It was the chairman of Virgin Group, Richard Bronson who used the adjective insane to describe the Nigerian ruling class and its technocracy. He was explaining the reasons that led him to withdraw Virgin from the Nigerian aviation sector. He said that after putting together a very good airline-the first airline in West Africa that was ever IOSA/IATA operational safety audit accredited, he ran into problems with excessive corruption. He said that “We fought daily battles against government agents who wanted to daily make fortune from us, politicians who saw the government 49% as a meal to seek for all kinds of favour…watchdogs (regulatory body) that didn’t know what to do and persistently asking for bribes at any point…Nigeria people are generally nice but the politicians are very insane…. The joint venture should have been the biggest African carrier by now if the partnership was allowed to grow, but the politicians KILLED it…Nigeria is a country we SHALL NEVER consider to doing business again..” When the Malaysian Government announced its withdrawal from the Malaysian Gardens project in the FCT because they had been asked to give 80% of the allocated land to the Minister making the project unviable. I guess there are so many examples of such insane demands.
It is this insanity that ensures that we have no significant increase in electricity supply after spending tens of billions of dollars in the sector and after a steady increase in the price of petroleum, we have been able to increase the incidence of poverty in the country from 54% to 70% of the population. This is the context in which we can understand the on-going probe of non-remittance of oil revenue to the Federation Account by the Ahmed Makarfi-led Senate Committee on Finance. We recall that there has been a lot of controversy following the leaked letter to the President by the Governor of Central Bank of Nigeria (CBN) that the Nigerian National Petroleum Corporation (NNPC) was responsible for the non-remittance of $49.8 billion to the Federation Account. The amount was subsequently narrowed down to between $10.8billion to $20 billion.
The Ministry of Finance that is overseeing the inter-agency reconciliation process is of the view that $10.8 billion is the sum yet to be reconciled. In his presentation to the senate Committee, the CBN Governor argued that long before his letter to President Goodluck Jonathan exposing massive diversion of government oil revenues became public in December 2013, he had been doing what many have accused him of failing to do: acting early as the losses escalated. He said he went to the Nigerian National Petroleum Corporation, NNPC, to ask for an answer to a simple math: why Nigeria’s reserves had failed to rise in the face of unprecedented high oil prices for petroleum internationally. Mr. Sanusi said NNPC officials responded that the problem arose because much of Nigeria’s oil production came from deep offshore wells; and that the Sani Abacha government had scandalously agreed with oil companies to peg such oil earnings at $10 dollar per barrel — the prevailing price at the time. The arrangement was fixed to run for 30 years. Officials of the corporation explained that only the Petroleum Industry Bill, PIB, the voluminous government-sponsored oil sector reform legislation, could reverse that agreement.
If indeed we have been selling our petroleum for only 10% of its market value in the last twenty years, then indeed only the word insanity could describe the state of mind of our ruling classes. In his memo to the Senate Committee however, Sanusi Lamido said that he had obtained a legal opinion from a Senior Advocate of Nigeria debunking that claim and demonstrating the contract can be re-negotiated without the PIB. Mr. Sanusi also stated in his memo that the CBN had in the years that followed shown how government fuel subsidy had been massively abused, and how the Pipelines and Product Marketing Company, PPMC, had sustained a notorious racketeering in the administration of the government’s oil swap deals- an arrangement in which Nigeria gives out crude oil to foreign companies in exchange for refined product. “By 2011, it was already clear to us that these transactions were not properly structured, monitored and audited,” One example he gave was that “companies in swap agreements with PPMC would lift crude oil for free, sell at the international market, repatriate the funds and sell at the autonomous rate, trade with the proceeds and at their own time, establish letters of credit (LCs) to import PMS using the funds purchased at the official window.”
The Governor also pointed out that in one shocking case, the PPMC signed oil swap agreements with companies with a clause allowing the destruction of vital documents after one year. Mr. Sanusi called the clause “troubling”, and said on account of that, he did not believe the on-going attempt by the National Assembly to probe the swap deals, will yield any result. At multiple meetings with lawmakers, the CBN governor said he raised the alarm on the findings, particularly about the subsidy fraud, long before the House of Representatives and the federal government finally, in 2012, launched investigations that proved grounding fraud in excess of N2 trillion.
Finally, the CBN Governor revised his earlier claim that nearly $50 billion was missing, and insisted that while part of that amount had been accounted for, as much as $20 billion (N3.3 trillion) – more than half of Nigeria’s entire budget this year- remains unaccounted for because the total crude oil lifting from January 2012 to June 2013, stood at $67 billion and only $47 billion of that amount was paid into government coffers. The claim by NNPC that 80 per cent of the $10.8 billion was incurred on petrol and kerosene subsidy should not be accepted since a presidential directive had in 2009 barred payment of subsidy on kerosene.
Sanusi Lamido Sanusi’s memo to the Senate Committee should be the focus of our efforts to save the Nigerian economy over the coming months. We cannot continue to allow the theft of tens and billions of dollars of our national resources by a few individuals while 70% of Nigerians wallow in poverty. No country in the world would accept this massive quantum of theft. In a country like China, ruling class elements engaged in economic sabotage, nowhere near this scale, would be shot in the head with a bullet and their families forced to pay for the cost of the bullet. We as a country committed to human rights and the rule of law cannot behave in the same way but the least we can do is to ensure such elements go to jail.
Nigeria has reached the level of booty capitalism that calls for radical solutions. In his analysis of prebendal politics in patrimonial China, Max Weber argued that for a long time, booty capitalism blocked the development of capitalism in China and fettered the ability of the business community to seek for profits, which is what makes capitalism to develop. In the old China, the ruling class and its bureaucracy that was feeding fat on their offices and the benefits, which accrue therefrom, blocked economic development. They did not give a damn whether the economy was developing or not, neither did they care about the suffering f the people. It might be the memory of that epoch that makes China behaves with such harshness to economic saboteurs. In Nigeria, the economic saboteurs are celebrated with chieftancy titles and national honours. We cannot continue along this path and expect our economy to grow and poverty to be reduced.