Wednesday, November 14, 2012

We now know how Nigeria loses so much money in oil revenues

It has long been a mystery exactly how Nigeria could be rich with oil yet so very poor. We know corruption within government to be the culprit, but we have little evidence as to how all the money is stolen. A leader in the Nigerian government who has had success in tackling corruption was charged with investigating what happens to oil revenues. Nuhu Ribadu, head of the Financial Crimes commission has completed his work and we finally have some evidence on the graft. Already politicians from both sides who are suspected of being the thieves are trying to discredit the report.

From the Guardian, writer Simon Allison details some of the corruption that Ribadu uncovered. 
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 allegation 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.

No comments: