24 Mar 2015

Tales of the unexpected at NNPC and CBN, By Atedo Peterside.

A foreign correspondent first called my attention
to it. We were at the same party in Lagos. He
leaned forward and whispered in my ear, in a tone
that suggested conspiracy and/or gossip, asking
if I had heard about the missing $49.8 bn at the
Nigerian National Petroleum Corporation (NNPC).
There was a glint in his eye. A knowing look and
a half smile that said: “after all this is Nigeria
and so we love to give headline coverage to the
negative – theft, corruption, sleaze etc.” I pointed
at the glass in his hand and asked him if he had
been drinking a little too much.
I could understand $1bn or $2 bn going missing,
but not $49.8 bn which was close to 75 per cent
of our Federal Budget. Then he “hit” me with what
I was least prepared for. The allegation came via
a letter addressed to President Goodluck
Jonathan by the then Governor of the Central
Bank of Nigeria (CBN), which alleged that up to
$49.8bn might have gone missing at the NNPC.
My head was spinning because I knew there was
no way such a huge amount could be missing
without the Coordinating Minister for the
Economy and Finance Minister (CME) and her
team being aware. Meanwhile, I knew the ex-CBN
Governor to be largely patriotic, sincere, hard-
working, intelligent, courageous and truthful. If I
was to list his faults (and we all have ours), I
would have listed a hot temper, mild arrogance,
and being “louder” than all his contemporaries
around the globe. It was impossible for me to
reconcile the CME’s assurances and my own
intuitive assessment that any missing funds could
not be anywhere near $49.8 billion, with my
knowledge of the ex-CBN Governor to be basically
a truthful person. I shall return to this theme
I would like to confess that I have never trusted
the NNPC. I always felt that it was conceived and
structured, from the first day, as a perfect conduit
for shady financial transactions by cronies of any
Government in power. At no time in its history has
NNPC operated in the national interest for any
length of time. Like many other agencies of the
Government, who are supposed to remit funds to
the Federation Account, NNPC has always been
notorious for remitting the barest minimum that it
could get away with. Those who love the NNPC
idea generally also believe that State Owned
Enterprises (SOEs) can work in the national
interest in Nigeria for sustained periods. They
simultaneously sing the praises of Petronas in
Malaysia and Petrobras in Brazil as models that
our own NNPC can emulate. Suffice to say that
we now know that Petrobras, which was hailed
as a model oil and gas SOE, had long been
inflicted by the exact same twin evils of political
interference and corruption. It is now under
investigation and some of its prominent officials
will go to prison.
Wake up on any day of your choice and accuse
NNPC of failing to remit 100% of what is due to
the Federation Account and you will be right – the
worst that can happen is that you may be
incorrect on the scale/magnitude. Therefore, do
not blame the Ex-CBN Governor for hurling what
we now know to be partially incorrect “shots” at
them; instead blame those who created the
monstrosity known as NNPC. We all “smelt a rat”
when the Ex-CBN Governor’s estimate of the
missing sums at NNPC started fluctuating wildly.
The figure went from $49.8 bn to $10 bn approx.
and then suddenly leapt back up to $20 bn. As if
that was not confusing enough, our overpaid
Senators who spent two years toying with a draft
Petroleum Industry Bill (PIB), jumped into the fray
pretending that they could “resolve” this matter.
There was always only one way to resolve this
imbroglio and that was to ask a credible external
financial expert to audit NNPC. Interestingly,
some misguided persons in the Government were
initially resisting this. Thankfully, the President
over-ruled them and endorsed the CME’s
recommendation and so PriceWaterhouseCoopers
(PWC) were brought in to audit NNPC.
