For The Record
A few days ago, the whole country awoke to the extent of rot still continuing in the Nigerian oil industry following a leaked memo from the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, to President Muhammadu Buhari, accusing the Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Maikanti Baru, of insubordination and award of contracts of over $24 billion without due process. Kachikwu’s letter mirrors a similar memo in 2013 by then Governor of Central Bank of Nigeria, Sanusi Lamido Sanusi, now Emir of Kano, to then President Goodluck Jonathan on the alleged non-remittance to the federal government of several billions of dollars by the NNPC. Below, are the two letters and the reactions that followed
Full text of the memo by Kachikwu, dated August 30, 2017
His Excellency, Muhammadu Buhari, GCFR
President and Commander-in-Chief of the Armed Forces
The Federal Republic of Nigeria
Presidential Villa Abuja
RE: MATTERS OF INSUBORDINATION AND LACK OF ADHERENCE TO DUE PROCESS PERPETUATED BY THE GMD NNPC – DR. BARU
Let me start by welcoming you back to the country and by thanking God for your recovery from ill health. I join millions of Nigerians who rejoice and thank God for grating you the grace of healing and strength to continue the good work you have done for Nigeria in your long illustrious career in public service. I would have wanted to come personally after receiving you at the airport to facilitate with you and discuss matters herein contained, however, I have been unable to secure an appointment to see you despite very many attempts.
Various activities of the GMD
Mr. President, yesterday like many other Nigerians. I resumed work confronted by many publications of massive changed within NNPC. Like the previous reorganizations and reposting done since Dr. Baru resumed as GMD. I was never given the opportunity before the announcements to discuss these appointments. This is so despite being Minister of State of Petroleum and Chairman NNPC Board.
The Board of NNPC which you appointed and which has met every month since its inauguration and, which by the statues of NNPC is meant to review these planned appointments and postings, was never briefed. Members of the Board learned of these appointments from the pages of social media and the press release of NNPC.
At the minimum and like all other Parastatals being supervised by me at the Ministry have continued to do, and in compliance with the proper governance standards expected of a serious public institution, these executive actions by NNPC were supposed to benefit from mine and the Board’s input prior to presentation to you. I need to add that backdoor and present same to the acting president were met with a request that this be discussed with me. This was never done.
Indeed, in anticipation of vacancies that would arise from retiring senior executives of NNPC, I wrote the GMD A letter requesting that we both have prior review of the proposed appointments. This was to enable me to present same to the Board or give an anticipatory approval and then review with the Board later (Appendix 1). I wrote to the GMD given previous happenstance of this nature, in addition, thereafter, I called the GMD to a private meeting where I discussed these issues. Needless to say that, not only did he not give my letter the courtesy of a reply, he proceeded to announce the appointments without consultation or Board concurrence.
Mr. President please note that there is a Board Services Committee whose function is to review potential appointments and terminations of Senior Staff prior to implementation. This committee was also not consulted.
The above is just one of the many occurrences of disrespectful experiences I have encountered with the GMD as your Minister of State.
The legal and procedural requirements are that all contracts above $20m would need to be reviewed and approved by the Board of NNPC. Mr. President over one year of Dr. Baru’s tenure, no contract has been run through the Board. This is despite my diplomatic encouragement to Dr. Baru to do so to avoid wrongfully painting you as a President who does not allow Due Process to thrive NNPC. Given the history of malpractices and the public perception of NNPC as having a history of non-transparency (Appendix 2: NEITI report), the NNPC Tenders Board (NTB) cannot be the final clearance authority for contracts it enters into. The NTB which is a collection of top level NNPC executives and COOs, with the GMD as Chairman, cannot continue to be the final approval authority for multi-million dollar contracts and transactions involving NNPC to the exclusion of the Board. Board members have singularly and collectively raised these issues to no avail. (Appendix 3: Letter from Vice President on Expanded Contract)
The following major contracts were never reviewed by or discussed with me Board of NNPC:
The Crude Term contracts- value at over $10bn
The DSDP contracts- value over $5bn
The AKK pipeline contract- value approximately $3bn
Various financing allocation funding contracts with the NOCs – value over $3bn
Various NPDC production service contracts – value at over $3bn–$4bn
There are many more Your Excellency, in most of these activities, the explanation of the GMD is that you are the Minister of Petroleum and your approvals were obtained. However, the correct governance should be that the Minister of the State and the Board review the transaction and give their concurrence prior to presentation to you. As I many cases of things that happen in NNPC these days. I learn of transactions only through publications in the media. The question is why is that the Parastatals which I supervise as Minister of State or Chair of their Board are able to go through these contractual and mandatory governances processed and yet NNPC is exempt from these?
