On Thursday December 1, the Minister of Finance, Ngozi Okonjo-Iweala, cringed when the senate joint committee investigating the management of funds set aside for petroleum subsidy handed her a seven-day ultimatum to produce a secret forensic report on the Nigerian National Petroleum Corporation in her custody.

The audit, done for her ministry by renowned audit and advisory consultancy, KPMG, which exposed the massive financial malfeasance and monumental corruption in the NNPC, is one document the federal government, the petroleum ministry and the NNPC have worked hard to conceal for a little over a year now.

The report, which could trigger a fierce face-off between the federal and state governments, is one of the most closely guarded secrets in Nigeria today.  It contains shocking details of how the NNPC, and by implication, the federal government has been swindling the states.

So when the committee requested Mrs. Okonjo-Iweala to produce it, she became a bit uneasy, knowing that doing so might embarrass the administration and sparked some troubles for the NNPC, a source close to her told the Times. Initially the minister didn’t make any commitment, but when pressed by committee members, she reluctantly acceded to the request.

It is not known at press time whether she has sent the document to the committee. Contacted yesterday, her spokesperson, Paul Nwabuikwu, said he had no information on the matter.  Calls to the chairman of the senate joint committee, Magnus Abe (PDP, Rivers), were unanswered. But as at noon today, long after the ultimatum given to Mrs. Okonjo-iweala expired, a source close to the committee said the minister was yet to make the report available. He said there was high-powered lobby by the NNPC not to make the document public.

The damning report
But the Times has scooped the report for you in case the minister fails to
produce it or does so to the committee in camera. As far as the 41-page report is concerned, the NNPC is a cesspool of monumental corruption and fraud. The report detailed the corporation’s sharp business practices, violation of laid down rules and regulations, illegal deductions of funds belonging to the state, and failure to account for several billions of naira that should go to the federation account.

The agency, the report says, has also severely defrauded our country in subsidy claims. Auditors found that between 2007 and 2009 alone, the NNPC over-deducted funds in subsidy claims to the tune of N28.5 billion. It has not been able to account for the sum ever since.

The over-deduction from its remittance to the federation account for 2010 and 2011, believed to be in several billions of naira, is not captured in the report.

The Federal Government, through the Federal Ministry of Finance, hired KPMG and another Nigerian auditing firm, S.S. Afemikhe & Co., in July 2010, to look into the books of the corporation following allegations of “wrongful deductions at source by the NNPC to fund its operations” by the 36 state governors.

There were also concerns at the time that “the procedures for managing and
reporting the country’s crude oil and gas revenues are opaque and characterized by gaps, overlaps and inconsistencies in the role of key parties responsible for the assessment, collection and reporting on these revenue streams.”

Officials of the petroleum ministry and the NNPC, a source at the finance ministry disclosed, developed cold feet after the auditors were sent in, and indeed tried hard to frustrate the representatives of the two audit firms by failing to supply evaluation criteria for commercial bids submitted in respect of petroleum products importation.

Believing that would turn the auditors away, our source further explained, the corporation also failed to provide them with other relevant documents such as the criteria for allocation of products and product volumes to importers/suppliers and periodic pre-qualification list of approved products importers/suppliers.

But in spite of the difficulty they faced, the auditors were able to determine that the NNPC had been anything but transparent in the management of our country’s oil resources.

The report that emerged from the audit was just too damning that the leadership of the petroleum ministry, the NNPC and some few other elements in the Federal Government have worked hard to keep it away from the 36 state governors and federal lawmakers in particular and Nigerians in general.

Stealing the states blind
In what is likely to anger state governors, the audit established that the
corporation was in the habit of arbitrarily estimating subsidy claims and then over-deducting funds from proceeds of domestic crude sales.

“For example,” the report said, N25bn was deducted as subsidy estimate for
September 2009 from domestic crude sales proceeds while PPPRA approved a subsidy
of N23.8bn. N35bn was also deducted as subsidy estimate fro November 2009 but
PPPRA approved of N21.3bn.”

The auditors’ analysis indicates “over-deduction for these two months amounted to N14.9 billion. However, only N4.2.bn was swept into the Federation Account by the NNPC as adjustment for subsidy claimable in the two months.” That is beside the N11.8 billion subsidy claim the NNPC claimed it paid for imported products that didn’t reach consumers.

State governors have always complained that the NNPC was shortchanging them
through illegal deductions from revenues payable to the federation account.

Fraudulent underhand tactics
Over-deduction is however not the only way the corporation is defrauding the federal and state governments. According to laid down regulations, the NNPC is invoiced in dollars for domestic crude allocations but is expected to remit the equivalent naira value to the Federation Account. But auditors found to their chagrin that in doing that, the corporation used exchange rates far lower than those published by the Central Bank of Nigeria.

Using this “fraudulent underhand tactics”, the NNPC succeeded in cheating
the three levels of government of a whooping N85.2bn in three years – N25.7 bn in 2007, N33.8 billion in 2008 and N26.7 billion in 2009.

When the auditors requested explanations for these exchange rate disparities, the NNPC claimed it obtained the exchange rates it used from the CBN via telephone.

The report also severely indicted the NNPC over the shoddy and non-transparent manner it renews crude sale contracts every year. The auditors noted that “evaluation criteria for renewal of contracts are not clearly stated in the contract document”, and that the selection exercises were based on individual discretion and wrong assumptions and criteria.”

The NNPC claims that renewal of contract was based on performance of off-takers (buyers). But the auditors observed that the basis and process for determining performance were not clearly defined.

The auditors wondered why in 2007 and 2008, some companies not on the approved list of buyers for that year were allocated crude, a practice the examiners believe had led to crude being sold to non-credible buyers, even with relevant guarantees and safeguards not implemented.

