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Interpretations of the NNPC inquiry (2)




Continued from yesterday

WITHOUT much quibble, NNPC has remained unreformable regardless of where its top management comes from. As my friends point out, the malaise, like that of the Customs, and the Police, is systemic. They say it as if that word defines reality – that these institutions are beyond repair – are not fit for purpose. What the Tribunal said about the accuracy of production and lifting is very instructive.

Basically, the minister cannot know how much oil is produced and sold; the NNPC cannot know because there was no reconciliation possible between the Crude Oil Marketing Department, the Account Department, the Inspectorate, the Customs and Excise and that, in theory, crude oil could be shipped without invoice, or invoiced late, stolen without invoice; that the 10Cs, as usual, did not give the minister the figures; that there was a systemic failure in accounting for what was produced, what was sold, etc.

I seem to remember that this was just the same point that Lamido Sanusi raised – the inability to be sure that all oil reportedly shipped or produced was actually paid for and that from his figures there was a discrepancy of several billion U.S. dollars. Sanusi’s disclosure made him into some rascally monster, almost a dedicated pariah, and the hand of Esau, wheeling the knife meant to kill Jonathan, and that (Sanusi), was out to bring down the government.

The explanation of the Ministers of Finance, and Petroleum Resources were inadequate because there was no mechanism to actually vet production, lifting, sales and payment nor was there one to state accurately what NNPC spent. In 1976, this was the position and it did not change in 2014 and has not changed till now. It cannot. Mrs. Diezani Allison-Madueke promised inquiries, none of which saw the light of day except the Price Waterhouse Cooper’s report which, frustrated as it was, asked NNPC to refund some money to the government.

The Irikefe Tribunal report is unequivocal about its main terms of reference: was US$2.8 billion missing from NNPC? They conclude that no such amount was missing nor was any money paid illegally to Midland Bank account held by NNPC.

They further concluded that every drop of oil exported from September 1977 was accounted for and paid for. That the hullabaloo of a missing $2.8 billion was a “hoax”, a “storm in a teapot… Nigerians, as a people, should resist their penchant for branding people guilty on mere rumour before production of evidence. How many an innocent man has lost his life needlessly, through public lynching, as a result of a hue and cry carelessly raised as a lark by someone who immediately thereafter melts into the crowd and then to oblivion.”

Nevertheless, the Irikefe report is the main source about the incompetence of the Crude oil Marketing section, the Account Department, the Inspectorate Division, the Department of Petroleum Resources in the Ministry of Finance, Customs and Excise. Not only are those units incompetent in their record keeping, there is inbuilt conflict of interest. That report further bemoans the impossibility of having a collaborative system where each of the above checks the other; it concludes that at no point can Nigeria be sure of what crude was produced (especially without co-operation of the 10Cs).

It raised the sceptre of oil lifting with no record in some key departments or indeed of late invoicing which was fortuitously or fortunately discovered; it describes the Account Department as in shambles and lacked the personnel to adequately control market sales and other accounting functions. In short, the Accounts Department is not fit for purpose as it has no adequate personnel to carry out its functions. NNPC, according to the report, is top heavy, too few lower and intermediate staff with experience to do their duties. The report has a table of unaccounted shortfalls in NNPC from 1976-1979 between the Commercial Department and the Inspectorate.

If all this is true, what responsibility, if any, should be attached to the minister? If this report had been issued under Mrs. Allison-Madueke what would be the response? If Mrs. Allison-Madueke incompetently ran NNPC, then blame must be attached to her.

It is now fashionable to use the word “forensic” when dealing with audits and account of NNPC. I have never understood why an audit in a company is not enough explanation for inflows and outflows of moneys in any enterprise but once the inquiry is called “forensic” the auditors charge five to 10 times what they should and in the end no one is any wiser. But since it is fashionable and I am a devotee of fashion, I have done a forensic examination of the Irikefe Tribunal report which dealt with the alleged US $2.8 billion that was declared missing sometime between 1977 and 1979. In criminal investigation, forensic deals with fingerprints, bloods splatter, DNA, CCTV, pictures of culprits, and other incontrovertible evidence to nail the culprit.

But when we apply “forensic investigation” to the Irikefe Tribunal, matters are not so clear. I have quoted in extenso the report and then applied forensic investigation. Who was in charge of this appalling inefficient organisation? How did the problems, which existed in 1970s gain such permanence? Why has the organisation remain unreformable? Whoever presides over an inefficient and corrupt organisation cannot claim immunity from blame.
• Concluded
• Dr. (Ambassador) Patrick Dele Cole (OFR) is a Consultant to The Guardian Editorial Board.

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1 Comment
  • emmanuel kalu

    There is only one solution to NNPC. it needs to be broken up into different publicly traded companies, with only nigerian’s owing it and no one owing more than 5%. Break it up like this, refineries one company, pipelines, NNPC retails, NNPC investment and JV, NNPC exploration. all this companies would be publicly traded companies . what this does is bring over 5-7 regulators into play, it then bring international best pratice for publicly traded companies. it would also investor who would demand more from the companies, and it would give nigerian’s a share of their resources via dividend payment. This is the only way to solve the NNPC problem.