Makarfi: Nothing is Foreclosed on the Unremitted $49.8bn Oil Money

Senator Ahmed Makarfi

In an interview with journalists in Kaduna, Chairman of the Senate Committee on Finance, Senator Ahmed Makarfi, whose committee probed the allegations on the non-remittance of $49.8 billion oil revenue to the Federation Account, gives some insight into the report of his committee submitted recently to the senate. John Shiklam presents the excerpts

Your committee on finance has just submitted its report on the investigations of alleged missing money by the former Central Bank of Nigeria Governor, Sanusi Lamido Sanusi. What is the overview of your report?

I will not want to say our report is the final report because we made certain recommendations as interim. There is an ongoing forensic audit which we said would be subject to the outcome of the forensic audit. In our report, the auditor-general of the federation with the external forensic auditors are requested to submit the forensic audit report to us. That is what will certify if the certification by PPRA which totaled almost $10 billion was correct, understated or overstated and by who?

Also, in terms of accounting, balancing of book, we cannot say the report is final until the outcome of some other work that is going on by the auditor-general of the federation and external forensic auditors. The senate will have to consider and approve our recommendation. We were asked to find out the whereabouts of some money and there was no dispute at all on the $47 billion out of the $67 billion. Right from the time we started sitting that money was in the federation account. Where there was dispute was between the figures of $20 billion and $10.8 billion. Even the dispute was not that the money was really missing. The issue was about what has been done with that money? Nobody said at that time that the money was missing.

A party alleged that it was not remitted to the federation account, if it was not remitted to the federation account, it can be hanging in one account or the other. We were to find out where that money was. We took the larger figure of $20 billion, not the figure of $10.8 billion to see what happened to the money.  Out of that $20 billion, over $5 billion was spent on petrol payments. We tried to find out whether that money was appropriated, we checked the budgets of the relevant years and we found that the National Assembly appropriated the money and it was expended. So if the National Assembly appropriated the money for it to be expended, you cannot talk of money missing.

Over $4 million was expended on subsidy on kerosene, but unlike that of petrol, this money was not appropriated by the National Assembly, but there were evidence and certification that it was spent. Again there is a difference between missing money and money that has been spent without authority. You know what it was used for but it was not authorised constitutionally by the National Assembly. You are left with a balance of about $10 billion. About $8 billion was not entirely for the federation. So our job was to determine how much of that money should belong to the federation account and how much for other players.

Let us assume that all of you are investors and I need N1billion to finance a business to make a certain profit, but I don't have N1billion. I only have N100 million and I ask each of you to bring N900 million and if you bring N900 million, from the profit, you will recover your N900 million and we will share the profit.  So right from the beginning, it was wrong to assume that the gross earnings belongs to me because from the gross money, you have to take your money, take your share of profit, then I take my own. That was the assertion that was made wrong by the person that made the allegation. All he alleged was that he believes part of that money belong to the federation.

We determined how much has been paid to the Federation Account; we determined how much has not been remitted to the federation account. Yes, there are certain monies yet to be paid into the federation account out of that. But we determined substantially that it was money belonging to other people. Even the one belonging to the federation, not all of it was remitted and it is fully captured in our report and we made recommendation that the amount not yet remitted to the federation account and evidence of remission be shown to us.  Even the agencies involved did not dispute our calculations and computations.

That settles the dispute over $8 billion. As I said, this is complex because this is the money belonging to so many people, the federation, indigenous companies, international oil companies, so we have to take time to know what belongs to who and we did that. Our recommendations are in line with what we have determined to be shared for each party. That leaves you with accounting for N2 billion. The Nigerian National Petroleum Corporation (NNPC) made submission that the $2 billion was expended in the cause of generation of revenue. This is different from spending on subsidy.

The constitution allows for certain expenses used to generate revenue. Whatever you are going to remit, is net of the expenses related to generating that revenue. Our job was to first of all see evidence that they were exclusively spent in the area of generating that revenue and that was the area that we said we don't have the technical expertise and the time. So we appointed two firms of forensic auditors to verify.

We asked them not to only sit in our office but to have an office even within the NNPC to go through all the documents they needed. They are professional chattered accountants and they made a report to us certifying how much was allowable and how much cannot be defended. What cannot be defended, we recommended that it should be refunded and that basically account for the $20 billion you are talking about. In summary, that is the classification of the way we conducted our work.

There are areas we did not look into and we stated it in our report. Like areas of crude swap, the strategic alliance which involves contracts over transfer of assets because, whereas they have an impact on how much you generate, it does not affect accounting for the $67 billion. We thought we should account for the $67 billion first of all to know how much was missing or not transferred or whatever, put that aside and go into this area because it is even the larger area that can hurt the nation the more. If you enter into contract that will continue to deprive the government its needed revenue, that is a very serious business!

