Nigeria : The great $6.8bn oil scandal

By Patrick Smith in Washington DC *

The revelation of gargantuan levels of corruption in the government’s fuel subsidy programme is sparking a groundswell of activity among the opposition and civil society groups

Opposition politicians, civic activists and trade unionists are joining forces thismonth to demandaction against grandcorruption at the heart of government. They promise it will be their biggest showof strength on Nigeria’s streets since protests in January that forced the government to back down on its plans to abolish the fuel subsidy scheme.

At the core of the opposition protests in June will be the findings of a parliamentary report released on 23April that reveals the government presided over the loss of $6.8bn from its fuel subsidy programme from 2009-2011 through theft and mismanagement.

“The government misread public feeling on the fuel subsidy,” says Tunji Lardner, executive director of Lagos-based information platform WANGONeT. “Hundreds of  thousands of small businesses and millions of jobs were set up the basis of the subsidy – protecting that and prosecuting corruptionis a popular cause,” he explains.

Adding to the opposition’s anger are allegations that more than N4.5bn ($28m) has been stolen from pension funds administered by the office of the head of the civil service. State investigators suspect the extent of pension fraud in the country is far larger.

This, together with the government’s announcement expected on 1 June that it will increase electricity tariffs by 50%, will ignite a new round of popular outrage, say activists. A government commissioned report on corruption in the oil export sector, coordinated by former anti-corruption czar Nuhu Ribadu, is also due out in the coming
weeks. Insiders say it will make more explosive revelations. National secretary of the Conference of Nigerian Political Parties Osita Okechukwu says: “It’s a perfect storm for the government.Weare taking them to the High Court for breaching the constitution, but you will also see protests backed by opposition parties and the trade unions.”
Okechukwu said that the findings of the House of Representatives committee formed to probe fuel subsidy payments are proving incendiary.The committee, chaired by Farouk Lawan, was set up at the height of mass protests against government plans to remove the subsidy. Its 209-page report backs up the protestors’argument that it was state corruption, not growing demand for fuel, that raised the cost of the subsidy to N2.6trn in 2011. That is almost 10 times the subsidy cost in 2006. Politicians in the ruling People’s Democratic Party (PDP) are sceptical that oppositionists will be able to repeat the mobilisation seen in January. By offering to retain half of the subsidy, they believe they have shown enough flexibility towards the protestors. Okechukwu and activists in groups such as Enough is Enough Nigeria are unconvinced, arguing  pressure is mounting to hold politicians to account.

“In our protests, we will have three key demands,” says Okechukwu. “All those responsible for the subsidy fraud should be sacked. They should be prosecuted, and the stolen monies returned to the state treasury,” he explains. In Lagos on 1 May, Nobel laureate Wole Soyinka and leader of the Save Nigeria Group, Tunde Bakare, both prominent in the January protests, gave the government two weeks to start prosecutions of the implicated officials or face mass demonstrations. Opposition leaders Bola Tinubu of Action Congress of Nigeria and Muhammadu Buhari of the Congress for Progressive Change met in Abuja in mid-May to discuss the campaign.


Activists say that trade union backing will be critical. It was the unions’ threat of national strike action – including closing down oil production – that forced the government to compromise in January. “There’s no point in going onto the streets to protest if the banks and government offices are still open,” a grassroots organiser tells The Africa Report.

In the frame for the protestors are petroleum resources minister Diezani Allison-Madueke, Nigerian National Petroleum Corporation(NNPC)chief executive Austen Oniwon, former accountant general and current Gombe State governor Ibrahim Dankwambo and the chairman of the Petroleum Products Pricing Regulatory Authority Ahmadu Ali.

Dankwambo, who professes his innocence, was accountant general when his office approved 128 subsidy payments of N999min a single day in 2009. At that time, 36 oil marketing companies were registered with the state oil company. Lawmakers argue that as chairman of the NNPCboard, Allison-Madueke should have known and stopped the state company’s role in subsidy fraud. The Lawan committee concluded that the NNPC was not accountable to any body or authority.

The scandal is getting increasingly partisan. All of these targets, apart from Oniwon, are senior figures in the PDP. Within hours of the report being released, supporters of Allison-Madueke gathered outside the National Assembly in Abuja to protest her innocence. PDP lawmakers in the House of Representatives defeated a motion calling for her prosecution in late April.


More than that,opposition parties claim much of the proceeds from the diversion of subsidy payments found their way into the PDP’s election campaign last year, said to be the most expensive ever. They are also demanding a full account of the operations of aviation minister Stella Oduah-Ogiemwonyi, who was was treasurer of President Goodluck Jonathan’s election campaign. Drawing parallels between the fuel subsidy scandal and the banking crisis in 2009, central bank governor Lamido Sanusi and finance minister Ngozi Okonjo-Iweala have called for early investigations and prosecutions. Sanusi says that lack of accountability in the oil, power and banking sectors is chronically undermining the political system. Attorney general Mohammed Adoke pleaded with activists to be patient, arguing that the prosecutorial agencies would have to study the report and assess the evidence before launching cases. Expectations of action are running high. Many Nigerians have been following the televised debates on the fuel subsidy and associated corruption in the oil sector. “There is more public information than ever about the oil business and what the country should expect from it,”  says Lai Yahaya, director of the Abuja-based Facility for Oil Sector Transparency. Yahaya says: “The question is how does the government use this? Will it push through a reform agenda and make real changes or will we see some tinkering and some small players ending up in court?”


Opposition action has been pushing the government to speed up efforts to get the Petroleum Industry Bill (PIB) into law, says Yahaya, but he warns the wheels turn  extremely slowly: “It will probably take five years to implement the PIB – don’t forget that the Power Sector Reform Act was introduced in 2001,wasn’t passed until 2005 and government is still working on its implementation.” Should the coalition of grassroots activists, trade unionists and political parties (including some dissidents from the PDP) hold together, it could spell real trouble for the Jonathan government. Many in the political establishment see it as an opportunity to weaken Jonathan, who is suspected of seeking to run for a second term in 2015. Should the protests take off in force again, the government will have to abandon its insouciant reaction towards the Lawan report. Jonathan’s allies are urging a minimalist approach – setting up further probes and prosecuting some of the mid-level officials involved in the subsidy scam. Government could also sue some of the smaller oil marketing companies and jail their directors in response to public anger. Few insiders expect action against the  bigger companies named by Lawan, their owners or indeed their allies at the top of government. A major reshuffle – in which Allison-Madueke would be moved or sacked–would be a last resort, if the opposition pressure was sustained. One suggestion heard in the National Assembly in early May was that Jonathan might appoint anti-corruption campaigner Ribadu as petroleum minister to silence the growing protests. That, along with much else that the government is currently doing, could have uncontrollable consequences.



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