Photo: Premium Times
By Eromo Egbejule
On
the night of Friday June 7, 2013, a pre-wedding party was in progress
at the Cavalli Club - named after the renowned Italian fashion designer
Roberto Cavalli - within the 5-star luxury Fairmont Hotel in Dubai.
There was champagne in abundance and some of the performers on ground
for the all-night gig included DJ Jimmy Jatt, leading comedian,
Basketmouth, singer Wizkid and rapper Naeto C. It was the summer party
to be at.
The next day, the
wedding proper held at the JW Marriot Marquis Hotel on the same street.
Most of the floors at the hotel and the nearby Mirage Palace were
occupied by the over 300 guests who had flown in for the wedding from
Nigeria to attend. Over 40 private jets were buzzing in and out of the
United Arab Emirates with sitting governors, senators, traditional
rulers, government officials, politicians and businessmen.
The entire weekend
was, as tabloids will call it, awash with pomp and pageantry. The groom
was Oluwatosin Omokore, first son of Olajide Omokore, a maverick oil
trader; and his bride was Faiza Fari, first daughter of Abdulkadir Fari,
then Permanent Secretary, Ministry of Petroleum Resources. Encomium
Magazine reported that souvenirs at the wedding rumoured to have cost an
estimated $8 million (N1.2 billion using the exchange rate at the
time), included the Blackberry Q10 released in January of that year,
other smartphones, Bang & Olufsen luxury speakers.
In the aftermath,
the then Nigerian president, Goodluck Jonathan, acting on the
recommendation of his petroleum minister and Mr. Fari's boss, Diezani
Alison-Madueke, suspended and later redeployed the father of the bride
to another parastatal. His accounts were also reportedly frozen by the
Economic & Financial Crimes Commission, EFCC. The Nation newspaper
quoted an insider at the ministry at the time as saying the wedding was
deemed too lavish for a civil servant to fund and that in allowing his
daughter marry the son of a major player in his sector, Mr. Musa had
triggered a conflict of interest.
In reality, the
wedding was primarily funded by Mr. Omokore who understandably spared no
cost to give his first son the gift of a good wedding. Mr. Fari, who
reportedly had been a little too strict in demanding due process on some
deals relating to marginal oilfields, was simply the sacrificial lamb
who had to go for reportedly delaying Mrs. Alison-Madueke's desires. He
was one of many in a revolving door policy that saw five group managing
directors and several permanent secretaries exit the Nigerian National
Petroleum Corporation, NNPC, in the five years of Mrs. Alison-Madueke's
tenure.
Back in May 2010,
the death of Umaru Musa Yar'adua precipitated the ascension of Goodluck
Jonathan as Nigeria's president. There was pressure on him from his
kinsmen and others within the enclave of the People's Democratic Party,
PDP, to run for the 2011 elections. It was only expedient to turn to the
Ministry of Petroleum Resources, a major source of election funding for
incumbents since the return of democracy in 1999.
To ensure a smooth
process, Rilwanu Lukman, the incumbent minister who favoured a
restructuring of NNPC into a full commercial entity, was replaced with
Diezani Alison-Madueke in a cabinet reshuffle. Mrs. Alison-Madueke
eventually became like an unofficial prime minister. From then till May
2015 when the Muhammadu Buhari presidency took over; anyone that stood
in her way was removed either by her personally or the presidency acting
on her recommendations.
In an era where
Nigeria earned over N51 trillion from oil and the commodity price peaked
at $112 per barrel, it was the best of times to have the listening ears
of the president and the discretionary powers of an oil minister as
enshrined in the Petroleum Act of 1969. In that five-year period, Mrs.
Alison-Madueke, whose name means 'look before you leap' in her native
Ijaw, leapt to unbelievable levels of influence and the accompanying
affluence.
DIEZANI'S CHILDHOOD
Born Diezani
Kogbeni Agama in the city of Port Harcourt two months after Nigeria's
independence, the young girl had a decent childhood as the third of six
children. Her father Frederick Agama - had a distinguished career at
Shell Petroleum Development Company (SPDC) as a management executive
before retiring to become a traditional ruler of the Epie-Atissa Clan in
Yenaka, Bayelsa State. Her mother, Beatrice Agama, is a retired
schoolteacher. Though her parents were not as wealthy as rumoured, they
lived a decent life by all standards. She grew up at the Shell
residential camp in Rumuomasi, Port Harcourt and schooled in Warri, Port
Harcourt and Mubi.
An intervention
from her maternal grandfather N. K. Porbeni, a renowned Ijaw chief from
Delta State led her to study architecture rather than the creative arts.
