Examination of Witnesses (Questions 160
- 175)
THURSDAY 16 JULY 2009
MR GARETH
THOMAS MP, MR
EAMON CASSIDY
AND MS
BEVERLEY WARMINGTON
Q160 Andrew Stunell: The White Paper
says that the budget for tackling corruption is going to be tripled
and there is no doubt at all that Nigeria is one of the biggest
thorns in the flesh of the United Kingdom in terms of international
fraud and lack of transparency and so on. Can we take it that
there is going to be an increased investment in this in relation
to Nigeria? You will remember I asked a question when you came
to us before. Is DFID absolutely sure that the UK Government is
doing all that it can to facilitate the speedy processing of cases,
including cases of extradition from this country and so on?
Mr Thomas: Just to try and break
down the different questions that you have asked. I think I would
point you towards the relative successes that the Metropolitan
Police's Proceeds of Corruption Unit has already had where almost
£80 million worth of Nigerian assets are currently restrained
and subject to judicial proceedings. Since 2006 there have been
some 24 arrests directly connected to Nigerian assets, two successful
prosecutions already, including a three-year conviction for money
laundering, and almost £21 million worth of money has been
directly returned to Nigeria following criminal or civil proceedings.
That unit that was set up in part at the time of the third White
Paper has made a direct difference. As the White Paper said, we
are seeking to build on that work going forward. There are other
ministries that I would need to touch base with to answer your
question more generally about are we sure we are doing everything
we can do. Certainly in Nigeria we are working extremely closely
with the representatives of a number of other government departments.
We are pretty well joined-up in-country and that reflects back
into the UK and London as well.
Q161 Andrew Stunell: Some of the
evidence we have taken from third parties has suggested that perhaps
the UK Government has not actually been as intense in its response
as it might have been. You have mentioned other government departments,
is that something on which DFID has expressed a view, or is ready
to express a view, in relation to getting Nigeria into a better
shape?
Mr Thomas: As I say, we work with
a range of other government departments both in Nigeria directly
and here in London through operations like the Proceeds of Corruption
Unit. We have stepped up the work at both ends of that corruption
piece, if you like, what happens here in London and what has happened
in Nigeria itself, and I think it is beginning to make a difference.
There is always more you can do given the scale of the corruption
issue in Nigeria and, as I say, we will seek to step up our work
further in the different areas, both through the systems point
and through the work of particular units and through what we can
do with parliament and the different legislatures.
Q162 Andrew Stunell: Perhaps I could
rephrase my question. There has clearly been a drop in the pace
and intensity of what the Nigerian authorities are doing. They
may have broadened it but certainly at the upper levels it would
appear that impunity reigns once again. My question is, is the
UK Government pushing to get back to a higher level of intensity
or are our government departments passively accepting that it
is up to the Nigerian authorities to take this further?
Mr Thomas: I do not think we are
passively accepting that corruption is just an issue for the Nigerian
authorities and there is nothing that we can do about it, which
partly reflects the commitment we made in the White Paper and
it is also reflected in the conversations that we have had and
will have, as ministers, with Nigerian interlocutors. Certainly
corruption was an issue that I discussed with the Secretary-General
to the Federal Government and I am sure when I go to Nigeria it
will be an issue that is on my agenda for discussions with various
ministers and others that I meet.
Q163 John Battle: I think it is generally
accepted that there are civil society organisations in Nigeria,
quite substantially, but that would leave two questions. One is
how representative do you think they are, and are they in the
right place? Someone said that people who do not have an email
and are not in the urban context do not really get a voice. That
is the representation question. The second question would be how
effective are they at engaging with and calling power to account?
Mr Thomas: I would reject the
first challenge. We work with a range of rural cooperatives, for
example, which are an essential part of civil society. I do not
think that is a fair characterisation of the support we give.
How effective are NGOs? Inevitably, different organisations are
effective to differing degrees. I think what we see as being our
role is to try and help support the development of civil society
where there are obvious issues that we can work with that civil
society on to strengthen their effectiveness to do so. To take
just two examples, climate change and corruption, we have supported,
and are supporting, civil society coalitions to emerge and do
work.
