Special Report: Nigeria’s Extractive Sector Corruption Trend

In the first quarter of 2017, the media reports revealing corruption scandal in the extractive sector is overwhelming. The reports show how corruption has continued to be a major feature of the Nigeria’s extractive sector and has hampered the nation’s economy growth and development. The Shell and Italian oil company Eni $1.1 billion (Malabu) scandal for the Oil Prospecting License (OPL) 245 oil blocks has continued to dominate discourse in the media. The OPL 245 is considered one of Nigeria’s richest oil blocks and estimated to contain over 9 billion barrels of crude.

A recent investigation by Global Witness has revealed how Shell participated in a huge bribery scheme in the Malabu deal. A leaked email seen by Global Witness shows that Shell took part in a deal that robbed Nigerians a billion dollars.

In connection to the Malabu deal, the Daily Trust on April 13th, 2017 reported the Nigerian House of Representatives to have said, it will invite Mr. Goodluck Jonathan, the former Nigerian President to appear before it to explain his role in the deal. Affirming this, Mr. Razak Atunwa, the chairman, ad-hoc committee probing the (OPL) 245 contract, said, the available information indicates Mr. Jonathan, may have been complicit in the OPL 245 deal.  We monitored closely, the Malabu trail in the Italian Courts instituted by the Public Prosecutor of Milan, and in that proceedings, some Ministers in Jonathan’s administration and Jonathan were mentioned to have played active role in the deal. Hence, he ought to appear before the committee to explain his role.

The Nigerian government has gone to court to challenge the legality of the Malabu deal. Premium Times on March 13th, 2017 reported how the court verdict to that effect was stalled. Mr. Mohammed Adoke, SAN, the former Nigeria’s Minister of Justice and Attorney General played a prominent role in the Malabu deal and was reported to have the knowledge of the diverse fraudulent manipulations of Malabu by Mr. Etete and went ahead to authorize the transaction.

In a similar vein, in March 22nd, 2017, Africa Oil and Gas Report revealed how the Nigerian government awarded an oil block outside the process of a bid round. The Nigerian Petroleum Development Company (NPDC) was awarded the Oil Mining Lease (OML) 13, in the south-east onshore Niger Delta. To this moment, it has remained unclear why such a petroleum producing property was awarded outside of the process of a bid round. Mr. Ndu Ughamadu, the NNPC’s spokesperson, refused to comment on the award when Africa Oil Report sought his explanation on the matter. In his exact word, “I can’t exactly comment on your query”, “as you know, matters such as this are currently being discussed at the hearings of the National Assembly in Abuja and the DPR (industry regulator) is involved”.

In March 10th, 2017 Premium Times reported how Nigeria lost $184 million to crude oil swap. Under the swap arrangement, the Nigerian National Petroleum Corporation allocated crude oil to AITEO Energy Resource Limited, Ontario Oil and Gas Limited and Televaras Group of Companies in exchange for processed petroleum products. In addition, NNPC lost over 130 million litres of petrol to MRS Limited and Capital Oil & Gas Limited. The petrol was stored in their facilities in APapa-Lagos state under an arrangement by the NNPC to ensure the product was adequately reserved. Mr. Henry Ikem-Obih, the NNPC Chief Operating Officer Downstream explained, the companies diverted the product without authorization from NNPC.

In a press statement released by NNPC, Mr. Ndu Ughamadu, the spokesperson, confirmed the corporation sacked its officials who played key role in the unauthorized sale of 82 million litres of petrol valued at N11 billion by Capital Oil. The sack was in line with the ongoing reforms and the cleansing of corruption in NNPC the statement reads. Mrs. Nnamdi-Ogbue, the Managing Director NNPC Retail, and four others were those affected he said. In a follow up, the Economic and Financial Crimes Commission (EFCC) investigating the Capital Oil deal, raided Mrs. Nnamdi-Ogbue Abuja residence and took away her computer hard drive and copies of official memos relating to the lifting of petroleum products stored in the Capital Oil and MRS depots.

