Sunday, June 5, 2011

Questionable conduct haunts once and future oil minister

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Former oil minister, Diezani Allison-Madueke. Photo:REUTERS

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As she waits to be returned to her throne at the petroleum ministry, the imperious Diezani Allison-Maduekwe has lobbied furiously and gone on an image makeover in recent weeks, paying for newspaper ads to counter the bad press she’s been getting, and showing herself in the best possible light on TV. The call has not yet come from President Goodluck Jonathan, who has promised Nigerians, following his landslide election victory in April, that his government will turn the page on bad governance and disperse the stench of corruption that surrounds much of government at all levels and in every corner of the country.
As the president weighs the caliber of people to invite into his new cabinet, he might be interested to know that Mrs Allison-Maduekwe has been under a fraud investigation for several months by a committee of the outgoing Senate.
The discreet investigation by the Senate Committee on Petroleum (Upsteam) concerns allegations that the minister, in September 2010, quietly, improperly and illegally assigned prospecting rights on three oil blocks — OML 4, 38, and 41 — to an international oil and gas company, Seven Energy International Limited, through its Nigerian subsidiary Septa Energy Nigeria Limited.
Mrs Allison-Maduekwe, generally perceived to be the most powerful minister in Mr Jonathan’s expired cabinet, consistently refused to respond to several letters sent to her by the committee, whose chairman, Lee Maeba, is believed by other committee members to be sympathetic to the minister. The committee, which stands dissolved with the Senate this week, is resigned to handing over the incomplete investigation to incoming senators.
Mrs Allison-Maduekwe and the spokesman for the Nigerian National Petrolem Corporation rebuffed several opportunities to state their case to our reporter. But the chairman of Seven Energy, Phillip Ihenacho, granted a lengthy interview to our reporter in which he painstakingly explained that Seven Energy scrupulously followed the rules and never participated in any illegal or unethical conduct. He also said his company did not take over the oil and gas fields but merely entered into a service agreement to exploit gas from the affected blocks.
In an email follow-up to our interview with him late last week in Abuja, Mr Ihenacho asserted that “due process was followed and Seven negotiated... in a manner that was transparent and in accordance with the precedent set by other service contracts entered into by NPDC (Nigerian Petroleum Development Company).” The contentious oil blocks are located in the northwestern flank of the Niger Delta region, in Sapele, Oben and Amukpe, which have extensive oil and gas reserves covering about 2,700 square kilometres and have a current gross production of about 30,000 barrels of oil per day. The Nigerian government owned 55 percent interest in the blocks while Shell Petroleum Development Company, Total and Agip, who were the operators of the blocks and focused largely on extracting oil, jointly had the remaining 45 percent stake. This has now been sold to Seplat Petroleum Development Company, a consortium of two Nigerian exploration and production companies and a French independent energy company.
The Senate committee was investigating the deal, valued at several billions of naira, allegedly because the petroleum minister, signing away, without regard for due process, 55 percent stake in the three OMLs held in trust for the public by the National Petroleum Development Company, a subsidiary of the Nigerian National Petroleum Corporation. According to industry guidelines, allocation of oil blocks shall be based on an open competitive bidding process to allow every investor, indigenous or foreign, an equal opportunity to explore and develop Nigeria’s petroleum resources.
Experts and insiders in the petroleum industry explained to NEXT that the processes for awarding of blocks and concessions to companies should involve advertisement of available blocks, a bidding conference where participating companies, government organs, the press and other industry actors are present. At the end of the exercise, the winners and the details surrounding each block won is announced publicly. The aim of these processes, they say, is to ensure transparency and integrity in obtaining a true and fair value for the oil blocks to be developed.
The Senate committee with oversight of the oil industry felt the allegations were sufficiently credible to warrant a serious investigation. A member of the committee, who did not want to be specifically identified so as not to offend Mr Jonathan, said his committee launched an investigation after it consistently received oral and written complaints against the deal from some aggrieved stakeholders in the industry.
“Some people came to us alleging that the minister has pecuniary interest in the transaction,,” the source said. “Although we didn’t believe some of the allegations, we believe they were weighty enough for a probe because what was alleged is a discretionary allocation of oil blocks which is against Goodluck Jonathan’s principle of transparency in the oil industry.” The committee wrote several letters to the minister, some of which are in NEXT’s possession, asking her to furnish it with details of that and other transactions under her reign.
“Such divestments, agreements, partnerships or transactions must follow due diligence that are transparent and in accordance with the best practice applicable in the industry and with national interest,” read one letter dated November 1, 2010.
“In this regard, we require your office to forward to the committee all due processes followed in the divestment/partnership with the National Petroleum Development Company on its 55 percent stake in OMLs 38, 41, 4 to Septa Energy.” The committee expected a response from the minister “on or before 9th November, 2010” but got no response.
A secret deal
Three months later, the committee again wrote to Mrs Allison-Madueke requesting details on all “licenses issued outside the official Bid Round and the due diligence followed in awarding the oil blocks”, while specifically asking after those given to Septa Energy. Other information the committee requested the minister to provide within a week were “on the present status of all Oil Prospective Licenses and divestments made in existing OMLs from 2001 to date, licenses revoked and the grounds for revocation, licenses relinquished, etc”.
