Select Committee on International Development Minutes of Evidence

Examination of witnesses (Questions 658 - 679)




  658. May I thank all of you for coming this morning and may I also thank His Excellency the High Commissioner for organising this morning's evidence session. The Committee is particularly grateful to President Obasanjo for arranging for you to come to give us evidence this morning from Nigeria. This Committee is very greatly concerned about corruption, which of course we wanted to talk to you about from your point of view because, as we see it as a Committee, corruption does very severely impact upon the poor and does also prevent the formation of domestic savings for further investment within the country and also deters investment from outside the country into any developing country. This is the evidence that we have been given and we would like to see it from your point of view as a country determined to stamp out corruption as one of the first priorities that President Obasanjo gave to your country when he came into office. We are very grateful to you for coming here to give us your views and perhaps pointing us in the directions in which we can move, all of us together, to stamp out this canker in our midst. I wonder, General Mohammed, if you would like to introduce your colleagues?

  (General Mohammed) The High Commissioner would like to do it.

  659. Then perhaps you would do that for us, High Commissioner.
  (Prince Ajibola) Thank you, Mr Chairman. We are pleased to be here before you this morning to discuss this issue of corruption as it affects our country. Corruption is a canker that, when it gets deep into the fabric of any society, invariably and ultimately destroys that society. It affects the giver as well as the taker. Hence our law not only prohibits, not only punishes, but also makes it a felony for any act of corruption to be practised by anyone in office, public or private. The punishment is not only for the recipients of corruption but also for whoever gives it. This is akin to the provision of our law as found in our Criminal Code Act which makes even the receiver of anything stolen to have a more heinous punishment than the one who has stolen it. While it provides for seven years' imprisonment for stealing, in some cases for the recipient it is 14 years or even life imprisonment. It is for this reason that the Government is so worried about the situation. All the monies by which people have corruptly enriched themselves in our society are not in Nigeria. They have been siphoned off and salted away mostly to Europe. If we say people have stolen, if you say people have unjustly enriched themselves and corruptly taken the money away, the money is far away in Europe and away from anything that can benefit the people of Nigeria. Were the monies which were being stolen corruptly left in Nigeria to improve the situation of the people in Nigeria, perhaps the situation would be easier to deal with but it is not there and we are really worried about that. Our plea to your Government very passionately is that you assist us to get hold of this money in order to help our society, in order to help our people, in order to help our community. A lot of them are dying, without jobs, without any means of subsistence. Seventy per cent of us live in lowly circumstances on a dollar a day, and that is the position at the moment. What we have up to date is the difficulty of even getting at the root and it looks at times like an interminable circle. We want information in order to prosecute. We are not getting the information from where the stolen money is now being kept, and we are still asked to go and prosecute them before we can get anything done here, so things are just moving around in a circle. The banks are there, they are fat banks that have enriched themselves with all this stolen wealth of Nigeria. With this short introduction, Mr Chairman, may I then face what you have asked me to do, to introduce my colleagues and apologise for my undue digression.

  660. There is no need for any apologies from you, your Excellency.
  (Prince Ajibola) Immediately to my left is the President's man who has been asked to come here and explain the position of our Government. I should not anticipate him. This is Alhaji Aliyu Mohammed. He is the National Adviser to the Government and his designation is National Adviser on Security Matters. He is all the way from Nigeria for this purpose. Next is Dr Usman Bugaje, who is sitting next to him. He is the Political Adviser to our Vice President. The other gentleman sitting next to Dr Bugaje is Mr Ebenezer Obeya, a Legal Adviser to the National Adviser on Security. To my immediate right is Mr Enrico Monfrini, the Legal Consultant to the Nigerian Government all the way from Switzerland. Thank you, sir.

