•Abuja house sealed off by EFCC
The desire of the administration of President Muhammadu Buhari to make huge recovery from alleged looted funds by senior officials in the administration of former President Goodluck Jonathan reportedly underlined the arrest, on Friday in London, of the immediate past Minister of Petroleum, Mrs. Diezani Alison-Madueke.
The arrest, according to Saturday Tribune findings, was an outcome of several bilateral cooperations between the United Kingdom and Nigeria since Buhari assumed office.
Several suspicious inflows and outflows of hefty sums in pound sterling were said to have been traced by the UK to her accounts in that country, hence the arrest on Friday.
An online newspaper, Premium Times, broke the news of the former minister’s arrest on Friday in London and the seal-off of her Asokoro Abuja home by the Economic and Financial Crimes Commission (EFCC).
According to the reports, she was arrested with four other people in London for offences related to bribery and corruption being investigated by the UK National Crime Agency.
The report quoted the British High Commission in Nigeria confirming that some arrests were made Friday but declined to disclose the identities of those involved.
Joseph Abuku, Press and Public Affairs Officer according to the report, said, “This morning, five people between the ages of 21 and 60 were arrested on suspicion of bribery and corruption offences. The crimes are being investigated by the National Crime Agency.
“The National Crime Agency does not confirm identity at arrest nor provide information that could be used to corroborate the identity of an arrested individual.”
The Buhari administration, it was learnt Friday night, also opted for the London justice system in achieving its objective of recovering looted funds as a further demonstration of his lack of confidence in the Nigerian judicial system.
Before becoming president, Buhari had never hidden his disavowal of the collective integrity of the Nigerian judiciary, having been ruled against in election petition cases thrice.
He was said to have recently told a chieftain of the All Progressives Congress (APC) who has an election petition case, that he prayed the petitioner would not suffer his fate.
To further demonstrate his lack of faith in the judiciary, the president had gone ahead to compensate the said chieftain politically, even when the case, had not been determined.
Buhari’s kitchen cabinet was said to have resolved on an alternative foreign jurisdiction in the handling of alleged major looting cases, in order to make quicker headway with them, particularly in the area of the recovery of alleged looted fund which administration’s insiders said would be needed to jump-start the ailing economy.
The oil sector was considered corruption-ridden under Madueke.
A government insider also told Saturday Tribune that despite her denial, she had attempted to refund certain sum of money immediately Buhari assumed office as president.
It was claimed that the amount she offered through a certain former Head of State was considered too insignificant for the alleged mind-boggling looting under her, for which reported incontrovertible evidence had been provided by the western world.
After the planned truce fell through, the Buhari administration was said to have placed her under security watch even while abroad for medicals, without giving her any inkling she was being watched.
Before her arrest on Friday, nearly all alleged corruption deals involving her were said to have been tightly packaged, with the one involving UK companies reportedly being used to facilitate her arrest.
Findings revealed that apart from the alleged bribery saga for which she was pulled in, other charges would be brought in once her trial commences.
Saturday Tribune was equally informed that her arrest would trigger a chain of arrests in Nigeria, with some of those to be picked, particularly aides that served in sensitive positions under her, to be used as prosecution witnesses for reduced punishment back home in Nigeria.
One of the anti-corruption agencies was said to have been on the trail of her aides, associates and subordinates on fact-gathering mission, with its findings expected to form part of the evidence against her.
A top judiciary source told Saturday Tribune that the leadership is worried with the lack of confidence in the system being expressed by the president, adding that days ahead may also see a deep surgical exercise in the judiciary.
Buhari further demonstrated his mindset about the judiciary as currently constituted by refusing to nominate any judicial officer to the presidential committee on anti-corruption.
His men were said to have relied on the outcomes of the London and Nigerian trials of former Delta State governor, James Ibori, in drawing their conclusion that a foreign jurisdiction would deliver faster on the desired objective of loot recovery.
It was learnt that the president deliberately sold a dummy on where the trial of alleged oil thieves would take place when he recently disclosed that the trial would commence soon, with many assuming the trial would be in Nigeria.
Senior security officials of the administration, it was learnt, have been making secret trips to countries where the alleged looted funds had been traced to as well as the destination of alleged diverted crude oil.
The trips reportedly afforded the opportunity of cross-checking the information given by western world collaborating with Buhari on the fight against corruption.