I know that bravado management style runs contrary to the cleansing operations you engaged me to catty out at the inception of your administration. This is also not in consonance with your renowned standards of integrity.
Your Excellency, even though the appointments of the other Parastatals Heads in my Ministry were made without my input. I have maintained a cordial and respectful relationship with all. Parastatals under my supervision have continued to excel in their respective areas and adhere to mandatory governance processes. However, my working relationship with GMDs has been fraught with humiliation, sidelining and campaigns of character defamation against me. This is particularly frustrating given many contributions I have made to the growth and stability of the Nigerian Oil and Gas industry through the many policies I have introduced August 2015.
If NNPC is considered and known to be one of the Parastatals under the Ministry, why does the GMD refuse to report into my office or to the Board on the serious issues such as above especially given that I have been by Your Grace, the Minister overseeing these Parastatals for two years?
Your Excellency, even at the time when we were unfortunate to have you away to England for a medical checkup, the situation remained the same.
The matter of collaborative meeting is another issue altogether. When I call for meetings, the GMD chooses which meetings he wishes to attend and those he chooses to send subordinate. He sends such subordinates without the courtesy of a call to explain his absence. The unattended meetings are in the majority. In all of 2017, I have been able only to get him to have one on one meetings with me about four to five times.
At inception, I instituted a Monthly Parastatals review meeting with Head of Agencies and another with the all the Senior management in all the Parastatals. GMD objected to his Senior Staff coming to the Joint Senior Management meetings. He argued that this was overreaching his territory. He was only comfortable with the Monthly of all Heads of Agencies meetings which he has only attended a few times. I have had to carry on with the rest of the Ministry. Despite being Chairman of NNPC Board. I have tried to manage the bad perception created by GMDs blatant insubordination and disrespectful attitude. Particularly I have worked hard to avoid being seen as pretty and meddlesome.
The effect of the attitude of the GMD and the sidelining of the Board is that there is a fear culture in NNPC. The open administration I introduced, with your support in our first year of pushing reforms, has been completely eroded. The essence of this innovation was to drive great working interface and interaction amongst all Parastatals in the Petroleum sector. Other Parastatals have benefitted from this.
NNPC staff are afraid of contacting me to avoid being punished, sidelined in appointments and targeted. Indeed, the key factor for growth and advancement in NNPC of today is to avoid the Minister of State’s Office.
In order to convince your Excellency of the need to sideline me, I am sure I have been labeled as being.
III. In Collusion With Militants
Some faceless blogs have even had the audacity to circulate such rumors. Nothing Your Excellency can be further from the truth. I mention this because this will be the likely response you will receive to this attempt I am making to alert you on the state of affairs under the GMD’s leadership.
These accusations are baseless.
First, all my appointments were generated with key inputs from all the COOs of NNPC and were balanced and based strictly on skills, experience, drive, and ethnic balancing for senior management positions. Mid-level positions were sole suggestions of the COOs. Let me say for the records that I am a completely detribalized Nigerian and I have lived my formative years in the East, West, North, and South-South part of the Country. My Father was a Federal High Court Judge in most parts of the North. My siblings and I benefited from growing up in Kano. In addition, I have resided and worked in Rivers, Delta, Lagos, Oyo, Enugu, Anambra, etc. I have no reason to be anti-North because in my working career I have found that good and skillful people abound everywhere in our Nation.
I have done nothing in my time at NNPC or the Ministry that is corrupt or laced with any such intent. In my time as GMD, all policies and contracts were generated by the Heads of Division, approved by COOs, passed through NTB and (in the absence of a Board at the time) I received your approvals, I have had no relationship with any one of or any transaction in my period that was product of a personal deal or an arrangement, if anyone benefited from NNPC contracts, they did so on their merit and I rarely participated in those contractual processes except to review them.
