A Cacophony of Thunderous Fraud, Alarm Bells, Which Way Nigeria?
A few days ago, the whole country awoke to the extent of rot still continuing in the Nigerian oil industry following a leaked memo from the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, to President Muhammadu Buhari, accusing the Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Maikanti Baru, of insubordination and award of contracts of over $24 billion without due process. Kachikwu’s letter mirrors a similar memo in 2013 by then Governor of Central Bank of Nigeria, Sanusi Lamido Sanusi, now Emir of Kano, to then President Goodluck Jonathan on the alleged non-remittance to the federal government of several billions of dollars by the NNPC. Below, are the two letters and the reactions that followed
Full text of the memo by Kachikwu, dated August 30, 2017
His Excellency, Muhammadu Buhari, GCFR
President and Commander-in-Chief of the Armed Forces The Federal Republic of Nigeria Presidential Villa Abuja
Your Excellency, RE: MATTERS OF INSUBORDINATION AND LACK OF ADHERENCE TO DUE PROCESS PERPETUATED BY THE GMD NNPC – DR. BARU
Felicitations
Let me start by welcoming you back to the country and by thanking God for your recovery from ill health. I join millions of Nigerians who rejoice and thank God for grating you the grace of healing and strength to continue the good work you have done for Nigeria in your long illustrious career in public service. I would have wanted to come personally after receiving you at the airport to facilitate with you and discuss matters herein contained, however, I have been unable to secure an appointment to see you despite very many attempts.
Various activities of the GMD
Mr. President, yesterday like many other Nigerians. I resumed work confronted by many publications of massive changed within NNPC. Like the previous reorganizations and reposting done since Dr. Baru resumed as GMD. I was never given the opportunity before the announcements to discuss these appointments. This is so despite being Minister of State of Petroleum and Chairman NNPC Board.
The Board of NNPC which you appointed and which has met every month since its inauguration and, which by the statues of NNPC is meant to review these planned appointments and postings, was never briefed. Members of the Board learned of these appointments from the pages of social media and the press release of NNPC.
At the minimum and like all other Parastatals being supervised by me at the Ministry have continued to do, and in compliance with the proper governance standards expected of a serious public institution, these executive actions by NNPC were supposed to benefit from mine and the Board’s input prior to presentation to you. I need to add that backdoor and present same to the acting president were met with a request that this be discussed with me. This was never done.
Indeed, in anticipation of vacancies that would arise from retiring senior executives of NNPC, I wrote the GMD A letter requesting that we both have prior review of the proposed appointments. This was to enable me to present same to the Board or give an anticipatory approval and then review with the Board later (Appendix 1). I wrote to the GMD given previous happenstance of this nature, in addition, thereafter, I called the GMD to a private meeting where I discussed these issues. Needless to say that, not only did he not give my letter the courtesy of a reply, he proceeded to announce the appointments without consultation or Board concurrence.
Mr. President please not that there is a Board Services Committee whose function is to review potential appointments and terminations of Senior Staff prior to implementation. This committee was also not consulted.
The above is just one of the many occurrences of disrespectful experiences I have encountered with the GMD as your Minister of State.
Contracts
The legal and procedural requirements are that all contracts above $20m would need to be reviewed and approved by the Board of NNPC. Mr. President over one year of Dr. Baru’s tenure, no contract has been run through the Board. This is despite my diplomatic encouragement to Dr. Baru to do so to avoid wrongfully painting you as a President who does not allow Due Process to thrive NNPC. Given the history of malpractices and the public perception of NNPC as having a history of non-transparency (Appendix 2: NEITI report), the NNPC Tenders Board (NTB) cannot be the final clearance authority for contracts it enters into. The NTB which is a collection of top level NNPC executives and COOs, with the GMD as Chairman, cannot continue to be the final approval authority for multi-million dollar contracts and transactions involving NNPC to the exclusion of the Board. Board members have singularly and collectively raised these issues to no avail. (Appendix 3: Letter from Vice President on Expanded Contract)
The following major contracts were never reviewed by or discussed with me Board of NNPC:
The Crude Term contracts- value at over $10bn The DSDP contracts- value over $5bn The AKK pipeline contract- value approximately $3bn
Various financing allocation funding contracts with the NOCs – value over $3bn
Various NPDC production service contracts – value at over $3bn–$4bn
There are many more Your Excellency, in most of these activities, the explanation of the GMD is that you are the Minister of Petro- leum and your approvals were obtained. However, the correct governance should be that the Minister of the State and the Board review the transaction and give their concurrence prior to presentation to you. As I many cases of things that happen in NNPC these days. I learn of transactions only through publications in the media. The question is why is that the Parastatals which I supervise as Minister of State or Chair of their Board are able to go through these contractual and mandatory governances processed and yet NNPC is exempt from these?
