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13 August 2012
Recent developments appear to indicate that several law enforcement agencies are making an increased effort to address corruption – an issue of great concern to Nigerians.
The topic that has probably featured most in the Nigerian news throughout the year is the fuel subsidy. Nigeria is a crude oil producing and exporting country that is largely unable to refine its crude oil. The country's four refineries operate at an average of 23% of their potential capacity. As a result, Nigeria has to import most of its fuel. Initially, fuel was imported almost exclusively by the state-owned National Petroleum Corporation. When the corporation was no longer able to fund this importation, private companies were persuaded to join in. A price was set at which products were to be sold to the public, and private traders were able to import fuel and sell it at a profit. However, when the cost of importation rose as a result of a rise in the price of crude oil, the government returned to subsidising the product.
The subsidy system worked thus: the government paid importers the difference between the cost of importation and the mandatory pump price, which had fallen well below the cost of importation. Over time, corruption crept into the system and dubious importers found ways of inflating their receipts. Between January and October 2011 the government claimed to have spent approximately $8 billion on subsidies, instead of the budgeted $1.5 billion. The government lost control of the system and announced, during the first week of January 2012, that the subsidy had been withdrawn. This resulted in a steep increase in the price of petrol and kerosene, which in turn led to widespread protests that paralysed business activities across the country for several days. The government was eventually forced to announce the restoration of the subsidy, albeit not at the pre-existing level.
A committee of the lower house of the National Assembly undertook an investigation into the companies that had engaged in the importation of petrol. The investigation revealed that several companies may have engaged in fraudulent conduct by claiming and receiving payments for 'phantom' fuel importation. The sums of money involved were said to exceed $6 billion, equivalent to 20% of the entire 2012 budget.
The legislator who led the committee was an individual who enjoyed a reputation for probity; indeed, he was nicknamed 'Mr Integrity'. However, allegations soon emerged that he had sought more than $600,000 from the chief executive of a petroleum trading company in order to have the company's name removed from the list of companies alleged to have been engaged in defrauding the government. The chief executive allegedly viewed the demand for money as extortion, as his company had not been involved in the importation of subsidised petroleum products. He therefore approached the state security service, which organised a sting operation. The legislator was filmed taking delivery of marked money. When this information came to light, there was an inevitable public outcry, along with demands that both he and the alleged briber be brought to justice.
At first the legislator denied everything. He later changed his story, claiming that he had accepted the money only as part of his own sting operation. When asked what had happened to the money, he claimed that he had handed it over to a colleague; the colleague denied any knowledge of this. Several months later, the money had still not been found and the legislator had not been charged with any offences. The general feeling was that this episode would go down as yet another instance of officials getting away with criminal conduct. Nigeria's recent past is littered with similar examples. There have been at least 27 prosecutions since June 2007, but no convictions; the only person among the 27 who has been convicted was convicted in a UK court.
However, a national newspaper reported on August 7 that, "barring any last-minute changes, criminal charges will be filed against 'Mr Integrity' in the next few days". This, along with two other recent developments, might indicate that things are changing. First, the Economic and Financial Crimes Commission applied to forfeit some $15 million that the former Delta State governor (presently serving a prison sentence in the United Kingdom for money laundering) is alleged to have given to the commission's former chairman as a bribe to avoid prosecution. The former governor was arrested and charged in Nigeria, but he denied that he had offered the bribe and denied that the money belonged to him. This money had been sitting in a vault at the Central Bank of Nigeria since 2007. Coincidentally, this development occurred around the same time that the US Department of Justice announced that, as part of the Criminal Division's Kleptocracy Asset Recovery Initiative, it had secured a restraining order against more than $3 million belonging to the former governor and his UK lawyer (who is also serving a prison sentence for money laundering) that was alleged to be the proceeds of corruption.
Second, a number of individuals accused of involvement in the fuel importation fraud have been arraigned before the Lagos High Court. Among those charged are the sons of senior members of the ruling People's Democratic Party. This development is extremely unusual. In the past, several high-profile persons were formally charged with corruption; however, such persons tended to be former governors and ministers, who no longer enjoyed significant levels of support within the ruling party.
Time will tell whether these latest moves indeed signal change or whether they will come to be viewed – like the many other prosecutions that have been commenced in the past – as mere posturing and not indicative of any genuine intention to punish those involved in corruption.
For further information on this topic please contact Babajide Oladipo Ogundipe at Sofunde Osakwe Ogundipe & Belgore by telephone (+234 1 462 2502), fax (+234 1 462 2501) or email (firstname.lastname@example.org ).
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