Anyone peddling any contrary information is resorting to cheap blackmail.
III.Militants and security
I took on the issue of security headlong because it was the primary causative factor for production that declined from 2.2 mpbd to 1mpbd at our lowest point (November 2016). At great risk to my life. I visited militant camps, coordinated with our security apparatus, organized the four of the HEVP to several frontline states and worked with PANDEF and other groups to bring calm and increase production and some measures of stability to what it is today.
I have never betrayed the trust you placed on me. I did not deploy any public financial resources to achieve the results in the Niger Delta region. Most times I have utilized my personal resources and goodwill accumulated over the many years prior to my appointment to achieve these far reaching results and of course all these were with collaborations with Agencies of the government (Office of the VP, DSS, NSA, etc.)
I dare mention that the blueprint of these engagements were discussed with and approved by you.
Given the sensitivity of my position, I remain one of the most tracked officers of your government, so if there is any truth to these rumors, you would have known.
Mr. President you took me from the private sector where I left an enviable track record of performance and integrity spanning over 25 years rising to the highest positions in multinational oil sector organization. I came to this job with the zeal to change the sector. Measurable progress has been made and more would have been achieved but for the challenges I have listed above.
The future of the oil industry
Mr. President I have been on a race to stabilize and move the industry to the next phase. Timing is critical. The sector is also in a critical state where only innovative ideas can stop the alarming impact of the fall of oil prices on the National Income. The innovations that we have developed and stated implementing in the Downstream, Upstream, Policy generation and Niger Delta Security have enabled the sector to stabilize slightly. However, truth is that given the global challenge in this sector, we must aggressively pursue out of the box ideas on rejuvenating this sector, getting the best yield and increasing our earnings from oil and gas. What this means is that Parastatals in the Ministry and all CEOs of these Parastatals must be aligned with the policy drive of the supervising Ministry to allow the sector register of the growth that has eluded it for many years. To do otherwise or to exempt any of the Parastatals would emplace a stunted growth industry.
My prayers most humbly and respectfully are:
That we save NNPC and the oil industry from collapse arising from the above non-transparent practices and empower the Board you inaugurated to do the needful.
That you save the office of the Minister of State from further humiliation and disrespect by compelling all Parastatals to submit to oversight regulatory mandate and proper supervision which I am supposed to manage on your behalf.
You kindly instruct the GMD to effectively leave NNPC to run as a proper institution and report out along due process lines to the Board and that your Excellency instructs that all reviews be done with the Minister of State prior to your decision.
That to set the right examples, you approve that recently announced reorganization changes be suspended until the GMD, myself, and the Board have made relevant input to same. This will send a clear signal of process and transparency.
That your Excellency encouraged joint presentation meetings between heads of Parastatals and the Minister of State to you so as to encourage a culture of working together and implant discipline in the hierarchy.
These in my view, Mr. President, will provide you balanced analysis on issues and avoid exposing the exalted office of Mr. President to ridicule. It will also reduce nonproductive, unsubstantiated rumor peddling.
Mr. President, I thank you for the opportunities given me to serve and I wish you continued full recovery. I remain loyal and very proud of you Sir.
Mr. President kindly accept the assurances of my highest esteem and loyalty.
Dr. Emmanuel Ibe Kachikwu
Honorable Minister of State Petroleum Resources.
Former CBN Governor, Sanusi Lamido Sanusi’s letter to ex-President Goodluck Jonathan, dated September 25, 2013
Goodluck Ebele Jonathan:
President and Commander-in-Chief
Federal Republic of Nigeria
State House Abuja
Subjects: Non-Repatriation to the Federation Account by Nigerian National Petroleum Corporation (NNPC) of $49.8 Billion, representing 76% of the value of crude oil liftings in 2012 and 2013
Failure of NNPC to pay N22billion Nigerian Export Supervision Scheme (NESS) Levy
Other Related matters
I am constrained to formally write your Excellency, documenting serious concerns of the Central Bank of Nigeria (CBN) on the continued failure of the Nigerian National Petroleum Corporation (NNPC) to repatriate significant proportions of the proceeds of crude oil shipments it made in gross violation of the law.
