[size=14pt]FG Orders Audit of Federation Account, Oil Sector[/size]
•Siemens: Makoju, others for questioning this week
From Kunle Aderinokun and Onyebuchi Ezigbo in Abuja, 05.31.2010

President Goodluck Jonathan has approved a comprehensive audit of the Federation Account by the Extractive Industry Transparency Initiative (NEITI) to find out whether the revenue accruing to the country from petroleum and solid mineral sectors are fully remitted.

Also, investigation into the 17.5 million euros Siemens bribery scandal has continued with the Economic and Financial Crimes Commission (EFCC) inviting former Managing Director of the Power Holding Company of Nigeria (PHCN) Joseph Makoju, former Managing Director of Nigeria Telecom-munications Plc (NITEL) Albert Mashi, former GM of NITEL E.C. Ossai and former Director of PHCN Shuaibu Maigida for interrogation this week.

Another intention of the Federation Account probe, it was gathered, is to ensure that monies allocated to the various tiers of governments actually get to the people.
Chairman of the Governing Board of NEITI Prof. Asisi Asobie who spoke at the just concluded NEITI transparency sensitization road-show for the states in the North-West said Jonathan had also approved the award of contract for the audit of the oil and gas sector from 2006 to 2009.

He said NEITI intends to use the audit to unearth the reasons why states and local governments have been unable to drive development up to the rural areas.
“Fortunately, the President has approved that the contract for the audit of the oil and gas sectors be awarded for 2006 to 2008, while that of 2009 should be advertised because we have it in the budget, so that by the end this year we will be up to date,” he stated.

“What our audit is going to focus on in the next exercise is the way and manner monies that accrued from the Federation Account through the state government to the local governments fail to reach them. And when it gets to reach the local councils, it never reaches the communities. So, while you are distributing money to these three tiers of government, the communities do not get the benefits,“ Asobie said.
He explained that the audit of the Federation Account is to be conducted in collaboration with the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) being the agency with the primary responsibility over revenue accruing to the Federation Account.

“We want to ensure that when you now allocate the funds to the various tiers of government that it is properly administered; the civil society will ensure that it is expended on priority projects that would promote development, not on issues like having twenty special advisers or thirty assistant special advisers."

Speaking on the powers and mandate of the organisation to undertake such a high-level audit, Asobie said everything about the activities of NEITI is backed-up by law. He added that one of the key mandate is to ensure accountability and transparency in the application of resources earned from the petroleum and solid mineral sectors.

“There is a clause in the law establishing NEITI that said we should ensure accountability and transparency in the application of resources in the country and that is what we are pursuing. We plan to carry out a special audit that has never been done before to find out how much actually goes to the Federation Account. Is it all that is declared? Or does everybody concerned pay its own share fully? How is it allocated? Is it done according to the provisions of the law?”

Explaining the nature of the audit, he said under the NEITI format, the templates are first discussed with those entities to be audited along with the civil society before agreeing on the template to be adopted. Secondly, NEITI will then ask the entity to fill the template and return in order to certify that what would be released to the public are acceptable.
On the proposal of the Federal Government to allocate oil shares to host communities, Asobie said the plan would likely lead to a more stable business in the petroleum sector.

“If you have a share in an organisation, it is going to achieve two things; you are going to have interest in monitoring its operations so that it is well managed and it also means that you will have a sense of responsibility and the frequent incidence of vandalization will be reduced,” he argued.

Aside from this, he said one of the major focuses of the PIB is to ensure that Nigerians participate more effectively in the oil and gas production process. The plan is to have a situation where the communities will be co-owners of the oil company with active interest on how it operates.

On what impact NEITI audit has brought to bear on the affairs of the petroleum industry, Asobie said the transparency campaign has resulted in an improved revenue generation of $2.17bn in 2003 and by 2007 it was $7.6bn for the country.
In his address at the Road-Show, Asobie said states in the North-west are particularly worst-hit by the low development index as was evidenced in a paper delivered by the former Governor of Central Bank of Nigeria, Prof. Charles Soludo which noted that although the national poverty level was 54% in 2007, the three geo-graphical zones of the North had much higher levels of poverty, with North-east having 72.2 per cent, followed by North-west 71.1 per cent and North-central with 67 per ent.
However, he said in contrast, the other three zones in the South had poverty levels which were considerably lower that the national average, with South-west having 43.05 per cent, South-south, 35.1 per cent and South-east with 26.6 per cent (the lowest in the country).

Asobie stressed the need for states and local governments in the North to imbibe transparency and good governance ethics. He also observed that while the South-south zone comes first among the six zones of the federation, in terms of the size of allocation from Federation Account, the North-west comes second.
He said there is no correlation between the proportion of revenue received from the Federation Account and the reduction of the level of poverty for each zone.

“The first lesson is that transparency and accountability are very important for effective resource management. Then you transform the resources into improving the well-being of the people. Secondly, the good thing about NEITI is its multi-stakeholder approach, a situation where bring the private sector to partner with government and discuss on how to develop initiatives rather than just the government doing it alone“, he said.
He said NEITI is pursuing a multi-stakeholder approach towards institutionalisation of transparency ideals in the handling of the country's affairs.

The NEITI chairman explained that it is not enough for the people to know the amount they are receiving but to focus on how the money is used.
Meanwhile, Makoju, Mashi, Shuaibu and Ossai who were invited for questioning by the EFCC in relation to the Siemens bribery allegation would be at the agency's office between tomorrow and Friday.

The remaining are still serving – CEO Mtel Edwin Momfe, CEO PHCN S.M. Mahmood, Permanent Secretary Power and Steel Ministry R. Olusanjo, Secretary, NITEL Tender Board Allah Bamulafiya, Director, NITEL Samson Olabiyi, NITEL Legal Adviser.
When contacted, EFCC’s Head of Media and Publicity, Mr. Femi Babafemi confirmed the invitation of the government officials.
EFCC Chairman Mrs. Farida Waziri had last Tuesday during the visit of Senator Smart Adeyemi to her office, hinted that former managing directors of PHCN and NITEL were to appear before it any time soon for interrogation.

As part of investigation of the Siemens scam, former Minister of Communications, Major-General Tajudeen Olanrewaju (rtd.) was last Wednesday grilled for more than seven hours at the EFCC headquarters but was later released on bail.
But Olanrewaju’s interrogation was not before he had failed to honour the invitation of EFCC on two occasions.He had been previously invited by the EFCC along with Acting National Chairman of the Peoples Democratic Party, Alhaji Haliru Mohammed Bello and another former Minister of Communications Chief Cornelius Adebayo.

Siemens was involved in about 1.3 billion euro bribery in some countries between 2001 and 2004.
The scandal was uncovered in 2009 by the German police after invading the headquarters of the company in Germany over allegation of bribing some Nigerians, Libyans and Russians in its bid to get contracts.

Two senior officials of Siemens convicted by the German court on April 20, 2009 had implicated top Nigerian officials, when they confessed that they bribed their way through to win telecommunications contracts in Russia and Nigeria.
Out of the amount, 17.5 million euros was allegedly given to some Nigerian ministers and government officials as bribes during the administration of former President Olusegun Obasanjo.

Based on the admission of guilt in Germany, Siemens was fined 201 million euros by a Munich court on October 4, 2007.
Waziri had said the commission would apply for the certified true copy of the Munich court judgment.
She had also said the agency would get to the root of the scandal and prosecute those found guilty.

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Time to fish out all parasites. The petroleum sector has been so opaque in the past that it was impossible to audit; its time to bring sanity to that sector.