The local and international media hastily linked
the suspension of the Ex-CBN Governor from
office with the allegations that he made against
NNPC. When his suspension was announced, I
published a statement in which I pointed out that
the “souring” of relations between the Presidency
and the Ex-Governor pre-dated the NNPC whistle
blowing saga. It was the accusations of financial
impropriety levelled against CBN as far back as
mid-2013 by the Financial Reporting Council of
Nigeria (FRC) that prompted the President to
query the Ex-CBN Governor. In that advertorial I
made it clear that, notwithstanding the
machinations of conspiracy theorists, two things
must happen:- CBN must answer the FRC’s query
and NNPC must answer to CBN’s allegations and
be subjected to a forensic audit. The first item
was taken care of when the Ex-CBN Governor
eventually sent a lengthy written rebuttal to Mr
President after his suspension from office in the
first half of 2014 and the second item has now
been handled via a PWC audit of NNPC which
found that NNPC and NPDC (it’s subsidiary)
failed to remit $1.48 bn to the Federation
Ordinarily, the Ex- CBN Governor should apologise
for his action of significantly “exaggerating” the
extent of NNPC’s misdeeds, but I don’t expect
him to. CBN staff that I quizzed privately at the
time all dissociated themselves from his initial
hasty figures. They said they did not have
sufficient facts and figures at their disposal to
corroborate those computations. Please let us
remember that a missing sum of money is a
“balance sheet” item. Every second that you take
a snapshot might therefore give you a different
figure because various sums are moving in and
out of the balance sheet several times in an hour
and in multiple currencies. Please remember also
that NNPC has a tradition/culture of non-
cooperation, arrogance and misinformation when
quizzed. Indeed, they could knowingly have lured
the Ex-CBN Governor into blowing a whistle on a
very large amount so that they could later
challenge his figures and “discredit” him.
If the Ex-CBN Governor felt some money was
missing, then he was “right” to have blown the
whistle on NNPC. Meanwhile, there was
absolutely no reason for NNPC to host a
“celebratory” Press Conference (like they did) after
PWC found that the missing amount was much
smaller. That action was in bad taste. NNPC
should be apologising to the CME and the nation
for holding back $1.48 bn from the Federation
Account instead of beating their chests
The CME and her team are the only Government
officials who came out of this imbroglio with their
heads held high. They have been maligned
needlessly by the local and international media
for “failing” to corroborate the Ex-CBN Governor’s
overly inflated figures. When he started throwing
in estimates of kerosene subsidy spending into
the missing billions, I realised that he was
“clinging to straws” because the Ex-CBN
Governor, the CME and I were probably the three
members of the National Economic Management
Team that were most vocal during the media
debates that followed the petrol subsidy removal
in early 2012. We had lost the argument for the
simultaneous removal of the kerosene subsidy
which we all argued was fraud prone.
Interestingly, neither of Nigeria’s two large
political parties was/is interested in advocating
for the removal of the kerosene subsidy because
they are both intellectually fraudulent/bankrupt.
President Yar ‘Adua’s directive to eliminate this
subsidy was never gazetted and he was too sick
to know whether his directives were being
implemented or not and CBN knew all this.
If I had my way, NNPC would be scrapped
completely. The PIB does not go far enough. It
seeks to commercialise NNPC. All past efforts to
commercialise SOEs in Nigeria have failed before
and will continue to fail because of the twin evils
of corruption and political interference.
Meanwhile, frequent and erratic top management
changes at NNPC over the years have also bred
cynicism amongst its employees. These “wounds”
run deep and cannot be rectified by a naive PIB. I
am among those who believe that Nigeria should
be seeking to generate the bulk of its oil sector
revenues through:- 1) the auctioning of oil blocks;
2) the collection of sizeable royalties which
should be a straight percentage of crude oil sales
and are therefore transparent and easy to
calculate; and 3) via a “top-up” coming from a
petroleum profits tax.
If this was our primary focus, we would not need
NNPC. We would however still need a strong and
vigilant regulator for the Oil and Gas sector and a
vigilant tax man. By allowing NNPC and NPDC to
have an equity stake in oil production, we
effectively opened a Pandora’s box. They decide
what their expenses should be and only declare a
profit/surplus after meeting all manner of dubious
expenses. Naturally, the twin evils of political
interference and corruption help determine how
high these expenses should be. It happened with
Petrobras in Brazil and it will continue to happen
with NNPC in Nigeria because our two large
political parties have kleptomaniacs in their midst
who lick their lips at the prospect of infiltrating
NNPC if/when they win elections at the centre.