"He travelled all the way from Warri [to the UK] to tell me in no
uncertain terms that my father hadn't spent all that money on my
education for me to study Fine Art", she said in a 2007 interview.
Mrs. Alison-Maueke
began her architecture training in the UK. It is unclear why she
abandoned her studies in the UK, but she later moved to the United
States to do a five-year architecture course at Howard University. She
graduated in 1992. Right after her graduation from Howard, she was
employed by SPDC and would continue to go through the ranks, heading
strategy and planning team handling its joint ventures with the NNPC. By
this time, she was married to a former military governor of Imo and
Enugu State, Alison Madueke.
In 2006, she was
appointed Executive Director, Facilities, becoming the company's first
female Nigerian director in its entire history. Ann Pickard, the
controversial American who headed Shell's operations in Nigeria from
2005-2010 fast-tracked her from mid-level executive, singling out her
and other promising young women for top roles. Perhaps Ms. Pickard,
believed to have placed moles in the Nigerian government - according to
US diplomatic cables leaked by Wikileaks - and described as "having a
willingness to manipulate every available political angle to further the
company's interests", saw a reflection of herself in the younger woman.
In July 2007, she
was named Minister of Transport. Her tenure was brief and uneventful
save for when she wept openly in August that year while inspecting a bad
road. Between December 2008 and March 2010, she was heading the
Ministry of Mines & Steel Development.
During her time in
the Ministry of Mines & Steel Development, the agency funded
'Hollywood Glamour Collection', a new limited-edition collection of
Nigerian gold and gemstone jewelry by the popular jeweler Chris Aire.
The collection was unveiled at an exclusive event in Beverly Hills,
California on April 7, 2010, barely hours after Mrs. Alison-Madueke had
been moved to the petroleum ministry. In the months after, Mr. Aire
registered new companies for the sole purpose of being awarded
questionable contracts to handle crude lifting, earning over an
estimated $30,000 daily.
Her royal heritage,
love for jewellery, style and the finer things of life inevitably drew
swift comparisons with the late Princess Diana of Great Britain. In
time, friends, well-wishers and hangers-on began to call her Princess
Di.
THE MEN
One of these
hangers-on was Donald Chidi Amamgbo, the lawyer said to have become her
friend when they met at Howard. Usually described by the Nigerian press
as her cousin, he hails from Imo State, not Bayelsa and runs a thriving
U.S.-based legal practice, Amamgbo & Associates. In 2012, he was put
on probation by the state bar of California for misconduct.
When government
appointees and politicians in general assume office, friends,
well-wishers, government contractors and stakeholders in their specific
industry find ways to contact them through their network, sending
unsolicited gifts to them and their relatives and taking out pages in
the newspapers for congratulatory advertorials.
"When someone
sends you a $10,000 watch here or expensive jewellery there with no
favours asked, you have to call one day to say thanks and have the
person visit", said a former staff of the ministry, who asked not to be
named because he still works for the government and has not been
permitted to talk to the press. "Or your daughter calls from Dubai that
an unknown person paid her tuition for two years and sublet an apartment
for her. Can you say no? Even the Bible says it that 'A man's gift
maketh a way for him."
No one knows for
sure which gifts came to Mrs. Alison-Madueke from some of the men at the
centre of the storm in her world today. But they worked regardless
because they became her close associates soon enough. There was Kola
Aluko, an oil trader seeking a big break; Mr. Omokore, a businessman
looking to diversify and swell his fortune. There were also folks like
Benedict Peters and Walter Wagbatsoma.
One of the many
billionaire conquests of supermodel Naomi Campbell, Mr. Aluko was born
and bred in Lagos as one of the nine children of Akanni Aluko, a
geologist and popular traditional chief in Ilesha, Osun State. His first
reported stint in the oil business was in 1995, after years of
wandering through the pharmaceutics and automobile industries, when he
cofounded Besse Oil, an oil trading firm. By the mid-2000s, one of his
serial companies, Exoro Energy International merged with a partner firm,
Weatherford, to become Seven Energy. It was run by Mr. Aluko who had
one per cent equity, alongside Mr. Omokore and a third man, Phillip
Ihenacho.
Kogi-born Mr.
Omokore, who was given the title of Elegbe of Egbe in his hometown in
October 2014 for his commitment to his town, was an influential
chieftain of the Peoples Democratic Party (PDP) from state to national
level. While the PDP reigns, his businesses were lavishly patronised by
government. e
After the 2012 flooding disaster, he donated N50 million to victims.
In February 2014,
Lamido Sanusi, then governor of the central bank was suspended by Mr.
Jonathan after a controversial statement about missing $20 billion in
crude oil earnings.
