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Still On Neiti Vs Nnpc On Fraud: Who Ordered Double Payment Of Over $2 Billion As Pre-1999 Jv Cash Call Arrears? By Ifeanyi Izeze
To say that corruption both real and imaginary is already at the heart of the ongoing electioneering campaign by political parties is an understatement. Under the current dispensation of you be thief, I no be thief campaign, there is no better time to address the rot in the Nigerian National Petroleum Corporation (NNPC) than now. And to refuse to tackle the mess in NNPC by either the EFCC or the National Assembly would amount to sabotaging the nation’s nascent anti-graft crusade which is already being used for cheap political purposes as alleged.
The pathetic issue of the double payment or rather criminal diversion of over $1.2 billion as pre-1999 joint venture cash call arrears deserves urgent attention especially now that everybody involved either directly or remotely in the mess at the NNPC is preparing to leave office after the April poll( all things being equal).
The Federal Government of Nigeria maintains a dedicated account for defraying the cost of producing crude oil in the country. This account is called Joint Venture Cash Call Account and is maintained specifically to pay the Joint Venture Companies for the cost incurred in respect of the equity crude due to the federation.
Based on budgets agreed between the Nigerian National Petroleum Corporation (NNPC) and the joint venture companies, the National Assembly appropriates funds annually to suit the requirement of the industry especially the exploration and production cash calls.
Between 1999 and 2002, the Joint Venture Cash Call Account (JVCCA) was maintained with Chase Manhattan Bank which later changed its name to J.P. Morgan Chase.
Although the account is not an investment or deposit account, being a dedicated escrow account, however, it earned a total of $53,623,280.82 as interest income credited to it between 1999 and 2002. This shocking revelation which was made in the audit findings by Hart Group, a United Kingdom-based audit firm, for the Nigerian Extractive Industry Transparency Initiative (NEITI) indicated that the accrued interest was diverted and used by a yet-to-be-determined person either in the NNPC system, the CBN or the Presidency.
Also, the audit report also drew attention to the fact that NNPC authorized the investment of $650 million from the escrow account on 30/5/2001. Although this was against the purpose of the account yet, the $650 million was used elsewhere before it was returned without the due interest. That the money was used elsewhere for the benefits of the unnamed beneficiaries further lays credence to the fact that all Pre 1999 Cash Call Arrears paid in 2001 and beyond were mere diversion of funds.
It should be pointed out here that while this escrow account is managed by NNPC, as account holder who gives instruction on the accounts, the Central Bank of Nigeria (CBN) disburses based on NNPC's instructions.
According to the EITI report, “One would have expected the Ministry of Petroleum Resources represented by NNPC, to run the account in a transparent manner in line with President Obasanjo' s administration's avowed policy and commitment to due process, transparency and accountability; however this account has been, to say the least, a beacon of corruption”.
It would appear that the NNPC Group Managing Director, Mr Funso Kupolokun has been running the corruption race to the admiration of the sole administrator and the supervising ministry (Ministry of Petroleum) since nobody has raised any form of alarm over any fund diversion or the like despite the revelation by the NEITI-sponsored audit report which was duly submitted to the National Assembly as a patriotic contribution to the anti-graft war by NEITI.
It would be recalled that immediately the Obasanjo-led administration came into power, Chief Gaius Obaseki, the NNPC erstwhile Group Managing Director, alerted the nation that the joint venture companies were owed cash call arrears of $1.0 billion.
About 2002, the GMD reechoed this claim but confirmed that the arrears were almost paid off.
Interestingly however, when Kupolokun took over as GMD of NNPC, he claimed that what Obasanjo's administration inherited as Pre- 1999 Cash call arrears was over $1.2 billion.
These claims have been established by the NEITI-sponsored audit to be false. They were merely a foundation to enable some privileged persons divert the nation's funds.
“Irrespective of how flawed the claim to $1.0 billion or $2billion may be, as the arrears were not-more than $978 million, the Ministry of Petroleum Resources” directly under the supervision of President Obasanjo as the sole administrator, “paid out a whopping $2.053 billion between 1999 and 2003 as Pre- 1999 cash call arrears thereby fleecing the nation of $1.015 billion”.