Sources of Federation Account Revenues include proceeds from Export of Nigeria’s crude oil by the NNPC, Petroleum Profits Taxes, and Penalties for gas flaring, oil exploration licenses and concession block allocations, etc.
Our analysis of the value of crude oil export proceeds based on the documentation received from pre-shipment inspectors shows that between January 2012 and July 2013 NNPC lifted 594,024,107 barrels of crude valued at $65,332,350,514.57. Out of this amount, NNPC repatriated only $15,528,410,098.77 representing 24% of the value. This means the NNPC is yet to account for, and repatriate to the Federation Account, an amount in excess of $49.804 billion or 76% of the value of oil lifted in the same period.
Your Excellency, I have attached as an appendix, a table giving the analysis of the crude oil lifting and repatriations as prepared by staff of Trade & Exchange and Banking & Payments System Departments of the CBN based on the firm documentation in their possession. The failure of NNPC to repatriate these amounts constitutes not only a violation of constitutional provisions but also of both the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act No. 17 of 1995 and the Pre-Shipment Inspection of Exports Act No. 10 of 1996 which stipulates that “An exporter of goods, including petroleum products, shall open, maintain and operate a foreign currency domiciliary account in Nigeria into which shall be paid all exports proceeds corresponding to the entire proceeds of the exports concerned”.
Your Excellency, you will recall that as far back as late 2010, I had verbally expressed deep concern about what appeared to be huge shortfalls in remittances to the Federation Account in spite of the strong recovery in oil price. At a recent NEMT meeting in the Presidency, I also expressed a strong view that while Government needs to continue its effort to combat oil thieves, vandals and illegal refineries in the Niger-Delta, the major problem is transactions taking place under legal cover with huge revenue leakages embedded therein. Your Excellency, it is my respectful view that a place to begin is to insist on NNPC to account fully for all proceeds that were diverted away from its accounts with the CBN and the Federation Account.
There are also other lines of inquiry which your Excellency may wish to authorize and pursue. These include;
A thorough audit of activity on any domiciliary accounts held by NNPC outside of the CBN. This is because the CBN has no record of either the dollar proceeds of these diverted sales or the naira equivalent being transferred to the Federation Account.
An examination of banking records of companies involved in Oil lifting and swap deals, including audit trails of regular payments to third-parties; An independent review of the terms and condition of Oil lifting and swap contracts for fairness and equity and transparency;
Investigation and prosecution of Bureau de change (BDC) that have purchased hundreds of millions of dollars from the inter-bank market and are unable to account for these monies. We have compiled a list of these companies with recommendations for prosecution under Anti-money Laundering Laws;
Investigation of obvious avenues for money laundering, such as companies that sell private jets to Nigerians.
The Central Bank stands ready to render full assistance and provide as much data as possible to assist these inquiries.
Your Excellency, as an indicator of how bad this situation has become, please note that in 2012 alone, the Federation Account received $28.51billion in Petroleum Profits and related taxes but only $10.13billion from crude oil proceeds. In the period January-July 2013 the corresponding figures are $16.65 billion and $5.39 billion, respectively. This means, Your Excellency, that in the first seven months of the year, taxes accounted for 76% of the total inflow from this sector, while NNPC crude oil proceeds, accounted for only 24%. You will also note, Your Excellency, that NNPC liftings amounted to 64% of total oil liftings from Nigeria during the reference period, and yet its remittance represented only one-third of the taxes paid by the oil companies that exported the balance of 54%. Finally, your Excellency, we would like to report that NNPC has failed to keep up with payments of its levies under Nigerian Export Supervision Scheme (NESS) in line with this law, and currently owes the Federal Government N22 billion.
As banker to the Federal Government and Economic adviser to the President, I am obliged to draw the President’s attention to these serious issues of which you have most probably never been aware in this detail.
To sumamarise, my recommendations are to respectfully advise the President to: Require NNPC to provide evidence for disposal of all proceeds of crude sales diverted from the CBN and the Federation Account;
Investigate crude oil lifting and swap contracts, as well as the financial transactions of counter-parties for equity, fairness and transparency; and Authorise prosecution of suspects in money-laundering transactions, including but not limited to BDCs who are unable to account for hundreds of millions of dollars.