Specifically the auditors queried the allocation of crude to Ovlas Trading (2,852,316 barrels in 2007 and 906, 269 barrels in 2008) Petrojam (2,818,914 in 2007), Oil Fields (950,166 barrels in 2007) and Zenon (906,000 barrels in 2008) even when they were not on the list of authorized buyers for that year.

Contracts for the importation of products, the auditors wrote, were also
routinely awarded without regard for approved guidelines and procedures. “We observed that contracts for the importation of petroleum products were awarded to companies and suppliers not listed in the approved pre-qualification list used for the fourth quarter 2008 importation,” the report noted.

The auditors specifically queried the award of contracts in that manner to
Astana Oil Corporation Limited, Natural Energy and Oando, when they were not prequalified for patronage that year.

Among other forms of misdemeanour, ranging from poor accounting and shoddy
record keeping, the auditors also indicted the corporation for leaving its own storage facilities, unused, and then proceeding to incur additional cost from leasing of third party storage facilities.

The auditors reported that DPK tanks (with storage capacity of 18,000 cubic
metres) at the PPMC depots within the Mosimi Area had not been used for three years even though there were in good condition. Yet the corporation, the examiners added, had been leasing storage facilities from third parties.

The spokesperson of the NNPC, Levi Ajuonuma, declined to comment on the report, saying he had nothing to say until the government releases it officially.

jason123:


I though it was the Yorubas and 1 Igbo man?! Bloody illiterates! Our leaders keep deceiving us yet, we point fingers at ethnic groups.

Gbawe:

Allison-Madueke is the most corrupt of them all. Yet you will see ignorant folks here leading other gullible souls astray via telling them she is "cleaning" up the system. Nigeria is a frustrating view of nationhood.

okada_man:

This madam like money sha

Gbawe:

My brother, na so we see am oo. Any effort, as I have constantly attempted, to show folks we must rise above the ethnic divide-and-conquer ruse our leaders use to subjugate and distract us, is always met with rabid bigotry. How can any sensible Nigerian, even minimally aware of how Nigeria works, think that their own leaders are innocent? They are all rogues and thieves !!!! The pragmatic focus should be on individuals, wherever they are from, who can deliver. Viewing ourselves holier than others is just pandering to crass self-deception.


The NDDC (Niger delta development commission) is the classic example I use because it is actually a cesspit of corruption when one would ordinarily expect "sons of the soil" in charge to be passionate about developing the ND. What have the "sons of the soil" been doing with funds allocated for the development of the ND? embezzling it is what they have been doing. Next minute, an ignorant person will tell us it is "parasitic" Yarobus and "Almajiris" who cause all the propblems of the ND. Conveniently, he forgets "his own" brother laughing all the way to the bank and happy to live their domain underdeveloped.

Allison-Madueke is the most corrupt of them all. Yet you will see ignorant folks here leading other gullible souls astray via telling them she is "cleaning" up the system. Nigeria is a frustrating view of nationhood.

jason123:


There are only two ethnic groups in Nigeria. The elitist Leaders and the masses!

oyb:

^^^^

nnpc corrupt ke?

since the advent of goodluck johnathan 'the  second coming' and amazon diezani - the nnpc has been transformed to a transparent world class company. don't u listen to radio beaf?

senbonzakura_kageyoshi:

^^^
lol, Beaf ke? the only thing left for beaf is to canonize GEJ and declare him a saint. i hardly bother with that one anymore. each administration has people like him so i won't waste typing time on him.

There are only two ethnic groups in Nigeria. The elitist Leaders and the masses!

ndu_chucks:

The unfortunate thing is that the corrupt NNPC officials and their enablers ignore the fact that th billions of naira they steal directly causes the death of thousands of Nigerians. Some of the stolen funds could have gone towards road construction/repairs, hopitals, education etc. Lets hope the masses wake up one day and realize that these elites are killing them daily. The time for Arab Nigeria Spring shouldbe now.

We all know what should be done, May Allah guide one of us with the wisdom for the best implementation mechanism.

Onlytruth:

Please I'm conducting an online auction for Nigeria. I would accept cash from the highest bidder. lol

Kilode?!:

Unspinable ko?

Ok. I can see that Gbawe and danjohn are both underestimating the power of spin.

Hopefully, whatever is being cooked right now will not shock you when the spinmeisters finally deliver it.

Onlytruth:

Please I'm conducting an online auction for Nigeria. I would accept cash from the highest bidder. lol

I bid 10 KOBO. Because that is what Nigeria is worth right now.

eros:


I bid 10 KOBO. Because that is what Nigeria is worth right now.

oyb:

^^^^

nnpc corrupt ke?

since the advent of goodluck johnathan 'the second coming' and amazon diezani - the nnpc has been transformed to a transparent world class company. don't u listen to radio beaf?

oyb:

buuuuuump

where are beaf, point b and were to refute these lies from these paid acn hacks ?

Stealing the states blind
In what is likely to anger state governors, the audit established that the
corporation was in the habit of arbitrarily estimating subsidy claims and then over-deducting funds from proceeds of domestic crude sales.

“For example,” the report said, N25bn was deducted as subsidy estimate for
September 2009 from domestic crude sales proceeds while PPPRA approved a subsidy
of N23.8bn. N35bn was also deducted as subsidy estimate fro November 2009 but
PPPRA approved of N21.3bn.”

The auditors’ analysis indicates “over-deduction for these two months amounted to N14.9 billion. However, only N4.2.bn was swept into the Federation Account by the NNPC as adjustment for subsidy claimable in the two months.” That is beside the N11.8 billion subsidy claim the NNPC claimed it paid for imported products that didn’t reach consumers.

State governors have always complained that the NNPC was shortchanging them
through illegal deductions from revenues payable to the federation account.