A TOP Nigerian anti-corruption crusader was asked to prepare a no-holds-barred report on the rotten state of the 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.
Report by Daily Maverick
Nuhu Ribadu is a Nigerian public protector who works in the dirty sea of corruption, waste and dysfunction and this has proved a challenge 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-co-operative countries. 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 credible 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 US$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.
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 US$5 billion; failing to collect royalties from the likes of Shell and Sinopec, creating a US$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.
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 US$29 billion.