Charter of Demands: A Symposium on Corrupt Governance and Fuel Subsidy Report

Please find below a Charter of Demands which I promised to make available in a previous post Symposium on  Corrupt Governance which was organized by N-Katalyst. This charter of demands is likewise a product of N-Katalyst, posted here with their permission.

N-Katalyst

Mega-Corruption in the Fuel Subsidy Regime

Charter of Demands

 

INTRODUCTION

The Nigerian State and its people woke up to the reality of the removal of subsidy on petrol by the Federal Government of Nigeria on the 1^st of January 2012. For virtually all Nigerians, it was evidence of an anti-people policy and a desperate move by the Federal Government to punish Nigerians for the corruption that that the Government itself organizes in the oil sector. This led to massive protests across the major cities of Nigeria in strong disapproval of the decision to remove the subsidy. As a result of the massive protests, the House of Representatives in an Emergency Session on the 8^th of January 2012 set up an Ad-Hoc Committee to verify and determine the actual subsidy requirements in Nigeria. The Report of the House of Committee on the Fuel Subsidy disclosed that there is monumental and unprecedented level of fraud in the subsidy regime.

It was in this context that N-Katalyst, a non partisan network of individuals with a deep commitment to the promotion of Nigerian unity and progressive change organized a National Symposium in Abuja on 30 April 2012 to address the issues. The occasion was chaired by Maryam Uwais, a respected leader in the human rights community. The speakers were Dr Otive Igbuzor who reviewed the report of the Ad Hoc Committee, Prof Chidi Odinkalu, represented by Udo Ilo, who addressed the issue of corruption and the human rights of Nigerians, Dr Hussaini Abdu who surveyed the engagement of civil society in the anti-corruption struggle and Yemi Candide-Johnson SAN who reviewed the role of the judiciary and anti-corruption agencies. Bashir Yusuf Ibrahim address was focused on the imperatives on the executives on addressing the implications of the massive crimes carried out against the people of this country.

FINDINGS

The findings which covered the years 2009-2011 revealed the following. That only five companies (including NNPC) were involved in fuel importation in 2006; ten in 2007 and nineteen in 2008. By 2011 however, the number had jumped to one hundred and forty. The Ad-Hoc Committee discovered that the fuel subsidy regime was “fraught with endemic corruption and entrenched inefficiency. Much of the amount claimed to have been paid as subsidy was actually not for consumed Premium Motor Spirit (or Petrol).” The Committee reported that “contrary to the earlier official figure of subsidy payment of N1.3 trillion, the Accountant General of the Federation put forward a figure of N1.6 Trillion, the CBN N1.7 trillion, while the Committee established subsidy payment of N2.59 trillion as at 31st December, 2011, an amount more than 900 percent over the appropriated sum of N245 billion.” In addition, there are “outstanding claims by NNPC and the marketers in excess of N270 billion as subsidy payments for 2011.” The Committee, in its Report, established that “NNPC was found not to be accountable to anybody or authority”.

The Committee also found out that “some of the marketers were involved in claiming subsidy on products not supplied.” Between the 12th and 13^th of January, 2009 (and within 24 hours) the Accountant General was found to have made payments of equal installments of N999 million for a record 128 companies, totaling a disbursement of N127.872 Billion.

Following a review of totally incomprehensible and contradictory presentations by Governmental ministries, departments and agencies, the Committee was able to make a credible estimate that the probable daily consumption of Petrol from the record of marketers and NNPC comes to an average of 31.5 million litres daily. It, therefore, proposed the continuation of subsidy for Petrol and Kerosene and suggested a budget of N806.766 Billion for the 2012 fiscal year. The Committee asserted that the 445,000 bpd allocation to NNPC is sufficient to provide the Nation with its needs in petrol and kerosene, with proper management and efficiency. The Committee recommended the refund to the treasury of the sum of N1.06 trillion, equivalent of $6.8 billion, fraudulently spent.

It is clear that fuel subsidy corruption has revealed a new trend of corruption in Nigeria. In the past, corrupt transactions took place mainly through contract inflation, over- invoicing and receiving of kickbacks. But the fuel subsidy corruption has witnessed situations whereby people collect subsidy payments without making any supplies, collect foreign exchange without supplying petrol and collect subsidy payments for not supplying petrol while collected foreign exchange for the purpose. The fuel subsidy probe presents a supreme opportunity for the people of Nigeria to be united in the determination to rescue our country from the stranglehold of thieves.