  661. Thank you. That is very clear. Your pronunciation is undoubtedly going to be a lot better than mine so I apologise to you all to begin with but I hope to get your lovely names correct during the course of this session. Can I go straight into questions and ask you about the history of corruption in Nigeria? What do you think are the origins of corruption in Nigeria and how pervasive is it? What kinds of corrupt practices do you wish to stop? What were the sacred cows that President Abasanjo referred to when he said, "I am aiming to put an end to corruption in Nigeria and there will be no sacred cows"? Who would like to start on that? Perhaps General Mohammed?
  (General Mohammed) Thank you very much, Mr Chairman. Corruption in Nigeria, like in any other country, is not something new but the type witnessed in the regime of General Abacha is certainly unprecedented. It took corruption to greater heights, destroyed our cherished bylaws, stunted our growth as a nation and damaged our image abroad. The Obasanjo administration therefore believes that it has a responsibility to stamp out this culture of corruption, restore our cherished values and re-establish sanity in our conduct of public affairs. The first step in all this is therefore to recover the loot, if only to send a signal that those who steal public funds will never get away with it. This is only the first step. The more important and the more enduring step is the passing of the Anti-Corruption Bill and the establishment of an Anti-Corruption Commission, the first of its kind by any regime in Nigeria. That will systematically and legally tackle corruption and cleanse our society from all corrupt practices. The Government is therefore stretching a hand to the civil society to join in its anti-corruption campaign and complement the effort to aid the restoration of good governance. Unfortunately, Mr Chairman, we are finding that the British system protects the British institutions and consequently the money launderers put their money in England. The result of this is that up till now Nigeria has not received the assistance of the British authorities because the British authorities claim that the Nigerian judicial criminal authorities are unable to press charges against all the people whom we have claimed help to commit a lot of crimes in Nigeria, and who have deposited their loot in the British banks. It is unfortunate that we cannot make the Nigerian people understand why we can raise help from countries like Switzerland, Luxembourg, France, even Jersey, who co-operate with Nigerian authorities in this, but not the British, or so it seems. The details of what has been looted and what has been recovered so far can be given by my Legal Adviser. Also, the assistance we have sought and have failed to get from the British authorities and what we have got from other governments and the banking institutions in various parts of Europe can be given by our lawyer from Geneva, Mr Enrico Monfrini. Thank you, Mr Chairman.

  662. We are going to go into private session at the end of our deliberations in order for us to discuss in private the whole question of General Abacha's looting, as you call it (quite rightly), and we can then discuss it with greater freedom without prejudicing any legal proceedings which may be taking place. I think that is probably the sensible way to deal with the Abacha case because it is in front of the British courts. Your general remarks of course apply not just to General Abacha but to a lot of other people and we are of course very concerned about your views on the non-co-operation of the British Government. That is terribly important. I wonder whether Dr Bugaje would like to tell us what is the scale and the nature of the corrupt export of—is it goods, services, money?
  (Dr Bugaje) Thank you, Mr Chairman. I hope the two gentlemen referred to, the two lawyers on the extreme end of this table, will be the ones to give you the details, but let me just say one or two things. You did raise the issue of the definition of "sacred cows", not that I am going to tell you exactly who. The President would be in a better position to say that. The point I want to emphasise is that right from the beginning, as you know, the background of President Obasanjo prior to his even contesting for election was working with Transparency International. One of the first things he did after appointing his cabinet, before any minister was sworn into office, was to organise a retreat for ministers and special advisers and later for other government officials. In these retreats one of the sessions that was held was specifically on corruption and he brought a team from Transparency International to define what constitutes corruption and to define the level of probity that is expected of every government official, in fact to demand that all those who participated must sign an undertaking so that, if they should be found to fall below the standard that has been set, in their own interests they have already written their resignation letter. All they need is to put a date on it; it is already signed. This shows the degree of concern and the determination of the President to stamp out corruption. That was even before the Anti-Corruption Bill was passed. As for the sacred cows, what he is basically saying is that nobody, not even himself and his Vice President, is going to be above the law. There have even been prohibitions going on, like during Christmas there used to be gifts,—and there is a very fine line dividing what is and what is not acceptable—and the President has been very clear as to what gift a Government office can give. Beyond cards and very symbolic gifts nothing else is allowed. A lot of changes have been brought into Government, a lot of measures have been taken to bring back sanity in public affairs. I would not want to say more than this for now.

  663. Can your colleagues help us with an estimate of how much money has been lost through corruption? Do you have some kind of idea?
  (Mr Obeya) It would be difficult to place a figure on what has been lost as a result of corruption. What we can specifically talk about is what we will be able to lay our hands on in relation to the monies taken away from the country by the Abacha regime but if you want a figure on what has been lost as a result of corruption, I do not know where I would start. Would we start from when the British came to Nigeria, or when Abacha came to government? It would be difficult to place a figure on it.