Q164 John Battle: You are funding
some civil society organisations directly?
Mr Thomas: Indeed.
Q165 John Battle: What about the
Coalitions for Change or the fund? Can you tell me a little bit
about that and how effective that could be in developing capacity?
Mr Thomas: Before I bring Mr Cassidy
in to give you a bit more detail, Coalitions for Change has been
a programme that has, for example, supported the emergence of
a climate change network. One of the products of that has been
the formation of a committee in parliament to begin to look at
climate change issues and some of the Nigerian members of that
network have begun to participate in international exchanges on
climate change issues.
Mr Cassidy: There are lots and
lots of different organisations in Nigeria, it is probably fair
to say there has been a bit of an explosion since 1999. Figuring
out which ones we have to work with and which ones represent anyone
and are not just one-man-shows is really quite difficult. What
we have done is to move away from the old model where you would
pick particular NGOs and build up capacity and perhaps undermine
them in many ways and turn them into donor consultants. What we
have tried to do is build up broader coalitions around interests.
We think the way to do this and to make sure that we are working
with genuine civil society representatives is to make sure that
this is very strongly Nigerian-led. In this particular programme,
on the CforC, as we call it—Coalitions for Change—there
is a board which is purely Nigerian, which is obviously overseen
by us but they make the decisions about who to work with. Once
again, this is not providing direct funding to NGOs to build up
their individual capacity, it is helping groups to work around
building capacity around issues, around the management of the
budget, for example, around oil proceeds and, as the Minister
said, around things like climate change which is relatively new
in Nigeria. We think this is a better way of getting the better
NGOs and civil society groups to work with us.
Chairman: Hugh Bayley is going to turn
to questions on the Delta. I make the point that for security
and time reasons we did not go to the Delta but both John Battle
and Hugh Bayley visited the Delta on a previous occasion.
Q166 Hugh Bayley: What are the reasons
why there is such a lack of transparency about where the oil revenues
go? What prospect is there of building a Nigerian economy that
is less oil dependent and building a tax base that raises revenues
from things other than oil?
Mr Thomas: In the Delta or more
generally?
Q167 Hugh Bayley: In Nigeria as a
whole. 90% of its income comes from oil revenues, is that figure
broadly right? It is terribly difficult to track the money from
the companies' accounts through to the government's accounts through
to the state governments' accounts through to public services
for the people, and it is important that process is improved.
How are you improving that? That is one question. It is also important
that this is not a single industry, single source of revenue for
state expenditures country. Indeed, Nigeria used to raise far,
far more than it does now before the oil from other taxes. What
can we, as a donor, do both to create more transparency with the
oil revenues and enable Nigeria to broaden the economy, bring
people into the formal sector and create a revenue base that allows
it to do things that a country of its wealth ought to be doing
for its people?
Mr Thomas: There is more interest
now than there has been for a while in looking at non-oil sources
of revenue, partly because of the decline in the oil price, but
I like to think as well partly because of the success that we
have helped to generate in Lagos in terms of Lagos' revenues where
some of the work that we have done has helped the Lagos authorities
triple their generation of revenues. As I explained in answer
to an earlier question, another state, Kano State, wants to work
with us in that area. In terms of the tracking of how oil money
gets spent, in a sense that is the whole rationale behind the
Extractive Industries Transparency Initiative (EITI). The audits
from 1999-2004 of what happened in the oil sector in Nigeria in
a sense provided a model for the EITI initiative internationally.
Over £500 million worth of revenue savings has flowed from
that EITI process. What I was encouraged to hear from the staff
and, indeed, the Secretary-General when we discussed the EITI
initiative was that the 2005 audit is currently with the cabinet
and we would hope that a similar process of publication and making
the publication of those audits simple and accessible so that
the citizens of Nigeria can understand what has happened can be
done in the way that happened after the 2004 audits were published.
