented his image as an anti-corruption crusader, an image which he used to good – but not good enough – effect in mounting a presidential campaign last year (his party took a creditable 5% of the vote).

In the spirit of reconciliation, and understanding the significance of the issue at hand, the winner of that presidential election, Goodluck Jonathan, appointed Ribadu to head a special task force to look into the rot in the Nigerian oil industry, which has long been a byword for gross inefficiency and corruption on an epic scale. There was plenty of rot to be found. Ribadu’s report implicated ministers, parastatals and oil majors in mismanagement and dodgy practices that are conservatively estimated to have cost Nigeria $35-billion over the last 10 years, or more than an entire year’s government spending. Put another way, at least 10% of Nigeria’s annual budget has been squandered into private bank accounts and fat corporate profit margins over the last decade.

None of this is a huge surprise. There have been other reports making equally massive claims. The oil industry in Nigeria has long been tinged with the stench of corruption. But Ribadu’s report is different, for two reasons: First, his involvement gives it moral credibility; and second, the report was commissioned by Nigeria’s government itself. This is not the work of some NGO or rights organisation with a mandate for activism and a shrill PR operation; this is an official government finding produced by a widely-respected Nigerian, which makes its devastating conclusions all the more damning.

It reads like a handbook for how to mismanage public resources. Countries just coming into great resource wealth – like Ghana, or Kenya – take note: this is how not to do it.

Some of the highlights include: the state oil firm selling oil to itself at ridiculously low prices, short-changing the treasury to the tune of $5-billion; failing to collect royalties from the likes of Shell and Sinopec, creating a $3-billion black hole in accounts; “losing” hundreds of millions of dollars owed to the government as signatures bonuses on new deals; and allowing oil ministers to award contracts at their own discretion, without even an attempt at a tender process.

The most damaging scam involved the state oil firm and oil companies Shell, Total and Eni, which together owned a subsidiary company called Nigeria LNG. This company acted as a middle man, buying oil on the cheap from the government and selling it on to international markets at a vastly inflated price. Ribadu’s report estimates that if the government had just sold the oil at market price, they would have made an additional $29-billion.

Predictably, Ribadu’s report was not exactly met with enthusiasm by other officials in the Nigerian government. Particularly harsh criticism has come from two members of the committee that helped draft it. They say the report is based on incomplete, unverified data and that Ribadu makes claims that cannot be sustained by evidence. Unfortunately for the credibility of these two critics – Steve Oronsaye and Bernard Otti, both senior government officials – they were both offered and accepted lucrative positions on the board of the state oil firm while continuing to sit on the committee investigating it. Nigerian media has largely dismissed their criticisms as a failed attempt at damage control.

“The reservations of some members of the Task Force must not be allowed to cast any shadow over the urgent need for the security agencies to bring all those indicted to justice,” wrote the influential Leadership newspaper. “We thank the Ribadu committee for showing the nation some of the reasons why Nigeria is a rich nation with poor people.”

Having received the report, Jonathan is now under increasing pressure to act on its findings. Whether he can do so – and whether he can in turn make a Nigeria a rich nation with moderately less poor people – will be the ultimate test of his administration. DM

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Photo: Action Congress of Nigeria (ACN) presidential candidate and former anti-corruption chief Nuhu Ribadu speaks during the flag-off of the ACN governorship campaign in Lagos March 5, 2011. Nigeria has completed a new 74-million-strong voter register it hopes will help ensure credible elections next month, but insecurity and the partiality of the courts remain challenges to a free and fair vote. REUTERS/Akintunde Akinleye

  • Simon Allison
    AllsionBW
    Simon Allison

    Simon Allison covers Africa for the Daily Maverick, having cut his teeth reporting from Palestine, Somalia and revolutionary Egypt. He loves news and politics, the more convoluted the better. Despite his natural cynicism and occasionally despairing tone, he is an Afro-optimist, and can’t wait to witness and chronicle the continent’s swift development over the next few decades.

  • Africa

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