In other words, Sanusi missed the point?

He did not miss the point in the area of the subsidy on Kerosene. Even before Sanusi raised this issue on kerosene; our committee had raised this matter with the NNPC. It was not even new to us because he was not the first person to raise it. We got to know that the money that was not appropriated was spent and we were on it when his later came, so it was not anything new. He was right in the area of Kerosene subsidy being spent without appropriation. When he said that the late President Yar'Adua gave instruction to stop subsidy, we are not disputing that there was such instruction, but there was never a time, even during Yar'adua's time, that government stopped paying subsidy on kerosene.

So the continuous payment of subsidy on kerosene is not limited to the current government. It was an issue that continued even during the time of the president that gave the instruction in writing. So, inadvertently, government must have given instruction which itself did not abide by. Now who took the action? That is why some people think NNPC on their own took the action; maybe the minister (of petroleum) took the action.

But we also have evidence and records that the president himself is aware and consents to it. So if the president is aware and consents to it, you cannot pick one director or one Managing Director and heap all the blame on the person. That is why we recommended that since the president is aware and has consented to it, the constitution says where that happens, he should prepare supplementary budget and bring to the National Assembly. The National Assembly can approve or reject it if it likes. If it likes, it can sanction him, but until he does that, you cannot commence any action.

Our report is there, we have confirmed that some money was spent without being budgeted for. We have found out that the money that was not remitted was much smaller than what was alleged. That is not to say that it is an issue that should be waved aside because the money is smaller than what was alleged. No matter what it is, all monies should be remitted to the federation account. In that respect, you can say that Sanusi had a point. But if you are talking in terms of scale, it was absolutely nowhere near the scale of the allegation that was made.

What can the nation benefit from the report of your committee?

First of all, we should look beyond the figures, beyond the money we said should be refunded, there are fundamental recommendations which we have made to block the loopholes we have seen. For instance, we made major recommendations on certain financial controls like NPDC account; we made major recommendations even in the area of the subsidy itself. Until we take a decision on subsidy, people will continue to kill this country one way or the other. We have made recommendations in the area of transfer of assets that is oil blocs where they are transferred to third parties.

We have recommended that if that continues, we will wake up one day and discover that our revenue yield will drop drastically because of the way and manner they are being transferred now and that is far more serious than the issues that we looked at. So there is need for all these recommendations to be implemented right away, otherwise we will enter into an era of dwindling revenue into the federation with severe consequences on the economy.

There is this concern that crude theft is so enormous that it is having a serious effect on the nation's revenue base. Did your committee look at the issue as well?

Before a particular company was appointed to police our pipelines to reduce theft, the money spent on the contract was $2.1 million a year. When this company was introduced, it almost got to $15 million a year, but the theft, more than quadruple! We made a recommendation there. That is why I said there are fundamental findings and recommendations in the report, not just limited to accounting for this money that this nation can benefit from. Why should I, when I was spending less money protecting the pipeline using only N10, now I am spending more money protecting the pipeline and I am loosing N1000, does this make sense? The loss to the federation over that period of time was certified by our external forensic auditors to the tune of $809 billion dollars. That is very horrendous! That is why we are spending more to protect the pipeline; we were losing 1000 percent more than we were losing when we were spending less to protect the pipelines, so it calls to question the capacity of the agency or company that has been given the contract to protect the pipelines.

In view of all these, did your committee indict anybody?

At this point, if you are to indict at all, it is institution you can indict. The report of the forensic audit is where you can indict individuals when it comes. That is why we said in our report that some of the recommendations we made are subject to the outcome of the forensic audit. We recommended that the National Assembly should take further legislative action upon the receipt of the forensic audit should we find reason to do so. So we have not foreclosed anything in our report. We made conditional report and we are waiting for the report of forensic audit from external auditors and the Auditor-General of the Federation. That is where personal indictment can come.

Let me tell you that right now, some people, for one reason or the other have the feeling that the minister, this and that person should be indicted. But in what we have seen, we did not see anywhere the minister approved anything, even in the expenses. So if you did not see where she approved any particular thing, how do you come to indict her? But if the forensic audit comes on payments of subsidy, the people that could be indicted are many.

How soon is the report of this forensic audit coming?

They are in touch with us because their mandate was to work in conjunction with us. The last time they paid me a visit was about three weeks ago. As at that time they had 12 weeks remaining to conclude the job. Whether they would be able to complete within the time frame, I am not in a position to say because they are independent international reputable company. I believe they will do a wonderful job. No matter how long it takes them, it is better they do a good job and bring the forensic report. That is what will bring out in clear terms, any illegalities and relating them to individuals; so that the nation can know who did what and if at all it was done wrongly, at what cost and what measure to take.