In 2010, Shell was
plagued by a lot of issues in its onshore operations. Oil spills across
the Niger Delta had gotten it into a lot of legal tussles; its goodwill
with the host communities had been on a decline since the days of slain
environmental activist, Ken Saro Wiwa in the 1990s; militants had
wreaked considerable havoc on its asset causing countless force
majeures; the government was seeking to get more local marginal field
operators out onshore. It has gone on a large-scale divesting spree
since then. That same year, Shell fixed one of the major pipelines in
the country - the 97 kilometre-long Nembe Creek Trunkline passing
through 14 oil pumping stations - for $1.1 billion. By November 2013, it
was on the market.
The company went
ahead then to divest its stake (45 per cent) in asset held in the joint
venture partnership with NNPC which held the remainder (55 per cent) on
behalf of the Nigerian government, and focus on the less 'dramatic'
offshore fields. The divested fields were the OMLs 4, 26, 30, 34, 38,
40, 41 and 42 and Shell sold them to indigenous operators, raking in a
total $2.3 billion.
Meanwhile NNPC
transferred its shares to one of its many loss-making subsidiaries, the
Nigerian Petroleum Development Company, NPDC, for $1.8 billion as valued
by the Department of Petroleum Resources, DPR. Till date, over $1.7
billion is outstanding as only $100m has been remitted to NNPC which
wholly owns it.
On September 16,
2011, a Strategic Alliance Agreement, SAA, was signed between the NPDC
and Septa Energy, a subsidiary of Seven Energy for OMLs 4, 38 and 41.
Another SAA was signed with Atlantic Energy Drilling Concepts (AEDC) Ltd
for OMLs 30 and 34. These companies were registered in tax havens like
the British Virgin Islands and in the United Kingdom, limiting the
revenue payable to the Nigerian government in form of taxes.
The contracts were
awarded by single-source procurement, in clear violation of Nigeria's
Public Procurement Act which stipulates that bids be subject to public
tender and competitive. Mrs. Alison-Madueke also contravened a guideline
under the Nigerian Oil and Gas Industry Content Development Act 2010
that mandated companies wanting to lift Nigerian crude to show records
of involvement in the industry in the preceding ten years.
SAAs are usually
signed between two or more companies for a number of reasons including
collaborating to augment technical expertise, meet capital requirement
or reduce high costs of operation. NNPC adopted this approach to meet
the huge capital requirement for cash call and lack of required skill
and manpower at the corporation.
According to the
terms of the SAAs, the partner company provides the capital outlay
required to lift crude in the asset supplied by the NPDC as well as
non-refundable entry fees of $0.30 per barrel and $0.010/mcf, 70 days
after the start of exploration activity. It was to recoup its investment
by lifting crude. Quite interestingly, another requirement was that the
collaborating firm pay a fixed sum of $350,000 per asset annually for
five years to facilitate the training of NPDC staff. This came to $1.4
million per year and Atlantic Energy never paid up.
Till date, Federal
Inland Revenue Service, FIRS, is pursuing Atlantic Energy to get its tax
returns. And while the NNPC has moved to terminate the SAAs so it can
get new partners who will pay as at when due, a court order obtained in
October 2016 by Seven Energy, may be restraining it from doing so.
"NPDC has till date
paid only $100m for those eight OMLs but is still enjoying the benefits
of an owner", says Waziri Adio, executive secretary of the Nigeria
Extractive Industry Transparency Initiative (NEITI) which tracks
revenues accruing to government.
An alternate
commercial valuation by PricewaterhouseCoopers in 2015 took Shell's
divested asset into consideration and roughly estimated these eight
assets to be worth $3.4 billion in total.
"NPDC brought them
on as partners because they are supposed to have financial capacity and
technical capacity even though the assumption is that NPDC itself has
financial and technical capacity to manage the asset", Mr. Adio
explains. "These firms had neither and the same asset were used in
raising the money. What stops NPDC from raising the money and hiring
contractors to do this job as well?"
Essentially, an
unnecessary medium was created to pay the SAA partners for sourcing
capital which they used the national asset to raise. All of this was
possible because of Mrs. Alison-Madueke's discretionary powers.
In 2014, Mr. Sanusi
told the Senate that Atlantic had lifted over $7 billion worth of oil
between January 2012 and July 2013, but while the NPDC had paid $400
million as petroleum profit tax (PPT), its partner had paid nothing,
flouting the PPT Act 2007.