DEMANDS

N-Kalalyst believes that the monumental corruption unveiled by the investigation should be turned into an opportunity to create a tipping point for zero tolerance to corruption and for the institutionalization of transparency and accountability in our public life.

1) Ending Impunity for the Fuel Subsidy Cabal

Public corruption has run out of control. We are recent witnesses to the police pension scam and the unbelievable spectacle in the House of Representatives on the power probe where it was discovered that over $16bn was spent to provide electric power without commensurate results. We are looking at a pattern of organized looting of our national resources emanating from the Executive Branch. It continues because Nigerians do not stand up to fight and hold their leaders accountable for their actions. It will not be enough to insist that the culprits be prosecuted and punished. We must begin this fight by demanding the following:

i. All persons and institutions proven to have been indicted in the fuel subsidy scam should be punished. These include, but are not limited to, the Ministers of Petroleum Resources and Finance, the Board Members, MD and Management of NNPC, the Board Members and Executive Secretary of PPPRA, the Director of DPR and all public officials indicted in the Report by the House of Reps Ad hoc Committee.

ii. The freezing of the accounts and recovery of all illegal payments made to the Petroleum marketing firms, the NNPC, PPPRA and others which, according to the House Committee, amount to N1.2 trn or $6.8bn

iii. The immediate dismissal of the Minister of Petroleum Resources, Diezani Alison-Madueke as she awaits prosecution for her crimes against the Nigerian people.

N-Katalyst commits itself to push these demands by exerting maximum pressure on the Federal Government to take action.

2) Getting the Judiciary to do its Work

The spectacular failure of recent high profile criminal prosecutions relating to corruption dramatizes the collapse of the system of public prosecution in Nigeria. Public prosecution rests on a tripod – the detection and investigation of crime, the prosecution of offenders and the conviction and punishment. All levels are in crisis due to the appointment of successive Attorney Generals who see themselves as the President’s poodle rather than an independent and impartial officer of the State determined to advance the cause of justice. There is no political will at the very highest echelons of authority to fight corruption in the country. Already, the Attorney-General of the Federation and Minister of Justice, Mohammed Adoke (SAN), has described the report as mere “fact finding” while the Political Adviser to President Goodluck Ebele Jonathan, Alhaji Ali Gullack, described it as lacking credibility.

While we are conscious of the fact that government must be guided by the dictates of the rule of law and due process, the message we get from the Presidency is that they are in no hurry to identify and prosecute the culprits of this mega corruption. The President must come out openly and show commitment to ending impunity by:

i. Immediately terminating the appointment of the Attorney General Mohammed Adoke, SAN and appointing a credible Attorney General who has the skills and the will to combat and prosecute corruption.

ii. Announcing a time frame, not exceeding six months, for implementing the recommendations of the Farouk Lawan Committee report and commencing the prosecution of all indicted officials and all persons who benefitted, colluded or participated in the corruption scandal.

3) Restructuring of the Petroleum Sector

The structural conditions which allowed for the monumental fraud is that NNPC remains as the regulator, main producer and marketer of petroleum and its products, both upstream and downstream. It is a clear conflict of interest that allowed the organization to become a behemoth with no respect for laws and processes. There is a need for deregulation so as to stop NNPC from regulating the downstream sector. Oil Minister Diezani Alison-Madueke has a conflict of interest by being both on the board of NNPC – a fuel importer – and the supervisor of the subsidy regulator, the Petroleum Products Pricing and Regulatory Agency (PPPRA). We demand as follows:

I. A Judicial Commission of Inquiry should be established into the operations of the Petroleum Ministry and NNPC.

ii. The management and the board of NNPC should be overhauled and those involved in any infractions should be investigated and prosecuted. The company should be unbundled to make it more transparent and efficient.

iii. NNPC through local refining, swap arrangements and offshore processing should be able to provide enough fuel for Nigeria. Therefore the government has no reason to grant subsidy import licenses to other companies.

iv. The chairman and board members of PPPRA between 2009-2011 should be investigated for complicity or gross negligence. The executive secretaries of the PPPRA during that period should be investigated and prosecuted by anti-corruption agencies. PPPRA should conduct a full performance assessment on all companies who import fuel into Nigeria.

v. The passage, within a maximum of three months, of the original, undiluted Petroleum Industry Bill.

