Examination of witnesses (Questions 658
- 679)
THURSDAY 25 JANUARY 2001
HE PRINCE BOLA
A AJIBOLA, GENERAL
ALHAJI ALIYU
MOHAMMED, DR
USMAN BUGAJE,
MR EBENEZER
OBEYA AND
MR ENRICO
MONFRINI
Chairman
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.
Chairman
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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