Lines of investigation suggested by the PwC
audit need to be pursued, writes Lamido
Sanusi
Just over a year ago President Goodluck
Jonathan suspended me from my position as
governor of the Central Bank of Nigeria after I
questioned an estimated $20bn shortfall in oil
revenues due to the treasury from the state oil
company. As I said then, you can suspend a
man, but you cannot suspend the truth. The
publication last month of a PwC audit into the
“missing billions” brings us a step closer to it.
When I was central bank governor I raised
three broad questions. First, did the Nigerian
National Petroleum Corporation remit to the
government the entire proceeds of its crude oil
sales? Second, if it did not, is there proof of
the purpose to which the unremitted amounts
were applied? And third, did NNPC have the
legal authority to withhold these funds?
Contrary to the claims of petroleum minister
Diezani Alison-Madueke, the audit report does
not exonerate the NNPC. It establishes that
the gap between the company’s oil revenues
between January 2012 and July 2013 and
cash remitted to the government for the same
period was $18.5bn. And it goes into detail
about the NNPC’s account of how it used that
money, which raises serious questions about
the legality of the state oil company’s
conduct.
The auditors say a significant part of the
unremitted funds is supposed to have gone
towards a kerosene subsidy that had been
stopped two and a half years earlier by the
late President Umaru Yar’Adua. His decree
never appeared in the official gazette, leading
some to question whether it ever had legal
force.
Evidence disclosed in the report suggests this
is a sideshow. The executive secretary of the
agency charged with administering subsidies
confirmed that, acting on Yar’Adua’s orders, it
had ceased granting subsidies on kerosene.
There was no appropriation for such a subsidy
in the 2012 or 2013 budgets.
Throughout all this, Nigerians paid 120-140
naira a litre of kerosene, far more than the
supposed subsidised price of 50 naira. Yet the
state oil company withheld $3.4bn to pay for
a subsidy that in effect did not exist. I have
consistently held that this was a scam that
violated the constitution and siphoned off
money from the treasury.
The second major item raised in the report
relates to the transfer of oil assets belonging
to the federation to the Nigerian Petroleum
Development Company, a subsidiary of the
NNPC.
NPDC has paid $100m for these assets, from
which it extracted crude valued at $6.8bn but
paid tax and royalties worth $1.7bn in the
period scrutinised by the auditors. PwC was
unable to establish how much of the
remaining $5.1bn should have been remitted
to the government. But the report showed
that, along with the private companies NPDC
partnered with, it was extracting crude worth
billions of dollars but yielding very little
revenue for the treasury. I was investigating
related transactions when I was suspended.
The third major item is a claim of $2.8bn by
NNPC for expenses not directly attributable to
crude oil operations; PwC said “clarity is
required” on whether such upfront deductions
from remittances to the federation accounts
are allowed, or whether the money should
have been remitted to the government. Finally,
there are duplicated expenses, “unsubstantiate
d” costs, computation “errors” and tax
shortfalls; a total of $1.48bn has to be
refunded.
Of the $18.5bn in revenues that the state oil
company did not send to the government,
about $12.5bn appears by my calculations to
have been diverted. And this relates only to a
random 19-month period, not the five-year
term of Mr Jonathan, the outgoing president.
Nigerians did not vote for an amnesty for
anyone. The lines of investigation suggested
by this audit need to be pursued. Any officials
found responsible for involvement in this
apparent breach of trust must be charged.
The writer is the emir of Kano and a former
governor of the Central Bank of Nigeria
Copyright The Financial Times Limited 2015.
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