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Obasanjo's oil windfall scandal
By Senior Fyneface
Posted to the Web: Thursday, July 20, 2006
EACH time Nigeria benefits from unexpected revenue windfall from oil and gas sales, the next thing that follows is scandal, which usually concerns the spending of such windfall earnings. First, it was former military president, Gen Ibrahim Babangida, now we have the current case of civilian president, Gen Olusegun Obasanjo.
If Dr Pius Okigbo (of blessed memory) lamented for the entire nation on the reckless manner the Babangida administration blew over $12.4 billion receipts in the special escrow accounts, the world-renowned economist must be crying to the Almighty God concerning the country following the disclosure by the authorities of the Revenue Mobilization and Fiscal Commission (RMAFC) that President Obasanjo has already blown over $13.2 of the latest oil windfall. The first oil windfall was as a result of a surge in the prices of crude oil (an average of $28 per barrel during the Gulf crisis) following the scarcity of supplies in international market orchestrated by a shortfall of five million barrels per day from the Gulf of Suez. This was Babangida’s windfall.
The second, Obasanjo’s windfall, (which is still on) came as oil prices surged above $70 per barrel, also orchestrated by shortfalls in supply to the market as a result of the crisis in Iraq, Iran and Nigeria’s Niger Delta. The two oil windfalls episodes share several things in common particularly in the manner the monies earned were spent. This is in addition to the two players being former military rulers though President Obasanjo under the current dispensation, was supposed to have been democratically elected by the Nigerian voters. The Pius Okigbo-headed Panel that investigated the spending of the Babangida oil windfall earnings revealed that $12.2 billion of the $12.4 billion was “spent on what could neither be adjudged genuine high priority projects or truly regenerative investment”. In common-man language, the money was squandered.
The Joint Senate Committee on Finance, Appropriation and National Planning, investigating the alleged illegal spending of the Obasanjo’s windfall was told on Thursday June 15, 2006, that so far, the Presidency has spent over $13.2 billion of the monies in manners that could best be described as blurred. Also in common man's language, the money was squandered. President Babangida, who allocated 200,000 barrels of crude oil per day to fund the LNG Project, initiated the concept of escrow and special accounts in 1986. In 1988 other special escrow accounts were created to fund specific development projects majority of which had remained in the drawing board till today.
It took The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) Chairman Hamman Tukur, when he addressed, the Joint Senate Committee on Finance, Appropriation and National Planning investigating illegal withdrawals from the Federation Account on Thursday June 15, 2006 to disclose that the President Obasanjo administration since 2003 created and has been operating three special escrow accounts namely, “export crude oil, excess Petroleum Profit Tax (PPT) and excess Royalty Accounts illegally maintained exclusively by the Presidency, out of which $13.2 billion has so far been withdrawn”.
The Babangida administration, as the Okigbo Panel disclosed, lodged all the windfall money- $12.4 billion in dedication, stabilization and other special escrow accounts, which were hardly applied for the purpose for which they were originally intended.
The late Dr Okigbo while presenting the report of his panel to the then Head of State, late General Sani Abacha, in 1994, was quoted as having said, “these disbursements were clandestinely undertaken while the country was openly reeling with crushing effects of the structural adjustment programme of the Babangida administration and external debt burden. This represented, no matter the initial justification for creating the accounts, a gross abuse of public trust. Had these resources of $12.4 billion, or even a significant portion been paid into the external reserves, the impact on the Naira/Dollar exchange rate today; on the attitude of our external creditors; on the credibility of Nigeria and on the environment for foreign investment, etc, would have been incalculable”.
The panel inaugurated in 1994, revealed how Babangida, in connivance with the top officials of Central Bank of Nigeria (CBN) and some NNPC executives squandered the Gulf war crude oil sales windfall. It was discovered that the money was blown on questionable and often unexplained expenses by the administration.
Continues tomorrow
•Mr. Fyneface, a journalist, writes from Port-Harcourt.