We know that there is an appetite to speed up the 2006, 2007 and
2008 audits and that is welcome. I think it is through the EITI
process that we can get that better tracking. We are funding groups,
coalitions of NGOs, to track the EITI process, and there are obviously
specific issues around the Delta, and trying to get an injection
of transparency into how oil revenues are being used or not in
the Delta region. Again, we have some funding going to NGOs that
are able to operate in the sector to try and begin the process
of building up the accountability and voice of people in the Delta
area to challenge why there have not been improvements in health
and education.
Q168 John Battle: It is not just
transparency and accountability, is it, but violence and crime.
The UN Office on Drugs and Crime recently published a report which
said that the situation in the Niger Delta now is so bad that
it is the greatest challenge to the rule of law affecting the
whole of the West Africa region. In the light of their report,
which is quite depressing in a way, it suggests that because the
problems have persisted so long they are almost intractable and
deep-rooted and not easy to weed out, how can donors, and DFID
in particular, help tackle that kind of problem, particularly
when some of the people who gave evidence to us suggested there
was a crossover between people who were working the drugs and
oil theft into political agents for some of the politicians there?
Do you just write it off, which I tend to think the UN are doing
really?
Mr Thomas: I do not think you
do write it off. There is work that the international community
can do. It is not necessarily just work for development organisations
to do in that sense, other bits of governments of the international
community need to get involved in that work, and certainly that
is the case for the UK. Where development donors, if you like,
can begin to make a difference, and we are certainly trying to,
is in two ways: one is in terms of the dialogue we have with ministers
and politicians in Nigeria; secondly, in the sort of pro transparency
and voice programme that we are funding in the Delta areas, again
as I said in answer to Mr Bayley, to begin the process of helping
officials and politicians in the Delta States be held accountable
for progress, or lack of progress, against the MDGs.
Q169 John Battle: Do you hold out
much hope for the new Ministry of Niger Delta Affairs that has
been set up? It is not well-resourced as far as we are aware and
has a very small budget and its remit is not that clear. Could
you work with beefing that body up?
Mr Thomas: It is certainly possible.
We have begun to have some interaction with the Ministry. I think
you have got to see that as one part of a series of responses
that are necessary by the government in Nigeria if the Delta problems
are going to be resolved. The offer of an amnesty is interesting,
but there is going to have to be a more fundamental discussion
about how those oil revenues that are generated in the Delta are
used to the benefit of the people of the Delta region.
Q170 Hugh Bayley: Amnesty International
believe that the UK should do more to strengthen the Federal Government's
oversight of oil companies' activities in the Delta and stop human
rights violations which are taking place. Do you accept that human
rights abuses are taking place and, if so, what can the UK to
do address them?
Mr Thomas: I think there is more
that you can do to help government to be held to account and if
you are improving the quality of governance that should potentially
create the conditions in which the regulation of the business
community in a state like Nigeria can be taken forward. The challenge
is still how do you build up an effective National Assembly, how
do you get effective ministries, how do you build up the structure
in-country to deal with the challenges of human rights abuses
and whether money is being spent in the way that it should. That
is what I would see us continuing to play a role in doing.
Q171 Hugh Bayley: Amnesty would say,
"We can't wait forever". If the circumstances are that
citizens in Nigeria are unable to gain redress for violation of
their human rights either by British-owned companies or a company
like Shell Nigeria, which is part of a British-owned group like
Shell International, should they not be able to get redress in
UK courts if there is a failure of a structure of governance that
allows them to get redress through the courts of Nigeria?
Mr Thomas: I understand the argument,
but it is quite difficult to see how it would work in practice
given that the companies that operate in the Delta are Nigerian-owned.
Yes, they are also part-owned by other companies but, in a sense,
if there is poor performance in whatever shape or form, be it
human rights, be it corruption, be it environmental standards
not being adhered to, it would surely be the oil company that
owns those assets in the Niger Delta that should be prosecuted,
and surely the right place for that prosecution to take place
is in the country where it has happened.
Q172 Hugh Bayley: I hear that clearly.