Sahara Reporters in April 13th, 2017, reported how the Economic and Financial Crimes Commission (EFCC) discovered $50 million in a house located at the 16 Osborne Road in Ikoyi, Lagos. Mr. Adamu Muazu, the former chairman of the People’s Democratic Party, has been fingered as the owner of the money. Mr. Adamu in a reaction via his twitter handle agreed he owns the house, but, denied knowledge of the monies. Although the EFCC is yet to officially reveal the owner of the money, Sahara Reporters claims a senior source at the anti-corruption agency said the cash possibly belonged to Esther Nnamdi-Ogbue, the Director Retail Nigeria National Petroleum Corporation (NNPC), who was sacked because of her role in a scandal involving the illegal sale of 130 million liters of petrol belonging to the NNPC.

Vanguard in April 11th, 2017 reported how Nigeria lost $17billion to undeclared crude. This is currently being investigated by the Nigerian House of Representatives Ad-hoc Committee. The crude is said to be 57million barrels of crude valued at $12 billion. According to the Mr. Abdulrazaq Namdas, the chairman ad-hoc committee, going by the 2014 dollar exchange rate, Nigeria lost over N2trillion to this deal.

Again, by March 2nd, 2017 Policy Advocacy for Legislative Centre (PLAC) reported that the Senate Committee on Petroleum (Downstream) is working to review and investigate the subsidy payment and non-remittance of funds by the NNPC to the Federation Account. The senate argues, NNPC had failed to justify the huge amounts of monies for subsidy claims in the last 10 years, hence the review and investigation become imperative.

Furthermore, in March 28th, 2017 Today Newspaper reported the Nigerian House of Representatives Ad-hoc Committee on Review of Pump Price of Petroleum Products to have summoned NNPC Group Managing Director, Dr. Maikanti Baru; Chief of Naval Staff, Vice Admiral Ibok-Ete Ekwe Ibas and Managing Director of Lubcon Oil to appear before it on April 7th, 2017 to explain issues concerning foreign exchange claims and lifting of crude oil by some unqualified companies. The committee demands the NPPC to justify why a South African oil company, Petrocan, is lifting crude in Nigeria when it doesn’t have a refinery, which is one of the prerequisites to participate in oil lifting.

Away from the oil and gas, in an interview with Premium Times, Mr. Fayemi Kayode, Ph.D., the Nigeria’s Minister of Mines and Steel Development, disclosed, all mine officers across the Nigerian 36 states were recalled because of corruption. Some of them were forging all kinds of receipts to collect royalties on behalf of the government Kayode said.   As a minister, I have seen letters purportedly issued by the ministry, obviously fake letters, coming from mines officers to agents for the purpose of collecting royalties from quarries, mining companies, and operations.

Having seen huge reported incidents of corruption in the extractive sector, Publish what You Pay-Nigeria wishes to draw citizens’ attention to the negative implication of corruption in the extractive sector. It essentially destroys good governance, stunts development and in the end hurts the poor most. By implication, if these huge stolen amounts were utilized properly, ultimately, development projects such as good water, quality education, good health system, stable electricity, good roads and other basic infrastructure will be adequately funded without borrowing.

For instance, analysis of the Shell and Eni’s Malabu deal shows it has huge consequences for Nigerians. The deal payment was equivalent to 80% of Nigeria’s proposed 2015 health budget, this is even as over five million Nigerians face starvation and one in ten children don’t live to see their fifth birthday.

It is, therefore, within this context that Publish What You Pay-Nigeria enjoins Nigerians and the internal community to work together towards ensuring the cleansing of the rot (the huge corruption) in Nigeria’s extractive sector. These efforts will not only prevent the corruption in the sector but reinforce the transparency and accountability of our natural resource management.

Since the core mandate of PWYP-Nigeria is to promote transparency and accountability in the extractive sector – majorly in the oil and gas as well as solid minerals, our members across the country are therefore faced with the onerous task of mobilizing citizens to bring accountability and sanity in the extractive sector. The huge corruption scandal reported in the media, further reaffirms the existence and the mission of Publish What You Pay.

Audu Liberty Oseni

Communication Officer, PWYP-Nigeria

Abuja Secretariat