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Lawyers differ over VP’s NNPC loan approval


NNPC tower

• NNPC Crisis Reveals Loopholes, Presidency’s Incompetence, Say Experts
• Corporation Needs To Be Strengthened – Okwuosa
• Purported Loans Approval By Osinbajo, Exercise In Futility – Orbih

With the Nigeria National Petroleum Corporation (NNPC) still squirming in the controversy wrought on it by poor corporate governance issues, legal opinions continue to differ on the propriety or otherwise of the approval for a joint venture loan, without a discussion and approval by the (NNPC) board.This is as Minister of State for Petroleum, Dr. Ibe Kachikwu, doublespeaks that there is no fraud in the award of contracts by the national oil company.

Speaking on Friday, in Owerri, Imo State at the end of a three-day Nigerian content workshop, organised by the Nigerian Content Development and Monitoring Board, he said his letter to President Muhammadu Buhari, was not based on fraud, but on governance.

“The conversation has been largely misunderstood to border on fraud. It was not on fraud, but on governance and suggestions on ways to go about it. I think a lot of people got it wrong … People dwell much on issues of sensationalism and leave the main substance…,” he said.Before Kachikwu’s attempt to clear the air, he had accused the Group Managing Director of NNPC, Maikanti Baru of insubordination and of awarding contracts to the tune $25 billion, without due process, allegations, which Baru denied.


After Kachikwu’s allegations, Senior Special Assistant (Media and Publicity) to Vice President, Yemi Osinbajo, Mr. Laolu Akande, in his twitter page, @akandeoji, announced that Osinbajo admitted granting approval to the NNPC for two oil contracts worth N640 billion, while Buhari was away on medical leave.He stressed that Osinbajo approved the contracts in his capacity as Acting President in July, after due diligence, but Osinbajo differed sharply the following day, insisting that he did not approve contracts, but gave approvals for two joint venture loans.

Lawyers are, however, divided on whether Osinbajo acted legally when he gave the nod for the joint venture loan, without a discussion and approval by the NNPC board.
Abuja-based legal practitioner, Abubakar Sani, is of the view that Osinbajo’s action was appropriate. According to him, Sections 5 and Section 130 of the 1999 constitution, vests all the executive powers of the federation on the President, and, in his absence, the Acting President.

“This is to be exercised either directly or through ministers. Given that President Muhammadu Buhari, is also the substantive Minister of Petroleum Resources, Osinbajo would only be out of order if he did what President Buhari could not himself have legitimately done, or was legally/constitutionally incompetent to do.“Could Buhari have unilaterally approved or authorised that transaction? That is the question. If he could, then so could Osinbajo as acting President,” he declared.

In sync with Sani’s view is another legal practitioner, Solomon Ukhuegbe, who said Osinbajo was not out of order in approving the loans agreements. His words: “The two agreements were Joint Venture agreements (Osinbajo actually correctly recalled Chevron’s). As only two JV financing agreements got presidential approvals during Buhari’s absence, July 10 and 31 respectively, it is the VP that obviously approved them.

“Since the NNPC Act requires the approval of the President and Vice President Osibanjo approved it as Acting President, like he approved (assented to) the 2017 budget, there was no offence committed.”For Prof. Ernest Ojukwu (SAN), as long as Osinbajo was Acting President, he inherited all the powers of the President.On whether he could have done so in the absence of NNPC board review/recommendation, the ex-deputy director general of the Nigerian Law School said, he is yet to read the NNPC Act and other laws on the matter.

Senior Advocate of Nigeria (SAN), Chief Ferdinand Orbih, however, begs to differ, saying by virtue of the provisions of Section 1 (2) of the NNPC Act, the affairs of the corporation ought to be conducted by the Board Of Directors of the Nigerian National Petroleum Corporation (hereinafter referred to simply as the corporation).He said Section 8 (1) of the same Act donates borrowing powers to the corporation, subject, however, to the limits set by the National Council of Ministers.  

His words: “The borrowing powers donated to the corporation under Section 8 (1) of the Act can only be exercised by the Board Of Directors of the corporation, having regards to the provisions of Section 1 (2), which we have earlier referred to.“When the two sections are read together, one cannot but come to the irresistible view that neither the President as the Minister of Petroleum, nor the Vice President, as acting President (and maybe by extension acting Minister of Petroleum), can, on his own, without reference to the Board Of Directors of the Corporation, approve a joint venture loan.

