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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 later.

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 Account. 

 

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 triumphantly.

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 falsehood. 

 

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 room. 

 

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 daughters.

 

Twitter: @AtedoPeterside