  664. But it is a lot.
  (Mr Obeya) It is unimaginable.

  665. We are struck by the fact that Nigeria is on the surface a very rich country. If we take the oil revenue alone you have got 300 billion dollars since 1970. We also note that your per capita incomes have dropped from a thousand dollars a head now down to 300 and we have the High Commissioner telling us that 70 per cent of Nigeria is living on below a dollar a day. Clearly a lot of money has gone somewhere and it is not in Nigeria, as General Mohammed was explaining. That is what we were worried about. What has been the impact of corruption on private investment other than in the oil industry? Do you know what the levels of private investment were and what they are now?
  (Prince Ajibola) That is also difficult to give a figure on. The reason is that within the private sector it is difficult for the Government even to control or oversee or collect information about what goes on, but one can definitely say that quite a lot of money siphoning happened in the past. At times we have a lot of capital flight from the country in relation to all this problem, and again the model has been always this: the contract has to be awarded; it has to be fixed with a price; there will be a tender for such contracts. There has been collusion between the Government functionary and the private sector, the contractors, most of them international contractors in terms of heavy contracts. If you look at contractors for the mundane and ordinary day to day petty contracts, because of the fact that the Government functionary may be relatively safe with his money outside, he colludes with the foreign contractor that whatever is realised by his own course should be salted away in Europe, and it is very difficult to know how much at any given time, but it is always happening.

Mr Rowe

  666. One of the striking improvements, for example, in Mozambique, has been the considerable increase in Customs & Excise revenue which has resulted from a serious attack on corruption and incompetence in that department. I wondered whether, since the President came, any such departments, like Customs & Excise or the Inland Revenue, have actually seen an increase in the amount of tax being paid or the amount of duty being collected, and whether you are encouraged by that and whether you want to go further down those paths.
  (General Mohammed) We did. What happened before the inception of this administration was that quite a number of goods destined for Nigeria were diverted to Porto Novo and the Togo ports. From there they came by land into our forest borders and they got into the country without duty being paid. One of the things that this administration discovered was that there are quite a number of administrative bureaucracies in our ports, so these were removed during the last budget, but certainly there was an increase in the Customs duties during the year 2000. As a result of the last budget that was passed quite a number of incentives were given to exporters so that they can bring their goods into Nigerian ports and clear them in a very short period of time without going through the borders where they give bribes or they pay less duty and so on, so we have seen that.

Mr Worthington

  667. I am interested in how it is done and the involvement of the western firms. You talked about functionaries earlier on, and contracts. We are not really talking about functionaries. We are talking about some very senior people at the top of the country who got money they should not have done. It is not just oil but oil is the easiest way of looking at it. How is it done that a British or European firm signs a contract for extracting oil and then the money that is in that contract goes to General Abacha or the governor or whoever? How is it actually done so that the British accounting firms say, "We cannot tell it has been done"?
  (General Mohammed) There are quite a number of ways to do it. In the case of General Abacha he ordered his official to go to the central bank and get money so it was the raw cash he took from the central bank vault to his own bedroom in his house. That is one way he did it.


  668. That is pretty direct.
  (General Mohammed) The other way is, these glasses cost £10. Abacha will call you, "I know it is £10 but we are going to pay you £100. Ninety pounds you pay into X account." That was done. A contract which was genuinely awarded to a company, the company will say that the completion period is two or three years. When Abacha took over he would call you, "Yes, before I came in you got a contract for such-and-such amount. You have not been paid. I am going to pay you but I need this cut, this amount. If you pay me then you take it and you can put it in the bank and it gets interest. If you do not give me that amount I will not pay you and then the banks that you borrowed money from, the interest will go high", and so on. This is one other way.

  669. But that is all Nigerian. That is for you to control.
  (General Mohammed) Some foreign companies were involved, some European countries.

  670. Can you give examples?
  (Prince Ajibola) Later.

  671. But what I would like to know very much indeed is what we can do. We can talk later about what happened and how you want that money back. What I want to know is what can be done about the future because quite clearly the British firms or the European firms were trading in a totally corrupt environment and you and I would like to change that. What can we do to help you?
  (General Mohammed) What we are doing from our own end is this. If there is a project in Nigeria, if it is a local project it will be published in the local newspapers for people to tender. Then it will be publicly open, "X quoted for this, Y quoted for this" and so on until they get all the people who quoted for the job. Then the consultants will examine the credentials of each competitor to know that that person or that company qualifies to do that job. In order not to get people unnecessarily competing for the job we will charge a minimum fee which is non-refundable so that if you do not have business in that field you will not go and spoil it for others. That is what we have started to do locally. Equally, all our international contracts are done in that way and some of the documents are even being opened by the World Bank.