That brings me back to the question of why the
Ex-CBN Governor’s estimates of the missing
NNPC funds were wildly inaccurate. Methinks he
lost his temper when CBN (under his watch) was
accused of financial improprieties by FRC and the
President queried him on account of that. This
angered both him and some of his close aides at
CBN and I believe this clouded their judgement
subconsciously and so they decided that “attack
was the best form of defence”. They were
gunning for the “under belly” of the NNPC or
seeking to tell the President that “if you are really
interested in financial improprieties then we will
show you where to find them – NNPC.” They
“went for broke”. This might have informed the
Ex-CBN Governor’s curious decision not to work
in concert with the CME on this matter, but
instead to “go it alone” to seek public acclaim and
risk martyrdom via quantifying missing figures
without having the wherewithal to properly call for
files and/or prior explanations from NNPC. Little
wonder that CBN had to quickly revise the figures
when NNPC later accused them of peddling
In my hey days as a bank entrepreneur/CEO, I
encouraged whistle blowing by employees by
emphasising that it was their duty to point me in
a direction that could help unearth a fraud early
and so there was absolutely no need for them to
wait to correctly ascertain the exact quantum of
the fraud. Obviously, this was because I felt that
delays could turn out to be very costly as the
thief may steal even bigger sums in the
intervening period. This same logic can be applied
to partially exonerate the Ex-CBN Governor’s
whistle blowing exploits.
Sources close to the Presidency insist that the Ex-
CBN Governor was not suspended from office for
whistle-blowing exploits per se. Rather, they
argue that it was because he chose to
“weaponise” his whistle-blowing through his
dalliance with opposition politicians and also
because he breached confidentiality when the
outcome of a one-on-one discussion between him
and the President made it unto the front page of
a national newspaper. Few of us (if any) would
tolerate that from a subordinate.
None of the foregoing detracts from the Ex-
Governor’s numerous achievements at CBN. Let
us give him his due. He rescued our distressed
banks and sanitised the banking industry. He
tamed inflation by bringing it just below 10%,
attained exchange rate stability and laid the
foundations and sowed the seeds of a cashless
society, strengthened the CBN’s research
capabilities etc. We should therefore allow him to
now stay above the fray and concentrate on the
demands that befall his new office/life as a
Paramount ruler.
Opposition politicians and the foreign media may
however not want this story to fizzle out for their
own reasons. The former won’t let go because
they already weaponised the missing $20 bn as
proof that this Government was the most corrupt
of all times and unfortunately we are now too
close to the elections to enable them unearth
another scandal that will be universally accepted
as the “mother” of all scandals. For much of the
foreign media, the only African news that makes
it unto their front pages/news headlines any way
are tales of massive fraud and corruption plus
death and disease. This is the diet that they
prefer to feed their audience and so the PWC
report which diminishes the scale of the imagined
massive fraud is not newsworthy. A third group
who love this missing $20bn story are those who
were implicated in the Halliburton $182 million
bribery scandal and/or other incriminating deeds
during their time overseeing NNPC. They were
“basking” in this $20 bn scandal because they
wanted us to believe that the crimes of their own
times were a lot less and so we should cut them
some slack. We must not allow them that wiggle
Suffice to say that the PWC Report has partially
vindicated the Ex-CBN Governor because it does
confirm that some money was “missing”, albeit
$1.48 bn and not $49.8 bn. It has also vindicated
the CME who called for an independent
investigation by a world class auditing firm.
Nigerians can now rest assured that our CME
was not asleep at the switch. She is an
exceedingly knowledgeable, thorough and
dedicated professional who continues to give her
all to Nigeria and thankless Nigerians and
remains an excellent role model for our

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