First Watch: The missing oil money
By Akintola Omigbodun (Dr)
THE Justice Irikefe Tribunal was put in place in 1980 following on reports during 1979 that an amount of N2.8 billion was missing from crude oil sales for the period 1976 to 1979. This amount was at that time the equivalent of about one year’s sale of crude oil by the Nigerian National Petroleum Corporation, NNPC.
The tribunal had as its chairman Justice Ayo Irikefe, a judge of the Supreme Court at that time and who later became the Chief Justice of Nigeria. The tribunal, amongst other things, was to determine if N2.8 billion or any other sum of money was missing from the accounts of the NNPC. The conclusion of the Irikefe Tribunal was that no proceeds of crude oil sales were missing or not properly accounted for.
We currently have reports that for crude oil sales in the last few years, the NNPC may not have credited the Federation Account with some amount that should be due to the Federation Account. It would appear that the NNPC has not built into it organisational fabric measures that would prevent the sort of controversies that took place about thirty-five years ago when an amount of N2.8 billion was alleged to be missing from crude oil sales receipts.
Chief Festus Marinho, the first Managing Director of the NNPC, was in position during the controversies of 1980. He published a book in 2010 entitled Nigeria’s Petroleum Industry: A Maverick Pioneer. The book is further subtitled – A recollection of my life, times and contribution to Nigeria’s prosperity. The book should be read by officials in both the legislative and executive arms of government. Government officials would thereby understand why the current situation has arisen and why the public views with suspicion government officials who are placed in charge of the nation’s assets.
Extraordinary measures
The information in Chief Marinho’s book is that crude oil sales are on long-term basis and that the same customers are retained as long as they were performing. Invoices for sales of crude oil are issued by the NNPC and payments against invoices are made into nominated accounts of the Central Bank of Nigeria, CBN, in Europe and North America in hard convertible currencies. The CBN subsequently credits the NNPC crude oil sales account held with the CBN. The CBN is therefore aware of NNPC’s income from crude oil sales. The issue of what amounts should have been paid into the Federation Account can be readily resolved without recourse to any extra-ordinary measures.
The NNPC is not capitalised and therefore it does not view itself as a totally commercial organisation. Chief Marinho has indicated in his book the advantages of capitalising the NNPC. A few years back, the Federal Government used funds from the excess crude account for some power sector projects. Eventually, these projects have been capitalised as the Niger Delta Power Holding Company belonging to the Federal Government, the State Governments and the Local Governments. The NNPC can also be capitalised.
One of the views that found ready public acceptance at the time of the Irikefe Tribunal was that the N2.8 billion was paid into a private account to earn interest in that account for some time before the money was transferred back into government accounts. This was denied and the Irikefe Tribunal found no such transactions. However, any organisation that has faced such a challenge to its credibility should have made its point by presenting its audited accounts promptly.
There may also be some significance to a missing oil funds controversy occurring about thirty five years after the previous in 1979/1980. Give the rules of employment into government establishments which stipulate the maximum length of service for an employee as thirty-five years, there would be very few current employees of the NNPC who were in service in 1979/1980. This should alert us to the need to put our institutions on a firm and proper footing for all generations.
And
Another report which referred to it: "Public knowledge of corruption in the oil sector dates back to 1980 following reports that some N2.8 billion in oil receipts was missing or unaccounted for at the time. The Shehu Shagari Administration set up a panel under the chairmanship of Supreme Court Justice Ayo Irikefe to probe the finances of the national oil consortium, NNPC. Although the Commission reported that it found no evidence that any money was missing it however produced some starling disclosures:
“Prof. Ayodele Awojobi of the University of Lagos demonstrated that the barrel being used to lift crude from Nigeria‟s oil wells was four gallons bigger than the standard international barrel. This meant that the company doing the lifting got four gallons for every barrel. Multiply that by a million and we are talking big money even in currency far less than the Naira” (Dare, 201064).
The pertinent question for NEITI to answer is whether the companies lifting the country‟s crude oil have since switched to the international standard barrel. On the issue of the quantum of oil produced, the Ayo Irikefe Commission found:
“ that nobody knew how much oil was being lifted. The metering rooms, manned by expatriates were out of bounds to Nigerian
officials. In return for not doing what they were assigned to do, the officials were generously provisioned with cash, canned beer,
then a novelty in Nigeria and expenses paid holidays abroad”(ibid)."
http://www.citizensbudget.org/citizens_image/Spend_and_Borrow_2011.pdf
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