Nigeria: President Buhari appoints himself to end nation's oil corruption

Oil provides 70 percent of Nigeria's government revenue but is an industry plagued with malfeasance. Two years ago the central bank reported $20 billion in missing oil-related funds.

Four long months after taking office Nigerian President Muhammadu Buhari finally announced his cabinet positions, with the most controversial and lucrative – oil – going to himself.

Mr. Buhari campaigned on a pledge to end corruption, and nowhere is that corruption more insidious than in the oil ministry of Africa’s most populous country.

Yet whether Buhari, himself a former oil minister, can clean up an industry that two years had $20 billion in missing funds is quite unclear. Critics say the new president is over-reaching with what amounts to a full-time second job.

As Africa’s biggest oil producer, crude runs through the arteries of the Nigerian economy.

Some 70 percent of the Nigerian government’s $22 billion revenue comes from crude. More than 80 percent of foreign trade is tied to oil. When oil prices dipped last year by nearly 40 percent, Nigeria’s coffers were so devastated that Buhari called them “virtually empty” when he came into office.

But mismanagement and the theft of billions have also plagued the ministry for decades. Most oil is stolen through accounting and oversight gaps. But much goes missing far away from the minister’s eyes: from oil fields, pipelines, and even from the export terminals.

Buhari said last week he is taking the oil ministry job because he doesn’t trust anyone else. His plans include stepped-up accounting of oil receipts and recovering of stolen funds. Such plans would head off reports like that in 2014 when the Central Bank of Nigeria announced $20 billion in missing oil receipts from the Nigerian National Petroleum Corporation (NNPC), a state-owned enterprise.

Much of the malfeasance appears to have taken place under Diezani Alison-Madueke, the oil minister under former president Goodluck Jonathan, Buhari’s predecessor. Ms. Alison-Madueke was arrested Oct. 2 in London on charges of bribery and money laundering. Her five-year reign at the ministry is widely seen as a period of rampant corruption and theft. 

“Nigeria has surely been short-changed by Nigerians who were trusted with public offices in the oil sector,” says Osadolor Etiosa, a prominent Nigerian journalist who has covered Nigerian politics for decades.

Alison-Madueke’s arrest underscores the complexities in the petroleum sector. But while it could open a path for Buhari to address corruption in an industry he served as government minister for in the 1970s, some question if Buhari’s effort to take charge of oil is constitutional and whether he is the right person for the job.

Tackling big oil 

Buhari’s biggest obstacle may be reining in the NNPC. The huge state oil firm is Nigeria’s largest employer. It'a also the according the least transparent oil company in the world, according to Natural Resource Governance Institute.

The NNPC has diverted more than $30 billion in oil revenue from the state since 2009, according to a Nigerian watchdog agency. A 2013 PricewaterhouseCooper audit stated that the oil behemoth had a “blank check” to spend without oversight.   

Buhari knows the company intimately. He oversaw its creation in the 1970s while he was oil minister. It is this expertise that many say could help him clean up the organization. 

“He is a man already acquainted with the basics of the oil sector. You must be thoroughbred to work with him,” says an oil expert, who asked to remain anonymous because he has close ties to the ministry. He thinks Buhari’s decision to oversee oil is the right one. “Let us wait. I think the wait is promising."

Since taking office, Buhari has already starting a major NNPC overhaul: He sacked the entire board, appointed a new managing director, announced a probe into accounting practices, and split the the company into two entities that are easier to watch. (Buhari says he may break up the firm further in 18 months to improve efficiency.) 

Some critics say the constitution forbids a sitting president to hold another public office. Others claim that reforming oil in Nigeria is a distraction from presidential duties. 

Garbu Shehu, the president’s spokesman, counters by saying that Buhari’s reform efforts are creating fear among many “briefcase-carrying crooks because they know that Buhari is not a dealmaker.” 

Follow the money

Buhari’s main focus appears to be the pursuit of missing oil funds. In his independence day speech on Oct. 1, he spoke about the prosecution of those involved in misappropriation of funds relating to the NNPC.

The next day Alison-Madueke was arrested. News of the former oil minister’s detention in London sent shockwaves through Nigeria. Part of the surprise was news that she was part of a joint British-Nigeria probe, something rarely seen in Nigeria where corrupt acts by politicians are rarely investigated.

Local investigations into Alison-Madueke’s conduct as oil minister, for example, have yielded little result. After she left office, the new government said that between 2012 and 2015, some $19 billion in oil revenue is unaccounted for.

Many Nigerians see her arrest as part of Buhari's clean up. Mr. Etiosa, the journalist, says he is happy the arrest happened in the UK rather than in Nigeria, where she could more easily escape the law.

Moving forward, a critical question is whether the arrest of the former oil minister is the beginning – or the end – of Buhari’s NNPC probe. Etiosa says there are many other figures who need to be brought to justice.