When a source in the government circle was asked if the former minister would be shipped home to face trial soon, the source said if such would be necessary, it would be after the London trial.
A security source noted that even if granted administrative bail in London, the implication is that she can’t leave the UK until the end of her trial.
According to the source, “it is not like our judicial system. One day, you are released on bail and travel document confiscated, the next day, you are back asking for release of same to travel for medical treatment abroad. Since they are always going to the same London for their treatment, where would she tell the Metropolitan police or the court she wants to go again.”
Buhari is also reportedly planning a massive reform in the justice system that would bring a radical change.
A former CJN is said to be collaborating with him on the imminent shake-up.
The failure to get 37 judges with integrity nationwide to handle alleged corruption trials being planned by the administration is said to be a major reason the sector would witness a shake-up soon.
A former Nigerian president is also said to be involved in the Alison-Madueke arrest saga.
He is said to have been putting his international connections in the UK at the disposal of the president.
Another former minister currently studying in London is also said to be on the alleged corruption watch-list.
Alison-Madueke had been in London on health grounds before her arrest.
She is considered Jonathan’s right-hand person while the administration lasted.
Under her watch, then Governor of Central Bank and now Emir of Kano, Sanusi Lamido Sanusi, alleged that about $20 billion was unaccounted for in the Nigerian National Petroleum Corporation (NNPC).
A February 2015 Reuter’s Special Report entitled: Anatomy of Nigeria’s $20 billion “leak” speaks on what it called the waste, mismanagement and leakages in the oil sector in Nigeria.
The report noted that in late 2013, then central bank governor Sanusi wrote to President Goodluck Jonathan claiming that the NNPC under Alison-Madueke had failed to remit the amount to the state.
After the letter was leaked to Reuters and a local news site, Jonathan publicly dismissed the claim and replaced Sanusi, saying the banker had mismanaged the central bank’s budget. A Senate committee later found Sanusi’s account lacked substance.
If Nigeria continued to leak cash at the rate described in his letter to the president, Sanusi said at the time, the consequences for the economy would be disastrous. Specifically, the failure of state-owned Nigerian National Petroleum Corporation “to remit foreign exchange to the Federation Account in a period of rising oil prices has made our management of exchange rates and price stability ... extremely difficult,” he wrote. “The central bank of Nigeria is always blamed for high rates of interest,” but “given these leakages, the alternative is a devalued currency ... and financial instability.”
Sanusi handed his documents to a parliamentary inquiry set up February 2014 to investigate the assertion in his letter that billions of dollars in oil revenue had not reached the central bank. He told the inquiry that the NNPC had made $67 billion worth of oil sales in the previous 19 months. Of that, he said, between $10.8 billion and $20 billion was unaccounted for.
A “forensic audit” of the oil industry was set up by then finance minister, Ngozi Okonjo-Iweala. The audit report was given to Jonathan on Feb. 2, 2015 and he said he would hand it on to Nigeria’s auditor general. NNPC said on Feb. 5 2015 that it had received a copy of the audit, before it was made public. The firm said the audit cleared it of wrongdoing, although it found NNPC owed the government $1.48 billion for a separate shortfall.
An August 2014 Senate inquiry expressed satisfaction that most of the money not remitted by the NNPC was withheld for legitimate reasons. But it urged the NNPC to remit $700 million that the committee said it could not account for.
Diezani Alison-Madueke, the oil minister who oversees NNPC, told the inquiry at the time that the correct sum for money not remitted was $10.8 billion, which was to pay for subsidies.
The NNPC has consistently said it did nothing wrong. The oil company said last year that Sanusi’s allegations came from his “misunderstanding” of how the oil industry works. The central bank is “a banking outfit ... how will they understand petroleum engineering issues?” then managing director Andrew Yakubu asked journalists. “They are not auditors.”
But last April, two months after he was sacked, Sanusi told Reuters he worried that the sheer quantities of cash going missing were “unsustainable.”
“You are taking what doesn’t belong to you and transferring it to private hands,” he told Reuters. “The state is captive to vested interests.”
NO-BID CONTRACTS
Sanusi’s documents identify three key mechanisms through which Nigeria has allegedly allowed middlemen to channel oil funds away from the central bank. Among the recipients, Sanusi alleges, are government officials and high-flying society figures.