If there is a lack of clarity about the oil revenues being paid
by an oil company in Nigeria which has a majority in Nigeria—Shell
Nigeria, I think, has 51% ownership by the state of the Nigeria,
the rest presumably is owned by the corporation of Shell—should
we not have legislation in this company that would require the
parent company to publish that information, perhaps as a condition
before it is allowed to trade its shares on the UK Stock Exchange?
In other words, should we not expect in the UK from the parent
company the sort of transparency that the Extractive Industries
Transparency Initiative is trying to impose in developing countries?
Mr Thomas: I think we should expect
that oil companies and any company that operates in the UK should
abide by UK law and should be transparent with our authorities,
absolutely. Also, that should be the situation in Nigeria as it
should be the situation in any other developing country, the particular
companies should adhere to the laws of that particular country.
Our role as a donor is to help strengthen the ability of the government
in Nigeria and the parliament and state legislatures to hold their
politicians and officials to account and, if they think it is
appropriate, to introduce the relevant legislation to bear down
further in terms of human rights abuses, poor environmental standards,
et cetera, and have the capacity to follow through and check whether
businesses and, indeed, other organisations operating in that
country are adhering to those laws and regulations. I have to
say I am sceptical at this stage about whether there is a magic
bullet in terms of a piece of legislation that might operate from
the UK and lead to a dramatic transformation of what is happening
in the Delta. I think it is a much more complex problem. Our job
has got to be to help Nigeria improve its structures.
Q173 Chairman: We have written to
Shell to ask them to answer some questions about their cooperation
with the EITI. We have not had any reply yet, but I think that
demonstrates we think at least they should engage on these issues.
Mr Thomas: I would be very interested
to see the reply.
Chairman: If there is a reply.
Hugh Bayley: If I may say so, I think
we should write again to Shell and pass on those comments from
the Minister that he also would be very interested to see their
reply.
Q174 Chairman: It was a serious letter
with a serious intent. What has been made clear to us, and Mr
Cassidy in his first and subsequent briefings reinforced this,
is that Nigeria is a huge player in Africa, the whole of Africa
and West Africa, it is a complicated and challenging country.
To what extent is DFID's strategy in Nigeria conditioned by the
wider implications of a successful or unsuccessful Nigeria for
the rest of West Africa and, indeed, the whole of Africa? To what
extent does it judge its performance from that bigger picture?
Mr Thomas: It is a factor but,
in a sense, such are the numbers of poor people in Nigeria and
the need to make progress in Nigeria meeting the MDGs that if
we want to make progress on the MDGs more generally I think that
is the driving force behind our programme. But, as you say, if
you look at West Africa in general and consider that two-thirds
of the GDP of West Africa is essentially housed in Nigeria you
do, as you say, get a sense of the economic, never mind the political,
importance of Nigeria in the region as a whole. Putting my trade
hat on, one of the things we want to continue to do is engage
with Nigeria as a regional player, certainly in terms of the Economic
Partnership Agreement that West Africa is currently in discussion
with the European Union about, but through the development of
the West Africa Corridor can we help to build the economic growth
potential of those other states as well as Nigeria by increasing
the trade potential. You then get into Nigeria's significance
in terms of the climate change lobbying and work that Africa could
and should be doing and, as you say, you start to see the significance
of Nigeria as a regional player. It is a factor, but I think the
dominant factor is just the huge numbers of poor people who need
assistance in Nigeria itself.
Q175 Chairman: I think the Committee
appreciates that, the statistics speak for themselves and the
scale and size of numbers. I would like to repeat again our thanks
for the cooperation from DFID's officials and staff. Mr Cassidy
has now returned home, I think, from that posting. Minister, whenever
you do go we wish you an interesting visit. I think it is fair
to say the Committee was not really quite sure what to expect
and possibly went with lower expectations, frankly, and came away
with a realistic picture but one that gave us some cause to believe
there were things that were moving and could move in the right
direction and it is certainly worth sticking with it. We all have
to account for the fact that it is a significant amount of British
taxpayers' money that has to show some kind of measurable result
over a reasonable length of time, but we appreciate that people
are working hard to try and ensure that happens.
Mr Thomas: We are. I am also looking
forward to going.
Chairman: Thank you very much.
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