I trust your Excellency will find the content of this letter useful and hereby reaffirm the support of Central Bank of Nigeria for your Government’s transformation agenda and effort to serve the Nigerian people.
While thanking you for your consideration, please accept, Mr. President, the renewed assurances of my highest regards.
Mallam Sanusi Lamido Sanusi (CON)
Governor, Central Bank Of Nigeria
PDP’s Reaction to Kachikwu’s Letter (October 5, 2017); Amaechi on Sanusi; Buhari on probe of Sanusi allegation
In a statement on October 5 by its spokesperson, Dayo Adeyeye, the Peoples Democratic Party condemned “the loud silence of President Muhammadu Buhari on the humongous corruption scandal” rocking the NNPC. The party called for the suspension of the NNPC Group Managing Director, Maikanti Baru.
PDP stated, “As a political party, we expect that the President, who prides himself as an indefatigable corruption fighter, would for once try to live above board, by genuinely allowing one of his own, accused of corruption, get properly investigated and prosecuted as a show of his impartiality in the war against corruption.
“He should do this to correct the open impression Nigerians have about his so called anti-corruption war; that it’s just a tool of persecution of perceived enemies.
“We view the allegations levelled against Baru by Kachikwu as too grave to be swept under the carpet and we insist that the NNPC GMD must be treated like an accused who should not have the opportunity to influence investigation into his alleged misdeeds.
“In this light, we demand an immediate suspension of the NNPC GMD so that proper investigation can be carried out by the relevant anti-corruption agencies.
“Ordinarily if there was sincerity in the anti-corruption war, President Muhammadu Buhari should not have waited for any prompting before he takes a decisive action on this matter. But as customary with his administration, we suspect that he’s trying to shield Baru as he did for Babachir Lawal, the Secretary to the Government of the Federation (SGF) whom he merely suspended to allow the hullabaloo generated by the fraud perpetrated in the management of the emergency fund for the IDPs, die down. Also up till now we have never heard anything again about the millions of dollars and billions of naira discovered at an Ikoyi apartment.”
The party added, “The sum involved in the NNPC scandal is $25 Billion. Less than 10% per cent of that ($2 billion) is involved in the so-called arms fund allegedly converted by the former NSA for which hundreds of Nigerians have been arrested and hounded.
“Nigerians can now see the hypocrisy in the so called anti-corruption fight. We may as well say that the privileged class of APC members enjoys total immunity from the anti-corruption campaign.”
APC’s reaction warning Jonathan not to sack Sanusi on account of his memo about graft in NNPC (January 9,, 2014):
In a statement issued in Lagos by its Interim National Publicity Secretary, Alhaji Lai Mohammed, APC said asking Sanusi to step down would not augur well for the economy.
”Our worry here is that the President should not destroy our institutions before he leaves office,” the party said.
APC’s Reaction to Lamido Sanusi’s Letter:
Economic loss would be enormous
”These include a loss of confidence in the economic management of the country, leading to uncertainty among domestic and foreign investors; as well as pressure on the exchange rate as foreign portfolio investors in government bonds and the stock market make their exit, and the corresponding fall in the value of share prices.
”Overall, a protracted standoff between the President and the CBN Governor will spell bad news for economic growth and employment and increase poverty. This is why we advise President Jonathan against precipitating a crisis in the economy, and we urge all Nigerians to advise him against such.”
The party said, “It stands to reason that if the CBN Governor had wanted to leak the letter, he had no reason waiting for four months to do so. Also, the moment the letter was sent to Mr. President, it has gone beyond the purview of the CBN Governor, and anyone with a reason to do so could as well have leaked the letter.
”Therefore, for the President to have made the extraordinary move to force out the CBN Governor, even though he has a few months to the end of his tenure, smacks of vendetta and is capable of impacting negatively on the economy. Circumventing the law to force out the CBN Governor will amount to brigandage and reinforce the perception of the Jonathan Administration as one with a propensity for impunity.”
APC reaction to Kachikwu’s letter to Buhari on contract abuse worth $25 billion: “No comment.”
