Buhari - We’ve found banks with stolen oil money

President Muhammadu Buhari, yesterday, in Abuja said that his administration has identified banks, financial institutions and countries in which payments for stolen Nigerian crude oil have been deposited.

Speaking at an audience with visiting United States Congressmen, President Buhari acknowledged the support and cooperation his administration was getting from the international community in gathering required intelligence for tracing and recovering stolen national resources.

The President, according to a statement signed by his Special Adviser on Media and Publicity, Mr Femi Adesina, told the Congressmen led by Rep. Darrel Issa: “We are getting cooperation from the international community, including information on ships that take crude oil from Nigeria and change direction, or pour their contents into other ships mid-stream. Some monies were paid to individual accounts. We are identifying the financial institutions and countries that are involved. I have been assured that when we get all our documents together, the United States and other countries will treat our case with sympathy.”

President Buhari told the Congressmen that his Administration will welcome more regular meetings of the Nigeria-United States Bi-National Commission. He noted that the Commission could serve as a more useful platform for the promotion of bilateral trade and economic relations as well as joint cooperation in the war against terrorism.

Rep. Darrel assured him that the United States will support Nigeria against Boko Haram by providing training, intelligence and military platforms.

“We look forward to helping you in many ways to end the Boko Haram insurgency and the theft of crude oil in the Gulf of Guinea,” he said.

Nigeria, the world’s seventh largest producer of crude oil, accounts for about 68.1 per cent of the total revenue Africa lost in a decade as a result of illegal transfer of funds abroad.

N10.08trillion lost in 10 years

The report of the Thabo Mbeki High Level Panel on Illicit Financial Flows from Africa adopted by African Union Heads of State and Government at their summit in Addis Ababa, Ethiopia said about $40.9billion (about N6.87trillion) of an estimated $60billion (about N10.08trillion) lost through such transfers from Africa in a decade (2001-2010) was traced to Nigeria.

The funds are stolen through corruption, tax evasion and illegal transfer of profits by multinationals, the AU said. Nigeria, which produces an average of 2.3million barrels of oil daily as the leading hydrocarbon producer in Africa, is being ravaged by poverty and underdevelopment. Cumulatively, Nigeria and Egypt topped the list of 10 African countries by illicit financial transfers between 1970 and 2008, with $217.7billion (about N36.57trillion), or 30.5 per cent, and $105.2billion (about N17.67trillion), or 14.7 per cent respectively, while South Africa had $81.8billion (about N13.74trillion), or 11.4 per cent.

In its 15-point findings, the panel noted that ending illicit financial flows is a political decision by the various governments as it involved issues of abusive transfer pricing, trade mis-invoicing, tax evasion, aggressive tax avoidance, double taxation, tax incentives, unfair contracts, financial secrecy, money laundering, smuggling, trafficking and abuse of entrusted power.

The interrelationships of these issues, it stated, conferred a technical character requiring transparency across all aspects to ensure access to information and the right to obtain such information.

It will be recalled that there has been reports that stolen Nigerian oil worth billions of dollars is sold every year on international markets and much of the proceeds are laundered in world financial centers like Britain and the United States which officials said  will help President Buhari to recover the funds. An estimated 100,000 barrels per day (bpd) of oil was stolen from pipelines in the Niger Delta, the report by London-based Chatham House said, not including the unknown quantities stolen from export terminals.

Theft of crude oil

The theft amounts to around 5 per cent of Nigeria’s current 2 million bpd production but has a wider impact because oil companies are often forced to shut down pipelines due to damage caused by thieves. The activity costs Nigeria’s economy an estimated $5 billion a year in potential revenue. While oil majors like Royal Dutch Shell and Italy’s Eni are often the first to complain about theft, it is unclear how much they are losing from it. A measure of acceptable losses may be keeping them from taking determined preventive action, the report said. Oil firms do not pay royalties on stolen oil.

“Nigerian crude oil is being stolen on an industrial scale. Proceeds are laundered through world financial centers and used to buy assets in and outside Nigeria,” said the 70-page report, entitled “Nigeria’s Criminal Crude”. Thieves have many ways to disguise funds … including cash smuggling, delayed deposits, use of middlemen, shell companies and tax havens, bribery of bank officials, cycling cash through legitimate businesses and cash purchases of luxury goods.”

The report named the United States, Britain, Dubai, Indonesia, India, Singapore and Switzerland as likely money-laundering hotspots, and the United States, Brazil, China, Thailand, Indonesia and the Balkans as the most likely destination for stolen oil.

Former Oil Minister, Diezani Alison-Madueke had called for stolen oil to be labeled “blood oil”, arguing that the security risk is similar to those in past and present mineral conflict zones such as Angola, Sierra Leone or Congo.

The Central Bank of Nigeria, CBN, Saturday said that the Global financial integrity group has said that about $15.7 billion illicit money pass through Nigeria annually. This makes Nigeria one of the top 10 countries for illicit financial flow. As a result, banks in the country have reacted by rejecting foreign currency deposits, saying that it has increased its vigilance on illegal financial flow.

A statement issued by  Ibrahim Mu’azu,  Director, Corporate Communications of the CBN said: “The Central Bank of Nigeria (CBN) notes with concern  a recent report by the Global Financial Integrity group, which ranks Nigeria as one of the 10 largest countries for illicit financial flows in the world. Although we do not have an independent confirmation of this assertion, the report estimates that about $15.7 billion of illicit funds go through our system annually.

“In the light of this avoidably negative commentary, we wish to  draw  the public’s  attention to several  protocols on illicit fund flows,  money laundering, and terrorism  financing both in Nigeria and around the world, and  warn that  the CBN will increase its vigilance to ensure that Nigerian banks are not used as conduits for illicit fund flows, especially in foreign currencies.

“The CBN will continue to support the Federal Government’s fight against  money laundering,  corruption, and terrorism financing  and will block  any and every avenue  that  may be used for these purposes. We will also ensure that persons who venture into currency speculation and currency substitution find it unattractive and dangerous. In these efforts, therefore, we  seek the  continued  cooperation of all Nigerians to make this  work for the enhancement of our shared progress, rather than the prosperity of a greedy few amongst us.”

Illicit financial flows in and out of Nigeria are mainly from crude oil theft, proceed of corruption, tax evasion, over invoicing of imports and inflated contracts.

The FGI report

According to the Financial Global Integrity report 2008-2012 released last month, “illicit financial flows from developing countries are facilitated and perpetuated primarily by opacity in the global financial system. This endemic issue is reflected in many well-known ways, such as the existence of tax havens, secrecy jurisdictions, anonymous companies, other legal entities, and innumerable techniques available to launder dirty money such as through misinvoicing trade transactions.

“This is, essentially, trade fraud and is often referred to as trade-based money laundering when used to move the proceeds of criminal activity.

“Of the estimated $1 trillion in measurable illicit outflows each year, trade misinvoicing is the method most often used to move funds offshore.”