The three mechanisms are: contracts awarded non-competitively to two companies that did not supply services but sub-contracted the work; a kerosene subsidy that doesn’t help the people it is meant to; and a series of complex, opaque “swap deals” that might be short-changing the state.
Sanusi’s concerns around the first of these mechanisms centre on the 2011 sale by Royal Dutch Shell of its interests in five oil fields. The blocks were majority-owned by NNPC. The government, keen to end the domination of the oil industry by foreign oil majors, had been encouraging Shell and others to sell to local firms.
Shell sold its interest in the fields to companies in Poland and Britain. But the new owners did not get the same rights Shell had. To promote local control, the NNPC gave the right to operate the fields to its own subsidiary, the Nigerian Petroleum Development Company (NPDC).
Without soliciting bids, the NPDC signed “strategic partnership agreements” worth around $6.6 billion with two other local firms to manage them.
One firm, signed for three fields; another, for two.
Both companies quickly sub-contracted production work to other operators, according to Sanusi’s submission to parliament and several market sources. The companies did not disclose terms of these contracts.
In May 2013, Nigeria’s parliament threatened to investigate the NPDC contracts because they were not issued through competitive tender. But the NNPC argued no tender was needed because the contracts involved no sale of equity in the oil fields; the probe did not go ahead.
Sanusi questioned why the NPDC chose those companies. His report said the deals’ only purpose seemed to be “acquiring assets belonging to the federation (state) and transferring the income to private hands.”
Asked about this, NNPC referred to the Senate report, which found that no-bid partnership agreements are not new. It also said that “it may be good policy to encourage indigenous players by giving them greater participation,” but called for such deals “to be conducted in a transparent and competitive manner.”
KEROSENE SUBSIDIES
The second mechanism Sanusi’s report identifies as problematic is a decades-old state subsidy provided to retailers of kerosene, the fuel most Nigerians use for cooking.
Nigeria lacks the refining capacity to make kerosene, so imports it instead. The government then sells the kerosene to retailers at a cheaper price than the import price. This subsidy is meant to make kerosene affordable for the poor. In reality, though, retailers have long hiked prices so consumers pay much more than official levels.
In June 2009, Jonathan’s predecessor, Umaru Yar’Adua, ordered a halt to the scheme on the grounds that it was not working. But the subsidies carried on regardless. The NNPC told parliament last February that it still deducts billions of dollars a year from its earnings to cover it.
In his report, Sanusi called the kerosene subsidy a “racket” that lines the pockets of private kerosene retailers and NNPC staff. The report estimated the cost of the subsidy at $100 million a month. It said kerosene retailers – there are hundreds of them around the country – routinely charged customers much higher prices than the government pays to import the fuel.
Sanusi’s report included an analysis of kerosene prices across Nigeria’s 36 states over two years. It found that the government buys kerosene at N150 per litre from importers and then sells it to retailers at just N40 per litre. Sanusi’s analysis found consumers pay an average of N170-200 per litre, and sometimes as much as N270.
“The margin of 300 percent to 500 percent over purchase price is economic rent, which never got to the man on the street,” Sanusi wrote.
NNPC said in a statement last year (2014) that it can’t force retailers to sell kerosene at the subsidised price.
SWAP DEALS
The third mechanism Sanusi identified involves other types of refined petroleum products, such as gasoline (petrol). Like kerosene, these are also imported. Nigeria is Africa’s biggest oil producer but it depends on imports for 80 percent of its fuel needs because its refining capacity is tiny.
To pay for the imported products, Nigeria barters its crude oil. Sanusi’s dossier focuses on these barter exchanges, which are known as “swap deals.” The idea is that importers who bring in refined fuel worth a given amount receive an “equivalent value” in crude oil.
How that equivalent value is determined is unclear. Sanusi said he was uncertain how much, if anything, is lost in these deals. But he expressed concern at the sheer value of oil that changes hands and the lack of oversight. His report estimated that between 2010 and 2011, traders involved in swap deals effectively bartered 200,000 barrels of crude a day – worth nearly $20 million at average crude prices over the period - for a loosely determined equivalent value in refined products. It is impossible to tell, he said, if all the refined products were delivered, let alone if the terms were fair.
“It was clear to us that these transactions ... were not properly structured, monitored and audited,” he wrote.
Sanusi wrote in his report that mismanagement and “leakages” of cash in the industry cost Nigeria billions of dollars a year.
Nigerian Tribune
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