“I use the words maybe as acting Minister of Petroleum, guardedly, because it cannot be validly argued that the Vice President was acting Minister of Petroleum, and by extension the Chairman of the Board Of Directors of the corporation at the material time. This is because the Minister of State for Petroleum Resources is the Chairman of the Board Of Directors of the Corporation.

“I am of the very firm view that notwithstanding the enormous powers of the President or the Acting President at the material time, neither of them is empowered by law to usurp the powers of the Board Of Directors of the corporation.


“For the avoidance of doubt, the President as the Minister of Petroleum Resources is not the Board of Directors of the Corporation, but the Chairman of the Board. The Vice President as Acting President is not even the Chairman of the Board of Directors of the corporation. This is because, the functions of the Chairman of the corporation was already residing in the Minister of State for Petroleum Resources, even before the Vice President became the Acting President of the country, at the material time.

“That being the case, from which ever prism we view the purported approval of the loans by the Acting President, it was an exercise in futility, as the same was null and void and of no legal effect whatsoever,” Orbih declared.

Another legal practitioner, Victor Oziegbe, is of the view that certain critical issues must be taken cognizance of before the verdict is reached whether Osinbajo was right or wrong to ink the loan deal.

According to him, Nigerians need to first of all, establish who transmitted the documents to Osinbajo to sign. It is also necessary to know those who may have been part of the deal’s negotiation, terms agreed, and conditions regulating the same contract document.

Another important point that he said should be noted is whether the NNPC board made any contribution to the contract document. This is because it ought to be holistic, because if NNPC is going into a contract, the board definitely ought to be carried along.
“So, if it is established that the board participated, or made any contribution or input into the contract, then, “presumption of regularities has covered the Acting President. This is based on the belief that he may have looked at those documents, believing that what ought to be done, have been done – that is, that the board must have actually contributed and looked at the documents, that there must have been deliberations that led to resolutions before going ahead to sign documents.
“So, when you look at it from that point, you will discover that the presumption of regularity favoured the Acting President in signing those documents. Because at that point, there was no how he would know that the board was not involved in the whole thing, except if somebody had drawn his attention to it. In this case, that presumption of regularity, which is recognised by law covered him on that.”

Commenting on the corporate governance challenges plaguing the NNPC, Co-founder, Sustainability School Lagos, and associate lecturer, Centre for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan, Dr. Olufemi Olarewaju, said good governance, transparency and accountability were clearly being undermined, in total breach of Buhari’s pledge to rid the country of corruption.
He said the situation has shown that the state-owned oil firm may not be empowered adequately, or positioned to provide the necessary guidance for good governance, transparency and accountability.“Making progress on transparency and accountability should be the unquestioned desire of all parties involved. Nigerians, in our long-suffering state, have earned this. Basically, the NNPC board has no role in contracts approval processes, according to the released response. Note also that when thresholds are exceeded, the process bypasses the board, and goes on to the FEC for approval. If this is the case, then these questions would arise. What is the role of the NNPC board? Is the NNPC board adequately positioned to provide the necessary guidance for good governance, transparency and accountability?” Olarewaju stated.
Executive Director, Civil Society Legislative Advocacy Centre,  (CISLAC), and Head of Transparency International Nigeria, Auwal Musa, said both Kachikwu and Baru must be asked to step aside to allow investigation into the NNPC crisis.He insisted that the situation did not speak well of the corruption campaign of President Buhari, adding that the revelation has shown that corruption is on the increase in the country.
Managing Partner, The Chancery Associates, Emeka Okwuosa, who equally expressed sadness that government agencies were bypassing due processes, stressing that if due processes were to be followed under extant laws, the minister would not have cried out.

“I am inclined to believe that Baru should step down to allow proper investigations to be done. I am also inclined to believe that overtly and covertly he (Baru) set out to undermine the minister, unless the minister’s position is just ceremonial.
“One of the avowed pillars of the present administration is its stickler for due process and transparency. It now looks as if this position is more or less a window dressing, and acknowledged more in breach than in compliance.
“NNPC for the avoidance of doubt, is a cesspool of corruption and one of the agencies that need to be strengthened. The sooner this is done the better, otherwise we risk undermining all the other reforms introduced by the minister since he took office,” Okwuosa said.

In this article:
Ibe KachikwuNNPC
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