A string of corporate fraud cases is stirring up partisan rivalries ahead of next year’s presidential vote
Prosecutors in Milan began to set out their case against oil giants Royal Dutch Shell and Italy's ENI in court on 26 September. Both companies are charged with paying over US$1 billion in bribes via Nigerian officials to secure OPL 245, one of the biggest oilfields in Africa. Although the case may drag on for years through the appeals system and higher courts, it could damage reputations and change the way companies operate in Nigeria and beyond.
In the short term, it will fuel arguments over corruption between President Muhammadu Buhari and his rivals in the opposition People's Democratic Party (PDP) before national elections next February. Opinion polls show that although Buhari scores badly on security and economic management, he is still seen as fighting corruption.
His prominent opponents in the PDP, many of them multi-millionaires, accuse Buhari and his All Progressives' Congress of bashing corporations to win over wavering voters and claim he is frightening investors. The PDP espouses ostensibly pro-market policies, more privatisation and a plan to float the naira. Some of the party's main backers are embroiled in some of the corruption cases that the Buhari government is probing.
However, the PDP stands a realistic chance of winning if it can agree on a strong presidential candidate and holds together. In the gubernatorial elections on 22 September in south-western Nigeria's Osun State, previously held by the APC, the opposition had a slender lead. A rerun in seven polling units where the vote was cancelled will determine the final outcome. South-west Nigeria, particularly Lagos, Osun and Ekiti States, will be critical to next year's result.
The Shell-ENI case in Milan over OPL 245 in 2011 is just the latest in a line of cases probing corruption in multiple jurisdictions linked to major international companies in Nigeria (AC Vol 59 No 15, Uncivil action & Vol 56 No 24, The return of OPL 245).
Shell and ENI deny any wrongdoing. But Italian and Nigerian fixers for the deal were convicted on corruption charges on 20 September. Now, ENI Chief Executive Claudio Descalzi and Shell's former Executive Director for Upstream Malcolm Brinded, along with senior colleagues, face charges in Milan.
MTN, a South African telecoms company, is fighting claims in a report by Nigeria's Department of State Security (DSS) that it remitted US$11.1 billion in profits through illicit channels out of the country to tax havens in the 2000s.
The DSS report, which Africa Confidential has seen, names several banks, Nigerian and international, as complicit in the transactions. It recommends further investigation of all governors of the Central Bank – Charles Soludo, Sanusi Lamido Sanusi and current governor, Godwin Emefiele – since 2006. The DSS report claims that the losses to Nigeria's treasury in this period total $25.6bn.
Although sources close to MTN see the latest claims as a pre-election shakedown, the company is likely to cut a deal on the remittance and a back-tax bill, which is also in dispute, but the bidding will start at over $1bn. It also knows that Oscar Onyema, director of the Nigerian Stock Exchange, is eager to get MTN to list to boost the local capital market and forex inflows. Emefiele, whose term as CBN governor expires next year, has tried to soothe nerves by saying that the banks which handled MTN's remittances would not be penalised.
International banks are also in the frame. In March, the United States investment bank JP Morgan faced a civil action brought by Nigeria in London over its role in managing funds in the OPL 245 case. JP Morgan argued that it was only obeying orders from President Goodluck Jonathan's government to transfer $800m, paid into a government account by Shell and ENI, into private accounts in Nigeria. The case continues.
A note by an analyst at Hong Kong-based HSBC in mid-September criticising Buhari's economic policies drew a stinging response. The government highlighted HSBC's links to laundering funds for several disgraced officials, including the late military ruler General Sani Abacha in the 1990s, former Delta State Governor James Ibori, convicted in London in 2012 for corruption, and unnamed serving Senators.
Standard Chartered, also a stern critic of Buhari-nomics, has admitted 'mistakes' in its role in the current MTN fiasco and was named by the US Justice Department in July last year as one of the banks operating accounts for oil deal broker, Kola Aluko, who is under investigation for money laundering. Aluko was close to Diezani Allison-Madueke, Minister of Petroleum Resources in 2010-15, who is the subject of a lengthy fraud investigation in Britain (AC Vol 58 No 7, The great oil chase).
An official in the presidency told us: 'Companies say they want a level playing field and it is the only basis for sustainable foreign direct investment. We are trying to re-establish the rule of law …if they break the law they should expect to be sanctioned.'
The government's problem is to convince Nigerians that such investigations pay off; the US Justice Department earns billions of dollars in fines and seizures each year, even on cases that could have been heard in Nigeria, Europe and South America. But Nigerians complain they see little evidence that funds clawed back from international fraud cases are put to good use by the government.
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