I know that bravado management style runs contrary to the cleansing operations you engaged me to catty out at the inception of your administration. This is also not in consonance with your renowned standards of integrity.
Working relationship
Your Excellency, even though the appointments of the other Parastatals Heads in my Ministry were made without my input. I have maintained a cordial and respectful relationship with all. Parastatals under my supervision have continued to excel in their respective areas and adhere to mandatory governance processes. However, my working relationship with GMDs has been fraught with humiliation, sidelining and campaigns of character defamation against me. This is particularly frustrating given many contributions I have made to the growth and stability of the Nigerian Oil and Gas industry through the many policies I have introduced August 2015.
If NNPC is considered and known to be one of the Parastatals under the Ministry, why does the GMD refuse to report into my office or to the Board on the serious issues such as above especially given that I have been by Your Grace, the Minister overseeing these Parastatals for two years?
Your Excellency, even at the time when we were unfortunate to have you away to England for a medical checkup, the situation remained the same.
Meetings
The matter of collaborative meeting is another issue altogether. When I call for meetings, the GMD chooses which meetings he wishes to attend and those he chooses to send subordinate. He sends such subordinates without the courtesy of a call to explain his absence. The unattended meetings are in the majority. In all of 2017, I have been able only to get him to have one on one meetings with me about four to five times.
At inception, I instituted a Monthly Parastatals review meeting with Head of Agencies and another with the all the Senior management in all the Parastatals. GMD objected to his Senior Staff coming to the Joint Senior Management meetings. He argued that this was overreaching his territory. He was only comfortable with the Monthly of all Heads of Agencies meetings which he has only attended a few times. I have had to carry on with the rest of the Ministry. Despite being Chairman of NNPC Board. I have tried to manage the bad perception created by GMDs blatant insubordination and disrespectful attitude. Particularly I have worked hard to avoid being seen as pretty and meddlesome.
Fear culture
The effect of the attitude of the GMD and the sidelining of the Board is that there is a fear culture in NNPC. The open administration I introduced, with your support in our first year of pushing reforms, has been completely eroded. The essence of this innovation was to drive great working interface and interaction amongst all Parastatals in the Petroleum sector. Other Parastatals have benefitted from this.
NNPC staff are afraid of contacting me to avoid being punished, sidelined in appointments and targeted. Indeed, the key factor for growth and advancement in NNPC of today is to avoid the Minister of State’s Office.
Various accusations
In order to convince your Excellency of the need to sideline me, I am sure I have been labeled as being. I.Anti-North II.Corrupt III. In Collusion With Militants Some faceless blogs have even had the audacity to circulate such rumors. Nothing Your Excellency can be further from the truth. I mention this because this will be the likely response you will receive to this attempt I am making to alert you on the state of affairs under the GMD’s leadership.
These accusations are baseless.
I. anti-North
First, all my appointments were generated with key inputs from all the COOs of NNPC and were balanced and based strictly on skills, experience, drive, and ethnic balancing for senior management positions. Mid-level positions were sole suggestions of the COOs. Let me say for the records that I am a completely detribalized Nigerian and I have lived my formative years in the East, West, North, and South-South part of the Country. My Father was a Federal High Court Judge in most parts of the North. My siblings and I benefited from growing up in Kano. In addition, I have resided and worked in Rivers, Delta, Lagos,
Oyo, Enugu, Anambra, etc. I have no reason to be anti-North because in my working career I have found that good and skillful people abound everywhere in our Nation.