4) Providing Fuel at Reasonable Prices

N-Katalyst accepts the Committee’s estimate that the probable daily consumption of Petrol from the record of marketers and NNPC comes to an average of 31.5 million litres. It, therefore, proposes the continuation of subsidy for Petrol and Kerosene and suggests a budget of N806.766 Billion for the 2012 fiscal year. The Committee asserted that the 445,000 bpd allocation to NNPC is sufficient to provide the Nation with its needs in petrol and kerosene, with proper management and efficiency.

i. Kerosene subsidy should resume as a means of helping the poor and aiding the struggle against deforestation in the search for fuel wood.

ii. Government must, as a matter of urgency, privatize all its refineries because the refineries have become mere cash cows for NNPC bureaucrats. Private investors who were issued licenses for the construction of new refineries must be made to use these licenses or the licenses be withdrawn and issued to serious investors who are ready to build new refineries over the next three years to guarantee sufficient local supply of petroleum products.

5) Citizen Engagement

N-Katalyst is aware that Government will not act if citizens do not mount sufficient pressure. We Nigerians must act more as citizens and not subjects. The country belongs to us all and we can no longer leave the political space and politicians and bureaucrats, and for common thieves and crooks. The fight against corruption must be comprehensive and all encompassing; all sections of the society must stand up and fight until we bring this monster under control.

i. Pressure should be mounted on Government to engage the participation of citizens in the formulation of a plan of action towards ending impunity and corruption in our national life, including the possibility of making corruption a capital offense.

ii. N-Katalyst commits to working with other civil society groups to ensure that these demands are met.

A Symposium on Corrupt Governance

Yesterday (30^th April 2012) I attended a Symposium titled “National Symposium on the Findings of The House Committee on Fuel Subsidy” which was organized by N-Katalyst and other civil societies. N-Katalyst promised to publish a charter demand soon so that the ideas shared can be translated into action. I will post the link here when I get it. This post attempts to highlight the issues that were brought up, especially those I found to be amusing and interesting; so it won’t be a boring reading. I present this in three themes, in this order: amusing ideas/issues I indulge, ideas/issues worth thinking about, AND account of event.

[Skip this paragraph if you don’t like reading names] The symposium was chaired by Maryam Uwais. The speakers were: Dr Otive Igbuzor, Dr Chidi Odinkalu, Yemi Candide Johnson SAN, Dr Hussaini Abdu and Bashir Ibrahim.

Unfortunately, I arrived late. It was during the conclusion of Dr Hussaini Abdu and I was present for all of the talk by Bashir Ibrahim. During later discussions, the jist of Yemi Candide Johnson became clear. If you are not familiar with these names, I am not either so forget the names and remember the ideas. Lets indulge in some amusing ideas that were discussed.

On Anti-Corruption Agencies

Yemi Candide Johnson pointed out that all the anti-corruption agencies (ICPC, EFCC) are complicated beautification of existing laws. His argument is that if the agencies are being set up on a federal level so that there is autonomy and distance to the “crime scene”, experience has shown these two premises have not been realized (and may never). First flaw is that these are government agencies that are not independent of the executive (probably funded through the executive), hence their image as “Government Hounds”. Do anti corruption agencies need government permission to pursue cases? Secondly being at the federal level makes it closer to federal crimes (which are the majority, or at least get most attention); it is not farfetched to assume EFFC or ICPC itself has taken part in some federal economic crimes (and I don’t mean by turning their gaze).

Yemi suggested these laws should be enacted under the Nigeria Police; as a division. This should take out the aristocratic-air around economic crimes; when an ex-government official is captured by the Nigeria Police. The same Nigeria police that were seen capturing armed robbers last week; I think this symbolic connection needs to be made. Now, any person publicly being hunted by the anti-corruption agencies (after all is said and done) is perceived as a “successful” person and the charges against him/her may well be a pushed by disgruntled colleagues.

This leads to two other issues raised: federal centralization of power AND lack of backdoor-pressure on the legislature by the executive.

Centralization of Power

One of the participants felt that concentration of power at the federal level is enabling corruption. If anti-corruption agencies operate at the federal level it will be overwhelming for them to deal with corruption at state level; so inefficiency is implied. Further, there is a relationship of dependence by the state government on the federal government to deal (or more appropriately, not deal) with its corruption. It turns out only Lagos recently enacted/provided-for its anti-corruption laws; the other 35 states await federal govt. It shows lack of commitment to punish corruption on state level. And this works out well for sooooo many in those states.