  672. That is fine if you are trading for trucks for whatever, but are you saying now that if you are dealing with major oil contracts you are now confident that that money cannot be siphoned off?
  (General Mohammed) The oil contracts are simple because there is a sort of equality in the whole world. Everybody knows the quantity that you drill. Everybody knows the companies that lift it. We go for the maximum and everybody in Nigeria knows the cost of oil when they go to the world map, they switch on the television or read the newspapers, they see, "Today crude has risen to this or that". The oil company that lifts so much quantity is supposed to pay so much to the Government of Nigeria and on the basis of that every Nigerian knows that annually we make on average ten billion dollars from oil revenues. There is no way anybody can do anything in that field, except probably in selecting who lifts the oil.

  673. But, with respect, oil is not simple. We have had hearings here about Angola and about the multinationals dealing with oil in Angola and where arms companies and others have become involved and it is a very complicated trail. There is a major scandal in France about it at the moment. You have had all this oil. When I have been to Nigeria what you see are the petrol queues. That may have changed. You became something like the fifth or sixth largest oil extractor in the world and the people of Nigeria could not get petrol. Where is the money going and what can we do to help?
  (General Mohammed) It is not the money that brings the petrol there. We have four refineries and all the four, before we took over, were put out of use for the simple reason that somebody can be given a contract to go and quote for refined petroleum products. What we are trying to do now is to get all the four to function properly so that we do not import refined products and that will be enough for our consumption and that of our neighbours.

  674. You are not giving me any answer at all about how we can alter our practices, what kind of scrutiny there can be by the British Government or by the oil companies themselves in their accountancy practices to help you to stop corruption.
  (General Mohammed) One of them is to expose all this money that is here now. Once it is done nobody will try to do it again.

  675. We will talk about that later. I am talking about the future now. You are saying there is nothing we can do to help you in terms of controlling the conduct of British or European firms?
  (Prince Ajibola) I think there is an approach that perhaps can be taken to assist on this matter. As I have said before, the problem is mostly on what we can call inflated prices, padded prices, of the contract sum involved in any transaction. If we agree that that is the situation we have these multinational companies bringing the money here and the agreed cut, the agreed sum to be paid to the other government functionary is then still taken out and paid back to them. Do you audit the accounts here? If you do, do you investigate their accounts here? If you do, you may find a lot of the coming in and going out because that has been agreed upon and they are the people paying them and from their own company's account it is paid into the account of the Nigerian Government functionary. That is exactly the modus, that is the route by which a lot of these things are done. They are promised a sum of money if they approve the contract or award the contract. They award the contract, as has been said. The contract is only costing 10,000, and then they are awarded for 100,000, but that 90,000 is not exclusively for the Nigerian functionary. It is shared and divided between the carrier of that sum, the foreign company, and the Nigerian end. During the movement of that 40,000 or so back to the Nigerian beneficiary of that corrupt sum something must have happened to the account of the company.

  676. So you are saying there are closed contracts?
  (Prince Ajibola) Yes.

  677. At inflated prices?
  (Prince Ajibola) Exactly.

  678. With agreement that some of the corrupt money will go into Nigeria and some will come out?
  (Prince Ajibola) Exactly. But what happens invariably is that that sum of money will first of all get here before it is shared, and it is then that it is necessary for your own end there to scrutinise your companies' accounts to see that they are the companies dividing, arranging, organising and distributing the corrupt largesse.

Mr Colman

  679. I want to get back to the Chairman's original question which was, what has been the impact of corruption on private investment? I worked in Nigeria between 1967 and 1969 and it was not a corrupt country at that time, and that was for Unilever for Kingsway Stores. I was responsible for a large amount of private investment in consumer goods industries, building them up to supply Kingsway Stores, but also the whole of West Africa exporting from Nigeria. Clearly since 1970 there has been disinvestment perhaps out of Nigeria, perhaps not new investment. You have mentioned quite correctly the private contractors working on government contracts, but have you made an assessment about the lack of investment which has occurred, the loss to the individual Nigerian and to the Nigerian economy because private investors have either withdrawn from Nigeria or are refusing to invest in Nigeria because of corruption between 1970 and today?
  (General Mohammed) Lack of investment we think is as a result of political instability. Quite a number of military coups, change of government, change of policies, that was thought to be the reason for the lack of further investment, not as a result of corruption other than in the private sector.

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