Monday, May 7, 2012

House Fuel Subsidy Probe and Implementation Challenge


April 2012 can conveniently be tagged Nigeria’s Month of Corruption Revelations.  On April 17, a former governor of Delta State, James Ibori, was jailed for 13 years by Southwark Crown Court, London, having pleaded guilty on 10 counts of money laundering and other fraudulent activities with total monetary value of £50m ($77m), about N12.17bn. The fraud sum excludes another 720,000 pounds (N183.6m) the ex-governor expended on exotic automobiles. He goes to join his wife, mistress, sister and lawyer in prison. Guinness Book of Record must note that uncommon feat. It was also the month that sordid details of how some civil servants in the Federal Pension Office perpetrated multi-billion naira frauds in cahoots with some unscrupulous bank officials. Same month, Bayelsa State claimed to have uncovered N6bn payroll scam. The state’s Treasury and the Universal Basic Education Board officials were alleged to be significantly involved in the scam. Also in April, some foreign airlines were found by the Senate Committee on Aviation to have scammed Nigerian government of certain revenues in spite of ripping off Nigerian travelling public through unfair fares charged.  The Senate Committee on Aviation alleged financial fraud and tax evasion and has ordered  all foreign airlines operating in the country to immediately refund five per cent Passenger Fuel Surcharge to the Federal Government.

By far the most startling revelation in the month was the tabling on April 18 and adoption on April 25 of the report of the House of Representatives Ad Hoc Committee on Fuel Subsidy headed by Farouk Lawan.  One of the national newspapers has this to say about the report, “The lawmakers in their 61-point recommendations, displayed the roll-call of institutions, private enterprises that ran a well-organised corruption regime, where both state officials and their private cohorts denied Nigerians the benefits of the subsidy policy, diverted public funds, over-invoiced fuel imports, and collected rebate for them.”  The highlights of the report included its recommendation of the refund of N1.067tn to the federal purse; the call for the unbundling of the Nigerian National Petroleum Corporation to make its operations more efficient and transparent; the request for a quick passage  of a well-drafted and comprehensive Petroleum Industry Bill;   the directive to the NNPC to stop any form of deductions not captured in the Appropriation Act before remittance to the Federation Account, and the request that the corporation should abide by the operational guidelines of the subsidy scheme.

Other noteworthy recommendations include the one that says the NNPC retail, Independent Petroleum Marketers Association of Nigeria and Major Oil Marketers Association of Nigeria should be the outlets for the distribution of kerosene to ensure availability and affordability of the product to Nigerians. Also, there was proposal that under the PSF scheme, importers, especially the NNPC, should be mandated to patronise Nigerian flagged vessels provided they produce the standard safety and sea-worthiness certificates in tune with international best practices.

The suggestion that the Petroleum Products Pricing and Regulatory Agency should provide the Nigerian Navy and NIMASA advance copies of allocation and vessel arrival notification documents to enable the Navy monitor, track and interdict vessels seeking to avoid Naval certification as well as the one that says all extant circulars preventing the Nigeria Customs Service from carrying out its statutory functions be immediately withdrawn by the Central Bank of Nigeria and the Federal Ministry of Finance. These are just to mention a few of the well articulated recommendations.

What the subsidy probe committee has succeeded in doing is the certification of Nigeria as a country under oil curse. The black gold has brought us more curse than blessings as it fuels corruption of unimaginable proportions. We make so much money from the extractive industry, yet we rank among the poorest country of the world with a lot of infrastructural deficit. The Lawan Committee only probed the fuel subsidy regime of three years, 2009 – 2011, and discovered a sleaze of over one trillion naira. Can we imagine what the probe of the subsidy regime from inception would have revealed?  As at today, we don’t even have accurate data on how much oil we produce per day; how much is lost to oil theft (bunkering); how much crude is refined locally; how much is imported? All that is being bandied are estimated figures.

The PUNCH editorial of April 20, said inter alia that “The World Bank and the International Monetary Fund have established a direct link between corruption and the impoverishment of Nigerians. Up to 40 per cent of all government spending in the country, they both agree, is stolen. This brazen theft, more than anything else, has left the Nigerian economy in tatters. It explains the latest dismal figures by the National Bureau of Statistics, showing that 112.47 million Nigerians are living in poverty, with almost 100 million or 60.9 per cent living in “absolute poverty”, using the United Nations benchmark of $1 as income per day.” According to the editorial, the oil subsidy fraud represents a complete failure of existing rules and financial regulations and criminal complicity by all agencies and officials entrusted with the responsibility of safeguarding our public interest. I could not agree more.

My greatest fear is that this report like many others before it may not be implemented. My doubt is not unfounded. How much implementation has previous probes enjoyed? In the recent past, there have been the Halliburton bribery scandal; Siemen bribery scandal; House of Representatives probe of the Power sector in 2008 by Ndudi Elumelu-led committee; the Senator Ahmed Lawan Committee on Privatisation probe in 2011 and several others. All of these came up with eye-popping and jaw-dropping revelations but the public excitement soon worn out as the reports of the probes were shelved in the presidency.

My sixth sense suggests that in spite of the symbolic sacking of two audit firms on account of this report, the pledge of the government to implement the report and the promise by the Economic and Financial Crimes Commission that it has set up an investigating team to further examine the probe report with the aim of prosecuting those that are found culpable, may not be fulfilled. My doubt stems from the fact that most of the indicted people are politically exposed people who probably used a chunk of the fraud to bankroll elections of some of today’s elected officials. Many will recall that a humongous sum of money was deployed in prosecuting the 2011 General Elections with many phony NGOs sprouting during the campaign period to canvass for votes for parties and candidates. There is no free lunch in Freetown, so says a cliché. Another source of worry is our weak judicial system coupled with lack of diligent prosecution by our anti-corruption agencies. Be that as it may, the Nigerian public must stay the course by ensuring that this report by the House of Representatives is fully implemented. Eternal vigilance, they say, is the price of liberty.