II.Corruption
I have done nothing in my time at NNPC or the Ministry that is corrupt or laced with any such intent. In my time as GMD, all policies and contracts were generated by the Heads of Division, approved by COOs, passed through NTB and (in the absence of a Board at the time) I received your approvals, I have had no relationship with any one of or any transaction in my period that was product of a personal deal or an arrangement, if anyone benefited from NNPC contracts, they did so on their merit and I rarely participated in those contractual processes except to review them.
Anyone peddling any contrary information is resorting to cheap blackmail.
III.Militants and security
I took on the issue of security headlong because it was the primary causative factor for production that declined from 2.2 mpbd to 1mpbd at our lowest point (November 2016). At great risk to my life. I visited militant camps, coordinated with our security apparatus, organized the four of the HEVP to several frontline states and worked with PANDEF and other groups to bring calm and increase production and some measures of stability to what it is today.
I have never betrayed the trust you placed on me. I did not deploy any public financial resources to achieve the results in the Niger Delta region. Most times I have utilized my personal resources and goodwill accumulated over the many years prior to my appointment to achieve these far reaching results and of course all these were with collaborations with Agencies of the government (Office of the VP, DSS, NSA, etc.)
I dare mention that the blueprint of these engagements were discussed with and approved by you.
Given the sensitivity of my position, I remain one of the most tracked officers of your government, so if there is any truth to these rumors, you would have known.
Mr. President you took me from the private sector where I left an enviable track record of performance and integrity spanning over 25 years rising to the highest positions in multinational oil sector organization. I came to this job with the zeal to change the sector. Measurable progress has been made and more would have been achieved but for the challenges I have listed above.
The future of the oil industry
Mr. President I have been on a race to stabilize and move the industry to the next phase. Timing is critical. The sector is also in a critical state where only innovative ideas can stop the alarming impact of the fall of oil prices on the National Income. The innovations that we have developed and stated implementing in the Downstream, Upstream, Policy generation and Niger Delta Security have enabled the sector to stabilize slightly. However, truth is that given the global challenge in this sector, we must aggressively pursue out of the box ideas on rejuvenating this sector, getting the best yield and increasing our earnings from oil and gas. What this means is that Parastatals in the Ministry and all CEOs of these Parastatals must be aligned with the policy drive of the supervising Ministry to allow the sector register of the growth that has eluded it for many years. To do otherwise or to exempt any of the Parastatals would emplace a stunted growth industry.
Prayers
My prayers most humbly and respectfully are: That we save NNPC and the oil industry from collapse arising from the above non-transparent practices and empower the Board you inaugurated to do the needful.
That you save the office of the Minister of State from further humiliation and disrespect by compelling all Parastatals to submit to oversight regulatory mandate and proper supervision which I am supposed to manage on your behalf.
You kindly instruct the GMD to effectively leave NNPC to run as a proper institution and report out along due process lines to the Board and that your Excellency instructs that all reviews be done with the Minister of State prior to your decision.
That to set the right examples, you approve that recently announced reorganization changes be suspended until the GMD, myself, and the Board have made relevant input to same. This will send a clear signal of process and transparency.
That your Excellency encouraged joint presentation meetings between heads of Parastatals and the Minister of State to you so as to encourage a culture of working together and implant discipline in the hierarchy.
These in my view, Mr. President, will provide you balanced analysis on issues and avoid exposing the exalted office of Mr. President to ridicule. It will also reduce nonproductive, unsubstantiated rumor peddling.
Mr. President, I thank you for the opportunities given me to serve and I wish you continued full recovery. I remain loyal and very proud of you Sir.
Mr. President kindly accept the assurances of my highest esteem and loyalty.
Dr. Emmanuel Ibe Kachikwu Honorable Minister of State Petroleum Resources.