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Vol 64 No 12

Published 8th June 2023


Nigeria

Shell holds up clean-up payments in graft row

Sacked director of Ogoniland project spells out corruption concerns in rebuke to environment ministry

Shell is withholding payments towards the Ogoniland clean-up until it sees a full accounting for the disputed contracts issued to date, Africa Confidential has learned from sources in the Hydrocarbon Pollution Remediation Project (HYPREP). Shell has declined to confirm the reports.

This latest row follows a decision by the UN Environmental Programme (UNEP) to sever ties with HYPREP this year, also over the issuing of contracts for hundreds of millions of dollars to companies which are not competent to carry out the clean-up work (AC Vol 63 No 24, HYPREP twists UNEP's arm).

A long-running controversy about the issuing of questionable contracts blew up after Africa Confidential reported that HYPREP Project Co-ordinator, Ferdinand Giadom, was sacked on 2 May.  Giadom was blocking a slew of contracts being hurried through before the expected change in Environment Minister, under whom HYPREP operates, when President-elect Bola Tinubu takes office on 29 May (AC Vol 64 No 10, Minister sacks oil clean-up boss as graft fears grow). The current environment minister is Mohammed Abdullahi.

HYPREP's money comes from Shell Petroleum Development Corporation (SPDC), a joint venture between the state oil company, the Nigerian National Petroleum Company (55%), Shell (30%), TotalEnergies (10%) and ENI (5%). SPDC is committed to paying 90% of the estimated US$1 billion of the initial five-year programme to begin cleaning up Ogoniland devised by the UN Environment Programme (UNEP) in 2011. UNEP has previously described the region as one of the most polluted on earth (AC Vol 52 No 17, Who cleans up in the Delta?).

Contracts issued by HYPREP are paid by the Ogoni Trust Fund, into which SPDC has paid $572 million between 2017 and the end of last year. The Fund's Board of Trustees, which includes the International Oil Companies (IOC), local politicians and Ogoni representatives and HYPREP managers, has been pressuring Shell to pay more.

Sources close to HYPREP told Africa Confidential that Shell had not complained much hitherto for fear of angering the Nigerian government. The company still has extensive investments in Nigeria, including offshore production that contributes substantially to its corporate revenues.

Shell may also have acted, we hear, out of concern that its shareholders would object to their money being wasted. With HYPREP's future in question, Shell faces serious risks regardless of who is ultimately responsible for implementing the clean-up.

The impasse over funding HYPREP projects comes as Giadom is challenging his dismissal by Environment Minister Abdullahi on 2 May and causing waves in the outgoing government led by President Muhammadu Buhari.

Giadom has written a letter to the HYPREP governing council, its highest body, which Africa Confidential has obtained. It denies all the ministry's claims about his behaviour, protesting that his removal violated good practice, and says he had no prior notification of any complaints before being sacked.

Giadom calls the claims in the ministry statement 'libel' and 'lies'. He said, 'I am yet to be communicated on what funds I have misappropriated' and that the contracts he did process were approved by the ministry and passed without objection. Those bona fide contracts were for clean-up projects ceremonially launched by President Buhari on 28 April.

At the heart of his fight with Environment Minister Abdullahi is the fate of two 'mega projects' that were already in the pipeline when Giadom took up his post as HYPREP chief in March 2022. The projects included: 14 'Batch 2 Potable Water Projects', and 39 'Semi-Medium-Risk Remediation Projects', 53 contracts in all.

The contracts were all set for awarding when Giadom examined them and discovered they were 'fundamentally flawed', his letter states. Only 66 of 173 companies (the 'prequalified contractors') had active websites; and only 36 of those 66 companies 'had relevant scope of works/services, for either engineering construction or maintenance services in the water sector,' wrote Giadom. 'This raised serious concerns,' he added.

HYPREP had not properly inspected and recorded what needed doing at the proposed remediation sites, and this meant bills of quantities could not be drawn up for the tender documents. Without these, or 'scope of works' specifications, the companies set to be contracted had no yardstick by which HYPREP could judge the amount or quality of any work undertaken.

Giadom, after obtaining independent expert advice, insisted that the procurement processes and documents be reviewed to remedy these shortcomings and for the sites to be properly surveyed. He also wanted the independent expert's other observations and corrections incorporated into the final bidding documents.

Ignoring these concerns, HYPREP head of operations Philip Shekwolo and Paul Ugbaha, head of procurement at the time, went over Giadom's head and obtained the authorisation of Minister Abdullahi, after which the expenditure was signed off by the Federal Executive Council, our sources said. All 53 contracts in the two mega-projects were awarded.

Shekwolo denies wrongdoing and neither he nor Ugbaha has been subject to any indictment or law enforcement investigation.

The ministry statement issued after our article also claims, 'Giadom perfected a method of siphoning public funds through multiple community sensitisation events at inflated costs' which Giadom insists is untrue and a libel. In fact, Giadom says, the sensitisation activities – visits to communities to tell them what is going to be done in their areas – have still not been authorised. So, he could not have defrauded events which had not taken place.

The ministry asserted Giadom was invited three times in writing to 'explain his misconduct' and 'none of his responses were satisfactory'. Giadom insists he received no such invitations. 'This is yet another grievous lie', he wrote.

Giadom's letter concludes, '…it is clear that the termination of my appointment was carried out in utmost bad faith, devoid of any due process as laid down in the Public Service Rules. It was hurried, poorly concocted and baseless.'

An emergency meeting of the governing council heard Giadom's appeal against dismissal and rejected it, in spite of his insistence that it was against all procedure and ethics.

Up to US$200m worth of contracts remain in the HYPREP pipeline and concerns are growing that many of them, especially those in the water provision and pollution remediation area, are also fundamentally flawed but may yet be issued regardless.


MINISTRY RAGES AT CONTRACT FRAUD CLAIMS

The environment ministry has unleashed a furious denial of Africa Confidential's report that Hydrocarbon Pollution Remediation Project (HYPREP) director Ferdinand Giadom was sacked for preventing questionable contracts going ahead. Africa Confidential stands by its story (AC Vol 64 No 10,Minister sacks oil clean-up boss as graft fears grow).

Environment ministry media aide Olusegun Shogbola wrote and tweeted on behalf of the minister, Mohammed Abdullahi, on 10 May: 'The article stated that Giadom was removed because he was preventing improper contracts from being issued. This is a blatant lie from the pit of hell.'

He went on, 'It is unbelievable, shocking, and unprofessional that a reputable online news media like African [sic] Confidential, could not verify facts from authorized government sources before publishing news of this sort.'

But our reporter did speak to Shogbola on 4 May, five days before publication, asking why Giadom was being sacked. Shogbola told us that if we wanted to know, we would have to contact President Muhammadu Buhari's office, because that's where the demand for Giadom's dismissal originated.

Yet Shogbola's statement 10 May continues, 'The reports of misappropriation of public funds …were too grievous for the President to tolerate, hence he gave a directive that his [Giadom's] services were no longer required.' Shogbola did not say this during our phone call. 

Analysts suspect that the ministry is trying to deflect criticism of the sacking by laying it at the door of the President, who leaves office on 29 May. A former minister and state governor close to Buhari has told Africa Confidential that it was 'inconceivable' that the President would be concerned with appointments so far down the chain of command.

Neither was it considered probable he would risk embarrassment by sacking Giadom only five days after presiding over the 28 April ceremonial opening of three big HYPREP projects in Ogoniland. The projects were all approved under Giadom's watch.



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