Lack of Back-Door Pressure on the Legislature by the Executive

The person who raised this issue is a member of House of Representatives (HOR). According to her, this administration has given them free reigns in conducting their legislative duties without pressure from the executive. It should be noted that due to the embarrassing failure of this administration (which is common knowledge), she started with the phrase “lets give credit where credit is due”. Rightly so, we cannot give credit where credit is NOT due. This may be a case of confusing failure with virtues.

It is common knowledge that the HOR Committee on Subsidy Reform has been under unrelenting pressure from the executive. This was publicized by the chairman of the committee. One of the demands by the executive is that certain private marketers should not be invited to the HOR to answer for their shady dealings. Another case is the known struggle for the office of Speaker HOR. On one side are the executive and minority of legislature and on the other side is the majority of legislature. The latter side won but not without pressure from the executive. What can be said is that the executive has failed, even in shady practices. The former administration was at least competent in such dealings. Failure is not a virtue, even if it is on questionable endeavors. “My failure to steal your bread doesn’t make me a nice guy, just an incompetent bad guy”

On another note, to show international perspective on this administration’s failure this is what the Financial Times had to say about the Nigerian president.

Man against Machine

The Nigerian machine (system) needs loads of repairs and spare parts, unfortunately not all the spare parts are found in china (or elsewhere). Nigeria has to fabricate some of them.

“When given the job of a slave, do the job like a free man” a Yoruba proverb paraphrased from Yemi Candid Johnson

The issue raised was due to the question: “what is the role of the Attorney General in prosecuting corruption cases?”. The issue however is Attorney General VS Minister of Justice. One person is given these two offices that have been merged as one. However, their goals can be antagonistic. The Minister of Justice seeks to protect the ruling administration while the Attorney General seeks to protect the Nation. The Minister of Justice is simply a political appointment whereas Attorney General is an office provided explicitly in the Nigerian Constitution. Based on experience, the masses see this person as a Minister of Justice with powers of Attorney General. This translates into a lot of retrogression for the nation when immense power is misused. A known case is how James Ibori (a former state governor) eluded justice because he had Oandoka (then the Attorney General) in his pocketsssssssssss.

” … the only one that’s gone to jail is this man called James Ibori. He’s gone to jail because he made the mistake of leaving Nigeria and gone to Jail in Britain” Mark Doyle, BBC Reporter in the documentary Nigerian Crossroads

The consensus from the symposium was that Nigerian’s can’t rely on institutions or offices but on the man in the office; at least for the time being. This is a sad concession but an appropriate course of action. In the case of Attorney-General/Minister-of-Justice, the person-in-office determines which of the two offices dominates the other. An Attorney General that we look forward to is the one that makes commitments to prosecuting corruption. It was also noted that the legislature can assist in this by preempting the office-holder to make commitments (which he/she should be held accountable to)

Masses that were not present also agree with this consensus. If you disagree then how do you explain new found trust in INEC only because the head was changed (Maurice Iwu to Attahiru Jega), OR the breeze of new hope when the Attorney General (Oandoka who protected the now convicted Ibori) was changed, or the mass’ confidence in police capability and integrity when the Inspector of Police was changed (from Ringim to Abubakar). This pattern of behavior highlights Nigeria’s lost trust in the Machine, only the Man, blind to the fallacy therein. Nonetheless, an upright Attorney General is more influential than an upright head of INEC.

Innocent Until Proven Guilty… or Is It?

” … the only one that’s gone to jail is this man called James Ibori. He’s gone to jail because he made the mistake of leaving Nigeria and gone to Jail in Britain” Mark Doyle, BBC Reporter in the documentary Nigerian Crossroads

According to the Nigerian constitution (as well as everywhere except France perhaps), every citizen charged with an offence is considered innocent until proven guilty. Therefore the plaintiff has the task of having to prove (beyond reasonable doubt) that indeed the defendant is guilty. These are wonderful ideas but theory does not promise adherence in reality. Anyone that has had dealings with the Nigeria Police knows that.

In a typical Nigeria Police Station, there is always someone locked in a cell who is putting effort to prove that he/she is innocent. In its simplest scenario, anyone can walk into a police station (or better yet, get a police on the street), report that some other person has committed an offense against you. You could leave with a police or two, go and bring the accused in. Your accusations become temporary truth and the burden of disproving the accusation rests on the accused. The important requirement is that you have enough “lunch” money for the cops.

Imagine having a good day… until someone decides to point a finger at you for some offence; cops pick you up, take you to the station, perhaps rough you up a little, and then leave you locked with the burden of proving your innocence.