"The profit sharing
arrangement was too good to be true", The Cable screamed in its
analysis. "Under Article 10 (d) (i)-(v), the two parties were to share
"profit oil" and "profit gas" in ratios of 90 per cent for NPDC to 10
per cent for Atlantic ("profit oil" and "profit gas" with regards to
undepreciated costs associated to capital costs prior to execution of
agreement); 40 per cent to 60 per cent (upon full recovery of
development costs by Atlantic); and, thereafter, it would be 70 per cent
to 30%."
"Up to the full
recovery of development costs related to the continental resources,
"profit oil" was to be shared 40 per cent to 60 per cent and,
thereafter, 70 per cent to 30 per cent. For the "profit gas" upon full
recovery of development costs regarding non-associated gas by Atlantic,
NPDC would take 30 per cent and Atlantic 70 per cent, and reverse to 30
per cent to 70 per cent thereafter. Profit gas" from the continental
resources was to be shared 30 per cent to NPDC and 70 per cent to
Atlantic, and thereafter, 70 per cent to NPDC and 30 per cent to
Atlantic."
"When you look at
the depositions from the U.S. courts, you see that it (the SAA) was a
cover for Mrs. Alison-Madueke and others to cream off things that should
have come to the Federal Republic of Nigeria", Mr Adio concludes.
According to a July 2017 affidavit at a federal high court, Messrs.
Aluko and Omokore owe the Nigerian government the princely sum of
$1,762,338,184.40.
Curiously, the 55
per cent held by NPDC was not given to the National Petroleum Investment
Management Services (NAPIMS), the NNPC subsidiary concerned with
supervising Nigeria's joint ventures (JVs), production sharing contracts
(PSCs) and services contracts (SCs). Why then did the NNPC transfer
them to the NPDC, which had no capacity for exploration?
Back in March 1999,
as former military head of state, Abdusalami Abubakar was wrapping up
his eleven-month stint in office and preparing for the transition from
military to democratic rule, the Deep Offshore and Inland Basin
Production Sharing Contracts Act was sent to his desk. The bill was
meant to stem declining investment in the upstream sector at that point
in time due to the absence of a defined fiscal structure. Nigeria had
also entered PSC agreements in 1993* and did not have legal backing for
the agreements it was entering.
Particularly significant was Section 16.
For the purpose of
the efficient management of Production Sharing Contracts and joint
ventures under this Decree, the National Petroleum Investment Management
Services (in this Decree referred to as "NAPIMS') shall be incorporated
into a limited liability company under the Companies and Allied Matters
Decree 1990, as amended.
Accordingly, NAPIMS
shall be vested with the exploration and production properties and
assets owned by the Federal Republic of Nigeria for the purposes of this
Decree.
It was following in
a tradition of governments signing controversial or hard-hitting
legislations at the end of their tenure. Nineteen days to Democracy Day
(May 29, 1999), the bill was signed into law; however, a single clause
present in the initial version had been deleted. It was Section 16.
The amendment
effectively opened the floodgates. "With that clause, JVs would have
been incorporated", says a source within the Ministry of Petroleum who
requested to be named because he does not have the permission to on the
matter. "If they were, as opposed to the unincorporated JVs agreement we
run currently, quite a few things would not be permissible. NPDC would
pay its bills, crude lifted will be accounted for, recently incorporated
companies will not be given such juicy OMLs to operate, cash calls will
not be paid 'mistakenly' etc."
"Will NPDC use
shareholders' funds to be doing rubbish?", the source asked
rhetorically. "Will an incorporated company setup to make profit be
acting so silly? So many ifs."
If the deleted
clause was a loophole, the discretionary powers given to the oil
minister in the Petroleum Act was a spade that helped Mrs Alison-Madueke
dig into depths previously unknown. The entire petroleum industry is
controlled by the president and the minister; the former appoints the
latter who is then empowered by law. Only the National Assembly could
have checked her excesses, but it didn't.
"The political
pressure on petroleum ministers to finance elections has turned NNPC
into petty cash machine for government", says Bassey (last name withheld
for anonymity), an industry insider. "That the minister has
discretionary powers that makes things worse and that's what we're
trying to unbundle with the PIB. Discretion can make or mar our industry
but it is clear what happens in Nigeria."
Who and what
institutions dropped the ball and allowed her fully exercise those
powers? "The CBN was definitely not one of them, because Mr Sanusi kept
harping on the rot in the oil sector", said Mr. Bassey. "The greatest
enablers of corruption are civil servants who keep quiet or look the
other way to save their jobs because of the god complex of chief
executives in Nigeria. Red flags were raised only because of
inter-agency collusion with banks, audit firms etc."
