Boris Becker made a US$100 million playing tennis. But he is now bankrupt at just 49. Surprisingly, the name Nigeria has been mentioned as one of the reasons he went bankrupt after reportedly “investing” US$10 million in a Nigerian oil and gas business that went bust.
No Nigerian company name has been mentioned nor is there any evidence that Becker actually made the investment or was just duped by fraudsters representing themselves as oil and gas business men from Nigeria.
Over the years, criminals have thrived globally by presenting themselves as owners of oil blocks in Nigeria who are looking for business partners abroad to partner with, to exploit the oil blocks in the country. Many foreigners have fallen victim to these fraudsters posing as Nigerian oil barons.
But these criminals have thrived because Nigeria has one of the most opaque and non-transparent oil-licensing regimes in the world. The latest report by the Natural Resources Governance Institute’s (NRGI), ranked Nigeria 55 out of 89 countries in terms of transparency in its oil and gas sector.
The country ranked particularly low in the area of licensing, pointing out that the Nigerian government rarely discloses government officials’ financial interest in the extractive sector or identities of beneficial owners of extractive companies.
The US Department of Justice (DOJ) on 15 July filed a civil recovery suit against two Nigerian businessmen known to be associates of former oil Minister, Diezani Allison-Madueke, revealing the behind closed door deals that goes in the Nigeria oil and gas industry. This is a case of how low transparency in the oil and gas sector around licensing rounds and contracts facilitates dirty deals by government officials in the sector.
In 2011, in a move that looked to have good intentions, but may have been influenced by some underhand dealings, the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) entered into Strategic Alliance Agreement (SAA) with Atlantic Energy owned by Kola Aluko and Jide Omokore.
The idea behind the SAA was for Atlantic Energy to contribute resources and technical know how to NPDC, which owned the licenses on which the SAA were signed with the aim of increasing the production from the oil fields covered by the licenses. Atlantic Energy will now be rewarded from the sales of the increased production from OMLs 26, 30, 34 and 42 that the SAA covered.
The SAA with Atlantic Energy was not the first to be signed in the Nigeria oil and gas industry. Sources in the oil and gas industry say that Nigerian Agip Oil Company (NAOC) and Sinopec had a similar deal with the NPDC in 2000 and 2002.
Septa Energy, a wholly owned subsidiary of Seven Energy International in 2010 also signed a similar deal with NPDC in respect Oil Mining Lease (OML), 4,38, and 41. Kola Aluko and Scott Aitken, who became the Managing Director of Atlantic Energy were said to have engineered this deal, which spurred them to set up Atlantic Energy to sign new SAAs with NPDC.
But as the documents filed by the US DOJ now reveal, Atlantic Energy did not wholly fulfil its obligations on the SAA, yet received the benefits of the deal, due mainly to having some underhand dealings with then Minister of Petroleum Industry, Diezani Allison-Madueke. Of about US$1.4 billion funding that was expected from Atlantic Energy under the SAA, it only contributed about US$340 million, but nonetheless was allowed to lift crude oil in excess of US$640 million.
The US DOJ documents allege that Atlantic Energy was not only unqualified to execute the SAAs, but also “improperly performed their obligations or, in some instances, failed entirely to perform them. Nevertheless, these companies received more than US$1.5 billion in revenues through the sale of Nigerian crude oil.”
The US DOJ also allege that Kola Aluko, Olajide Omokore and others: “(i) conspired to and did purchase millions of dollars in real estate in and around London, U.K., for the use and benefit of Alison-Madueke and her family; (ii) conspired to and did provide more than one million dollars in furniture, artwork, and other furnishings purchased within the Southern District of Texas, and shipped, in part, to London and Abuja, Nigeria, for the use and benefit of Alison-Madueke and her family; and (iii) conspired to and did otherwise fund a lavish and privileged lifestyle for Alison-Madueke and her family.”
Also of interest in the US DOJ documents is the fact that Atlantic Energy was incorporated on July 19, 2010, “approximately three months after Alison-Madueke was appointed Minister for Petroleum Resources” and by March 8, 2011 had expressed an interest in signing an SAA with NPDC. Within three weeks of expressing the interest, Kola Aluko, acting on behalf of Atlantic Energy, had a meeting with NPDC to discuss the possible award of the SAA to Atlantic Energy. Three weeks later, on April 20, according to the US DOJ, Omokore on behalf of the Atlantic Energy, signed the SAA for OMLs 26 and 42.
“Approximately one month later, on or about May 25, 2011, AEDC and NPDC entered into two more SAAs for OMLs 30 and 34. These SAAs were also signed by Omokore on behalf of AEDC.”
The US DOJ allege that “NPDC’s award of the Forcados SAAs to AEDC was done with the knowledge and support of Alison-Madueke and at her direction. For example, in a recorded conversation between her and Aluko, she acknowledged, “we stuck our necks out regarding the SAA and we supported it.”