A genius proposed that why don’t we use similar tactics on financial crimes. After all this is the type of justice a typical Nigerian lives every day; the majority poor are guilty until proven innocent while it’s the reverse for the minority rich. I remember once watching on local TV that a man had been in prison for over 15 years simply for being suspected of stealing a chicken… sad case.

It may not be constitutional to treat the rich like the poor but it is an idea that gets me excited. In any case, there is no crime more suitable for this justice than financial crimes. Before an accusation is made, some funds, entrusted to the accused, may have seemed to disappeared. We are talking about Millions and Billions in funds. A Nigeria Police tough-love is excused… actually welcomed

Till Death Do Us Part… or You End Up in Prison for Corruption

“Sex, drugs, murder, politics and religion
Forms of hustlin’, watch who you put all your trust in”
Black Thought of the Roots

Creativity in the symposium was not dying. Another issue raised was the complicity of citizens (most of us in the room that is) in economic crimes. The focus was on the two social spaces: Place of Worship and Family.

It was agreed that the 2nd highest beneficiaries of economic crimes are religious leaders. Most religious leaders are smart enough not the bite the hands the feed them but dumb enough to neglect what they preach. Well perhaps not so dumb because their sermons are starving from words with remote meanings to social justice, equity, good governance etc. The few that talk about corruption, shout CORRUPTION with a populist lean. Now next to promising water and electricity, politicians now promise to eradicate corruption; as if they can contract it out (and make something on top).

The point was that religious leaders should preach against these despicable acts AND refuse patronage from persons they suspect to be of shady dealings. The last bit will be hard to swallow. Imagine if people like Pastor Chris, Pastor Oyedapo or Sheikh Dahiru Bauchi denounce such dealings and calling their congregations to action; there will be historical impact.

The other aspect of this is close monitoring by family. Your spouse may suddenly be able to afford (and buy you) things that were not possible just yesterday… and it is not the end of the month. It could be your siblings, or Parents. If you find something shady, would you confront (or report) your spouse or parents? Think hard about this because this can make all the difference. With mass conscience, one person does it and by the time there are 20 reported cases, looters will start being more careful. After all the spouses or children may be assisting by demanding more than can be afforded and thus provide the criminal with a reason when conscience starts acting up.

It was interesting to find out that the only case (or famous case) of such family monitoring was that of a father reporting his son. I didn’t see that coming… neither did his accused son.

Other Issues Raised that I thought are Worth Thinking About

Question: If NNPC’s misappropriation accounts for about 70% of the funds lost to the fuel subsidy scandal, then is the suggestion for deregulation synonymous with restructuring NNPC?

In other words, if fixing of NNPC can save 70% of the misappropriated funds then perhaps that should be the government’s focus not nation-wide deregulation (especially when implemented so inefficiently).

Question: Do anti-corruption agencies need executive order to pursue prosecution around this fuel subsidy corruption (or any other case for that matter)?

Suggestion: Like some developed countries, CAC () should publish all registered companies annually so that concerned citizens can cross-check that companies being awarded contracts do exist (as published in contract awards)

Suggestion: Salaries [basic + others] of the top 1000 civil servants so that Nigerians know what their leaders should be able to afford and more importantly, what they shouldn’t.

Suggestion: The solution for Nigeria is Fiscal Federalism, using the derivative principle. (Don’t ask me how this is related to the subject of the symposium)

Bashir Ibrahim’s Contribution

Since this was only speaker I listened to completely, I should be able to summarize his points. Bashir Ibrahim is a politician and business man. His background is important because it affected the approach and content of this talk. Being a politician, he didn’t need to be sensitive in his statements (because they are known opponents). For being a business man, he appears to be the free market type (unlikely to be keynesian). Below are some of his propositions titled “Urgent Imperatives on the Executives”

1. Remove all from office that have been indicted, shown-neglect or incapable of checking the fuel subsidy issue. They include Minister of Petroleum, Minister of Finance, Members of the Board of Directors for NNPC & PPRA, and others.
2. All marketers must refund monies unaccounted for by them
3. Pass the reviewed Petroleum Industry Bill
4. Deregulation of Petroleum Downstream (showing his favored economic philosophy)
5. * Commercialize management of NNPC (using incentives, if I remember correctly)

On a related note, the Chair of the Symposium (Maryam Uwais) added that NNPC should be stripped off its regulatory powers so that it must be required to balance its books (accountability). This implies that it also won’t have easy access to the government’s treasury with a laissez faire attitude. It will then become simply a marketer that must compete to survive.