After thorough audit investigations, it was established that whatever may have been owed the Joint Venture Companies as Pre-1999 Cash Call arrears was paid off in 1999 “as a total of $1.125 billion was pooled from various accounts for this purpose. Therefore, all payments made from 2000 to date as Pre-1999 Cash call arrears are fraudulent diversions of funds. These facts, according to the report, are verifiable from NNPC, CBN and J.P. Morgan”.
In addition, the audit was able to firmly establish that the“ NNPC/NAPIMS letter Ref NAP/GMEIFCC/99ARA of September 25th 2000, purporting to pay 1999 cash call arrears of $270,448,000 to some beneficiaries was not only an illegality but a fraud.
“The claims on this document cannot be reconciled with the position clearly stated in the statement for JVC account for 1999, which confirmed that all cash call arrears have been paid up to December 1999”.
“Also, NNPC in its reconciliation statement on the Pre-1999 cash call arrears, did not consider this claims of the said documents.
“On NNPC Internal Memo Re. NAPIFIN/JIA.Arr2 of January 7, 2002, from GGM (NAPIMS) to GED (E&P), entitled "SETILEMENT OF PRE 2000 ARREARS SECOND PAYMENT JANUARY 2002", the Pre 1999 Cash Call Arrears would be $746. 612 million and not $1.0 billion nor $1.2 billion as variously claimed by NNPC.
“Despite the above glaring position confirmed and reaffirmed by NNPC, the corporation still went ahead and paid out $2.053 billion as Pre 1999 Cash Call Arrears against a maximum liability of $978.275 million. This shows a diversion of $1.075 billion in the Ministry of Petroleum Resources under an administration that should be the beacon of transparency and accountability”.
The annoying aspect of the entire fraud scandal is that even the National Assembly which was supposed to be the eyes and mouth of the Nigerian people has deliberately decided to ignore the glaring facts and figures clearly presented by the NEITI- sponsored audit report.
The NNPC GMD should explain to Nigerians and the international community, if for nothing at least in the spirit of the anti-graft campaign of the Obasanjo-led administration, why NAPIMS was ordered to pay a whopping $2.053 billion to settle a liability of less than $978.275 million. And if he did not order the payment, was it President Obasanjo , the then administrator of the Petroleum Ministry who ordered the payment? If the President was responsible, who or which subsidiary of the NNPC provided him with the facts and other information on which he based his decision to pay out the money? This is necessary because the President, if he was responsible, may have acted on wrong or rather mischievous briefings by the perpetrators of the fraud in the NNPC system.
The National Assembly should equally, since it has decided not to open the matter, explain to the nation why it is taking such a stance on a critical national issue of criminal or rather not very transparent activity that has continued in the nation’s apex oil concern- the NNPC. The lawmakers should ask questions to -whom-it -may -concern based on the allegations raised by NEITI with a view to checking and completely stopping the rot that has continued in the NNPC. Such inquest may not actually amount to witch-hunting anybody but rather for the good of the country and the health of the nation’s oil industry. Except the lawmakers have other information on the allegations that other Nigerians are not privileged to assess, if not, as the nation is cleaning up all the footprints of fraud and corruption in government especially between 1999-2007, let us equally address the rot in NNPC during the same period before the perpetrators of the frauds leave office by May 29th.
NEITI on its part should as a matter of urgency re-introduce its demand for accountability and full investigation into the pathetic NNPC case. If the National Assembly continues to snub the report, the organization should tap from its vast network of international NGOs coalition to compel the Nigerian authourities to account for the obvious and glaring hiatuses in the NNPC accounts especially as it pertains to the payment of the arrears of pre-1999 joint venture cash calls. NEITI, to me is not doing enough to pressure the Nigerian authourities on the matter. It would be dangerous for the organization to allow this particular matter to just die like that. What it means is that nobody would ever take the organization seriously again in the scheme of things in this country. The NEITI officials should be clearly aware of this very important fact.
IFEANYI IZEZE, BONNY ISLAND, RIVERS STATE, (iizeze@yahoo.com)
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