Minister of Transport, Rotimi Amaechi, on how he leaked Sanusi’s letter (May 5, 2016):
“Our attention has been drawn to reports in the media that tends to infer and/or suggest that immediate past governor of Rivers State and now Minister of Transportation, Rt. Hon. Chibuike Rotimi Amaechi surreptitiously and clandestinely ‘leaked’ a letter written by former Central Bank of Nigeria (CBN) governor and now Emir of Kano, Sanusi Muhammad 11 to then President Goodluck Jonathan on the non-remittance of $49.8 billion from oil sale to the federation account. This is further from the truth and what exactly transpired as regards Amaechi’s involvement in that Sanusi letter.
“To put the records straight, we want to categorically state that:
“1. A concerned and patriotic Nigerian who felt sufficiently troubled with what was happening then, gave a copy of the Sanusi letter to Amaechi in Amaechi’s capacity as the chairman of the Nigerian Governors’ Forum (NGF). Like Amaechi, we should appreciate that concerned Nigerian’s patriotism.
“2. When Amaechi got the letter, he spoke with Sanusi who was still the CBN governor to confirm the authenticity of the letter. Sanusi confirmed to Amaechi that he wrote the letter. During their conversation, Amaechi made it abundantly clear to the then CBN governor that the bleeding of the nation had to be stopped, all non-remitted funds remitted and that he (Amaechi) was going to use the letter to do whatever is in the best interest of the nation and Nigerians, which was the stoppage of the non-remittance and the recovery of all the non-remitted funds from oil sale. The CBN Governor didn’t agree with Amaechi on the way forward.
“3. Considering that the letter was given to Amaechi as Chairman of the Governors’ Forum, he shared the letter with his colleague governors first, and with Senator Bukola Saraki (now Senate President), who before and around that period was doing some work or/and investigation around the oil sector in the senate.
“4. Around that period, a delegation from the United States of America government, from the offices of the Secretaries of State and Defense visited Amaechi in Port Harcourt to discuss the issue of oil theft in Nigeria. From their records, they gave Amaechi figures of billions of dollars (about $7 billion dollars, annually) that was being lost to oil theft in Nigeria. They were discussing the issue and figures of oil theft, and that was how the CBN governor’s letter to President Jonathan came up. In the presence of journalists covering the visit, Amaechi brought out the Sanusi letter to the visiting American delegation to buttress the point that Nigeria was losing far more money to non-remittance of proceeds from oil sale into the federation account, which everyone seemed to concur, was in itself, another form and another dimension to the issue of oil theft.
“5. To suggest, infer or even extrapolate that Rt. Hon. Chibuike Rotimi Amaechi surreptitiously, clandestinely or underhandedly ‘leaked’ the CBN governor’s (Sanusi’s) letter is indeed most unfair, disrespectful and uncharitable to his person. Amaechi did what he did because he believed that the theft and corruption was just too much. He was propelled by his patriotic zeal to put Nigeria first, do what is in the best interest of the nation and Nigerians, and stop the bleeding and sucking of our collective resources by a tiny few. The mindboggling corruption revelations in the recent past, that is still ongoing clearly justifies and vindicates Amaechi’s stance on the issue and the actions he took. Faced with the same situation, under similar circumstances, Amaechi will not act differently. The good of Nigeria, putting the nation and Nigerians first, will always be his guiding principle.”
Amaechi’s reaction to Kachikwu’s letter to Buhari: Silence.
Buhari vows to probe missing NNPC $20 billion (April 24, 2016):
Then as President-elect, Buhari said his administration will probe the $20 billion, which Sanusi had alleged was missing from the coffers of NNPC. Buhari told a delegation from Adamawa State led by the governor-elect, Bindow Jibrilla, “I heard that some people have started refunding money, but I will not believe until I see it.
“His royal highness, the Emir of Kano, Sanusi Lamido Sanusi, was removed from the Central Bank because he said that about $20 billion was missing. Instead of the government to investigate the matter, they refused, instead they sacked him. As God will have it, he is now the Emir of Kano and that is exactly what he wants to be.
“He has already written all the detail report on it, the incoming government will not ignore it, even though we have promised to draw a line, but $20 billion is too big to ignore. This is Nigerian money and it must be investigated.”
Buhari’s reaction to the illegal award of $25 billion contracts so far: silence.