"The government is
one single unit", emphasises Kola Banwo of Abuja-based Civil Society
Legislative Advocacy Center. "Institutions have roles but usually, with
the nature of patronage and corrupt party system we operate, corruption
is endemic. The NNPC has internal mechanisms and systems to prevent
fraud. The relevant National Assembly Committees have oversight roles
and could have prevented this. The Office of the Auditor-General could
also have made some difference. The EFCC, ICPC, etc. However, these all
formed part of the problem and so did nothing then. Some action from one
or all of these, could have reduced if not prevented what happened
during that period."
Those in the know
say it was the impunity with which Mrs. Alison-Madueke broke the rules
that set her apart from those before her. There were times when she
stopped receiving visitors at the office and made them come to her in
the comfort of her official residence. She would keep governors waiting
for hours, dodge calls from CEOs and chairpersons of multinationals,
employ domestic staff on the bill of the corporation and more.
Mrs. Alison-Madueke
allegedly requested kickbacks from her collaborators to approve some
contracts and the infamous oil swaps which President Buhari ended in
November 2015. Mr. Aluko for instance, admitted paying rent for Mrs
Beatrice Agama's luxury home in Parkwood Point, St. Edmund's Terrace,
St. John's Wood, London, describing it as "simply gifts to a friend,
given long after Atlantic had signed its deal."
In October 2014, in
the run-up to the 2015 elections, Bernard Otti a director at the NNPC
was appointed deputy group managing director (Finance and Accounts), a
position created entirely out of thin air. The press release justified
his appointment as needed to transform NNPC into a commercially-driven
entity but the truth was that he had to close some deals to secure
election funding.
After Mr. Buhari's
inauguration, he ran to the UK after reportedly entering a plea bargain
with the EFCC; With his help, the EFCC traced monies allocated for the
Ekiti gubernatorial elections and other issues. His retirement was later
announced by Mr. Kachikwu in August 2015.
Audits by both PwC
and KPMG showed that the NNPC had at its discretion, spent an average of
$6 billion annually from 2011 to 2013 and there were no watertight
records. A similar amount had also not been remitted on a yearly basis
by NNPC to the CBN.
After studying the
patterns and making calculations, Mr Sanusi cried out in a September
2013 20-page memo to Mr. Jonathan that $20 billion was missing. The NNPC
claimed the money had been spent on subsidy payments for kerosene and
pipeline maintenance even though Mr. Yar'adua had ended the payments in
July 2009. Another audit by PwC was submitted before the 2015 elections
but never released by the government.
"Civil society has
always suspected that there was corruption in the oil sector", said Mr.
Banwo. "When information of extravagant spending for maintain jet
emerged, civil society raised alarm, called for investigations and her
immediate resignation or removal, which the then president ignored. The
NASS set up a committee to probe but nothing came out of it."
"When in 2015, the
then CBN Governor alleged that she was responsible for the missing $20
Billion from the NNPC coffers, civil society also initiated a campaign
for her investigation and removal. The impunity in the then government
allowed her get away with the deeds."
If
Mrs..Alison-Madueke was Princess Di, then Mr Aluko, who was last seen in
Porza-Lugano, Switzerland, in 2016, was The Fresh Prince. He owned a
private jet and an $80 million yacht, Galactica Star; in September 2013,
it was rented to Jay-Z and Beyoncé at the cost of $900,000 a week for
two weeks for the latter's 32nd birthday party. A big fan of Ayrton
Senna, he is also a car racing enthusiast and placed third with a
Ferrari 458 GT2 at Rome's Vallelunga circuit in December 2012. Mr Aluko
was also the owner of the eighth most expensive condo in New York,
costing a mere $50 million.
The U.S. Department
of Justice (DOJ) has filed a lawsuit under its Kleptocracy Asset
Recovery Initiative against the trio asking for the forfeiture of assets
worth $144 million, proceeds from the oil contracts. Mr. Aluko remains
elusive while Mr. Omokore has been arraigned in court since July 2016.
Mrs. Alison-Madueke herself has been arrested even though she is yet to
be tried in court. The proverbial mills of God that grind slowly, seem
to at last be grinding well.
"She kept saying
'when we come back', says Mr. Bassey. "She did not think that Jonathan
would lose the elections. Maybe the opaque deals would have continued
till now."
Beyond Mrs.
Alison-Madueke and her oil men, perhaps the biggest fear of stakeholders
in the industry is that there could be deja vu in this administration
or another. As the salacious details of her time in government
circulate, the loopholes that made this possible remain open. The NNPC
is still devoid of political independence and total transparency.
Newcomers to the party will be happy to take notes - literally.
This report was made possible by the BudgIT Media Fellowship 2017 with support from Natural Resource Governance Institute. READ the story - with graphics - on the Premium Times site.
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