According to our sources, Mrs Allison-Madueke again snubbed the committee, failing to respond to this and other official inquiries.
Another member of the committee said efforts to bring the minister to book over the matter was not helped by her perceived closeness to Mr Maeba, committee chairman.
“As you know, she is from the same part of the country as our chairman and our take is that our chairman has been too soft on her, may be because she is seen as a favourite minister of the President,” the source said.
But when contacted, Mr Maeba, who confirmed the investigations, dismissed the allegations against him, saying he never covered up for the minister. “Those who told you that should have their heads re-examined,” Mr Maeba fumed. “All I can tell you is that we did our best under the circumstance we found ourselves. We were investigating this deal but we suddenly ran out of time and we couldn’t bring it to a close. But it will form part of our handover note and the petroleum committee after us can continue from where we stopped.” As things stand, the details of the deal remain secret.
Most people in the industry, even within the NNPC say they do not know the terms on which the blocks were handed over to Septa, how the blocks were valued, how much accrued to government from the transaction, and how and why the minister settled for the company.
Mr Ihenacho, the Seven Energy chairman, declined to disclose details of the deal, citing a confidentiality agreement.
“Like most commercial agreements, the parties to the agreement are bound by confidentiality provisions of the agreement, and we would be in breach of them if we disclosed the agreements to third parties,”Mr Ihenacho said.
Mrs Allison-Maduekwe did not return calls or respond to text messages seeking comment.
Minister, NNPC won’t comment
The NNPC too wouldn’t open up on the transaction. Its spokesperson, Levi Ajuonuma, declined comment on the telephone. He also didn’t agree to a meeting or an email enquiry, saying he would only respond to a written enquiry sent to him by courier.
“Don’t call me again,” Mr Ajuonuma said. “Write officially by letter and send it by DHL before I’ll reply. Don’t send anything by email,” he said. But when asked if he makes this request from other journalists in and outside Nigeria, he terminated the call abruptly.
A similar response came from the Department of Petroleum Resources, the agency statutorily charged with supervising all petroleum industry operations being carried out under licences and leases in the country in order to ensure compliance with the applicable laws and regulations. Initially, a spokesperson, Belema Osibodu, requested that questions be sent to her by email. She promised to respond after getting answers from the department’s upstream division.
She never responded to the mail sent in the afternoon of May 31, 2011. But after our reporter followed up with telephone calls and text messages, Mrs Osibodu responded on June 2nd via a text asking our reporter to physically visit the DPR headquarters in Lagos before his questions would be answered. The reporter explained that he was based in Abuja and would make do with an email response. But by the next day, the agency’s communications department had added another layer to the conditionality that would ensure they answer our questions. In addition to coming to DPR’s office in person, the reporter was to provide a letter of introduction from NEXT to which his current photograph is attached.
We did nothing wrong
Mr Iheanacho however provided a vigorous defense of his company, asserting that Seven Energy acted appropriately at all times. He said what his company signed with the NNPC was a Strategic Alliance Agreement which allows it to provide financial and technical services while earning revenues from NPDC production. But the deal should still have been subjected to open bidding, according to the official industry watchdog.
Assisi Asobie, chairman of the Nigeria Extractive Industries Transparency Initiative (NEITI), an agency mandated by law to promote transparency and accountability in the management of Nigeria’s oil, gas and mining revenues, said:.
“The general picture of who should explore and exploit any oil well should be done through competitive bidding,” Mr Asobie said.
“And this can’t be over-stamped by any other agreement or arrangement. It should still be competitive.” One scandal to another The Senate investigation into Mrs Allison-Maduekwe comes to light about two months after we uncovered a brazen scam at the Petroleum Product Pricing and Regulatory Agency (PPPRA), an agency under Mrs Allison-Maduekwe’s supervision, where oil marketers were compelled to pay bribes in US dollars in exchange for obtaining the authorisation to import gasoline.
Our investigation at the time showed that oil marketers were instructed by PPPRA to call a mobile telephone number and pay a bribe of $8 per metric tonne of petroleum allocated to them, so that a firm with a 100,000 metric tonnes allocation would be required to pay a bribe of $800,000 in cash.
Our investigations were supported by audio and video evidence, and caused a stir in the industry. Mr Ajunoba, the NNPC spokesman,
threatened our reporter with physical harm, and elements in the government tried to misuse police authorities to harrass our editors.
In addition to NEXT, the Punch newspaper also has published unflattering reports on Mrs Allison-Maduekwe. Civil society anger Shehu Sani of the Kaduna-based Civil Rights Congress said Mrs Alison-Maduekwe should be prosecuted and kept away from public office if it is proven that she did discretionally gave out the oil blocks in violation of laid down procedures.
“This will be a test case of Jonathan’s promise of fighting corruption. If she’s allowed to go scot-free over this matter, it is better then that we close the chapter of anti-corruption fight in this country and open the 138 prisons in Nigeria so the inmates can go free,” Mr Sani said.
“If the allegations are true, she has no right to hold any public office in Nigeria. Or is it not for this kind of misconduct that people like Bode George were jailed?” Balarabe Musa, National Chairman of the Conference of Nigerian Political Parties, also said the revelation was a reflection of the deep-seated corruption within the federal administration.
“If the president reappoints her in spite of this revelation, it means he prefers to appoint people to positions on the basis of their weaknesses so they can be manipulated,” he said.
Eze Onyepekpere of the Centre for Social Justice said if the allegations against the former minister were true, she deserved no place in President Jonathan’s new cabinet.

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