However, investigations by the US DOJ also show that Allison-Madueke did not stick her neck out for nothing. The DOJ alleges that on or about January 27, 2011, less than two months before AEDC officially approached NPDC about the first of the SAAs, a Seychelles company named Miranda International Limited purchased a property known as “The Falls” for £3.25 million. The Falls is located just outside London at 96 Camp Road, Gerrards Cross, Buckinghamshire SL9 7PB. Omokore beneficially owns Miranda International Limited, according to the DOJ but the property was bough for the exclusive use of Alison-Madueke and her family.
Furthermore, on or about March 24, 2011, just four days before Aluko met with NPDC officials to discuss Atlantic Energy’s interest in an SAA, a British Virgin Islands company called Mortlake Investments Limited was used to purchase a property at 39 Chester Close North, London NW1 4JE.
Aluko beneficially owns Mortlake Investments but the US DOJ also found out that the property was actually bought for the Alison-Madueke’s mother and son. The US DOJ alleges that “Construction Company Employee #1 personally met Alison-Madueke on at least two occasions at the property and, on one of those occasions, she selected stone flooring and countertops to be installed in the bathrooms.”
Then, on March 28, 2011, the same day Aluko was meeting with NPDC officials to discuss Atlantic Energy’s interest in an SAA, a Seychelles company, Rosewood Investments Limited, was used to purchase real property at 58 Harley House, Marylebone Road, London NW1 5HL, for £2.8 million. Rosewood Investments is beneficially owned by Omokore but again the property was for Alison-Madueke who received design plans for the remodelling of the house.
Also on March 29, 2011, a day after Aluko met with NPDC officials to discuss AEDC’s interest in an SAA, another Seychelles company called Colinwood Limited was used to purchase real property at Flat 5 Park View, 83-86 Prince Albert Road, London NW8 7RU, which was apparently for Alison-Madueke again. She was not only present for a discussion of interior design plans of the flat but in addition, design plans for Flat 5 Park View were later found at the known London residence of her mother.
Apparently, Aluko and Omokore were not splashing these gifts for nothing. As an oil minister, Alison-Madueke was also the Chairman of the board of the NNPC and could determine who gets what in the oil industry. The Petroleum Act gives the minister enormous powers, including powers to grant Oil Exploration License, Oil Prospecting License and Oil Mining Lease respectively and even to revoke such licences. Section 8 of the Petroleum Act, empowers the Minister to exercise general supervision over all operations in the oil and gas sector. Having the oil minister on your side could therefore open ways that could lead to significant fortunes.
Not surprisingly, right from the military era, the ministers of Petroleum have always been close confidants of the President because of the enormous powers they wield. Dan Etete, who was petroleum minister under military dictator, Sani Abacha had in 1998 awarded an oil block to Malabu, a company he partly owned alongside Mohammed, Abacha’s son. The oil block, OPL 245 is reputed to be one of Nigeria’s richest blocks and the former oil minister received US$1.1 billion in payments for the block in a controversial transfer of ownership to Shell and Eni, which is now the subject of investigations in Nigeria and Europe.
But perhaps, the strongest evidence of the rot in the oil and gas sector is seen in the various audit reports released by the Nigeria Extractive Industries Transparency Initiative (NEITI) reports. The NEITI has accused the NNPC of not accounting for US$15.8 billion of Nigeria’s share of Nigeria Liquefied Natural Gas (NLNG) dividends received between 2000 and 2014. The NEITI also estimates that the total revenue losses to the federation as a result of crude oil theft, deferred production and sabotage between 2011 and 2014 stood at $15.9billion. NEITI has also alleged that NPDC failed to remit the sum of $5.5 billion and N72.4 billion comprising of outstanding payments for the OMLs divested to it, and cash calls paid by NNPC to the NPDC for already divested assets and legacy liabilities. Basically, the Nigerian oil and gas industry is littered with missing and unaccountable funds due to the opaqueness that dominates the sector. The NEITI and civil society groups have increasingly called for a more transparency industry but the government has so far resisted or offered token disclosures.
The Petroleum Industry Bill (PIB) meant to reform the oil and gas sector, make it more transparent and accountable has been stuck in the National Assembly for more than 16 years, ensuring that the rot in the sector is sustained. Even though there has been some movement this year, with the Senate passing its version of a diluted PIB, the Petroleum Industry Governance Bill (PIGB), the House of Representatives are yet to concur to the bill.
Sources in the oil and gas sector have told BuisnessDay that as long as the PIB remains in the cooler, whiffs of corruption will permeate the Nigerian oil and gas sector due to the low transparency and accountability as well as discretionary powers that are exercisable in the sector.
As insider told BusinessDay, “the dirty deals have not really changed in the oil and gas sector. What has changed are the executioners.”
By our reporter
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