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Nigeria’s umbrella body of civil society organizations is
concerned that transparency and accountability are still far from apparent in
the country’s extractive industries. The group is particularly worried that the
country has lost its way and momentum in its progress toward receiving
validation in the Extractive Industries Transparency Initiative (EITI)
implementation exercise due to take place next month.

The Executive Director, Civil Society Legislative Advocacy
Centre (CISLAC), Auwal Musa Rafsanjani, told NEXT in Abuja that the way things
are playing out at NEITI’s secretariat in recent times, is a source worry for
most civil society groups in the country. According to him, internal wrangling
between top officers of the secretariat has turned the place into “a notorious
centre for corruption”, pointing out that the crisis has called into doubt the
country’s commitment to implementing the EITI principles.

“The Civil society organizations are incapacitated, because they
are not sufficiently mobilized to effectively engage the NEITI process based on
knowledge. The current leadership in NEITI has not shown sufficient zeal,
commitment and interest to get the EITI principles implemented in the country.
They have not been able to follow up on the progress recorded with the two
industry audits in 1999 and 2004, because of lack of commitment,” Mr.
Rafsanjani said.

The CISLAC boss, who said his organization is planning a
publication, “Gaps between commitment and implementation: Civil Societies’ assessment
of the performance of NEITI”, to show how ineffective NEITI has become, said
“the inability of NEITI management to assert itself and demand accountability
from erring companies has been the main reason why a lot of things have been
swept under the carpet in recent times.”

Corruption in the
Secretariat

Two weeks ago, the media was awash with reports of corruption
charges against some top NEITI officials involving illegal allowances running
into over N15 million.

The former Director of Services, Stan Rerri, who withdrew his
services from the agency last June in controversial circumstances, accused the
erstwhile Executive Secretary, Haruna Sa’eed, of abusing his office by
receiving a “double salary for over 12 months” from the both United Kingdom Department
for International Development (DFID) and the Federal Government.

In a petition No. NEITI/ PETITIONS/DS/01 dated August 10, 2010
to President Goodluck Jonathan, Mr. Rerri alleged that he was victimized by the
NEITI Board, which he said declared his office vacant when his appointment was
yet to be terminated, for blowing the whistle on Mr. Sa’eed’s corrupt
activities.

The Federal Government, through letter No. SGF.19/S.52/C.3/T/75
of August 9, 2010, signed by the Secretary to Government of the Federation
(SGF), Mahmud Yayale Ahmed, ordered the removal of Mr. Sa’eed as Executive
Secretary of NEITI for what they said was “in the public interest”.

The crisis between the two officials, NEXT investigations show,
is rooted in a power tussle, which resulted in the setting up of a five-member
committee to investigate the handling of the 2009 Civil Society training
programme following reports of discrepancies in payment records, abuse of due
process in the disbursement of funds and general administrative lapses in the
secretariat.

The committee, which uncovered procedural breaches in the
procurement processes allegedly supervised by Mr. Rerri, said in its final
report that: “There was a very clear case of over-inflated hotel rates, for as
much as 100 percent on line items.”

“The meeting room rate (in Homegate Resort, Lagos used for the
programme) was N115,000, inclusive of VAT (value added tax), and service charge
on the tariff collected, yet NEITI was invoiced N150,000 for the meeting room,
exclusive of VAT and service charge”, the report said. “There was absolute
leadership failure at the NEITI Secretariat. There are clearly account
management lapses in the NEITI system, which resulted in a loss of over
N500,000 from the transaction,” the report went further to note.

As a result of the committee’s report, the Procurement Officer,
Tony Onyekweli, who handled the bookings for the venue for the workshop, and
the Accountant, Sunkanmi Adeoti, who disbursed the N15million used for the
programme, were discharged from their posts for “collusion, forgery, and
non-adherence to due process standards in policy formulation and implementation
of monetization policy convention.”

But, Mr. Rerri described the committee as a “fraud and a hatchet
body used as a pretence to kick people out,” saying “My petition to the
President was based on facts. Board members collected money. Records bearing
their signatures and the amounts they collected are there for all to see.
NEITI, as an institution that has transparency in its name, should not tell
lies.”

Worries over validation

NEITI Chairman, Assisi Asobie, refused to speak on the matter,
saying providing answers to questions concerning corruption charges against the
sacked officials as well as allegations of general laxity in the management of
the agency would touch on the official explanations on the issue sent to the
Presidency in response to the query issued.

Mr. Asobie was also not ready to grant a formal interview on the
activities of the NEITI in respect of the forthcoming EITI validation exercise,
saying doing so would jeopardize the process and compromise the official
documentation in the final validation report submitted by NEITI on July 1 to
the EITI Board ahead of the review exercise scheduled for Dar es Salaam,
Tanzania next October.

“There is nothing like a deadline for validation. The true
position is that all candidate countries that have not been validated,
including Nigeria, were given July 9, 2010, which has since passed. There is no
new deadline. But, the EITI Board is meeting in October to take a report of the
Validation Committee,” he said.

The Managing Partner of S.S. Afemikhe & Company, the
Nigerian auditing firm that participated in the two previous oil and gas
industry audits conducted so far by NEITI, Sam Afemikhe, told NEXT that since
those exercises, Nigeria has made sufficient progress that would stand it in
good stead for the EITI validation.

According to Mr. Afemikhe, considering the situation before
NEITI, when the oil industry was relatively opaque, the industry is opening up
today, even more rapidly than in developed societies, pointing out; “today,
everything is in the open. One would visit websites and see operational
processes and actual figures and data about oil companies’ operations, which
was not the case before.

“The 2006 and 2008 audits are in progress. All parties,
including the National Stakeholder Working Group (NSWG), are very supportive.
Nothing has changed, in terms of NEITI’s capacity to discharge its functions,
as far as the auditors are concerned. There is good progress in what is going
on. If the validation was supposed to be based on whether the audit is going
well, then there would be no hesitation to say that there is no issue for
Nigerians to fear anything,” he said.

Despite this vote of confidence, the industry is still grappling
with problems of how to get certain institutions like the Nigerian National
Petroleum Corporation (NNPC) to adhere to the basic EITI principles, which are
founded on the ethics of prudent management and use of natural resources, not
only for the benefit of the citizens but also for the promotion of sustainable
national socio-economic growth and development as well as poverty reduction
through a commitment to openness, transparency, and good governance.

Till date, the corporation is still unable to reconcile the
discrepancies uncovered in the 2004 and 2005 audits, and owes the Federal
Government N450 billion .

The National Coordinator, Publish What You Pay (PWUP) Nigeria,
Faith Nwadishi, said recently that it is illegal practices by institutions like
the NNPC that are undermining efforts by Nigeria to entrench transparency and
accountability in its extractive industry. “Why are we still talking on the
reconciliation of discrepancies in the 2005 audit report when we should be
talking about the 2008 report,” Ms. Nwadishi said, adding that it is issues
like this that show how unserious the government is with the commitment to get
EITI validation.

Nigeria in EITI

Nigeria, which signed to commit to EITI in November 2003,
launched the Nigeria EITI (NEITI) in February of the following year, followed
by a Bill to the National Assembly in December of the same year, to provide the
legal backing to the work of NEITI.

To demonstrate its commitment to meeting some of the EITI implementation
indicators, the first set of financial, physical and process audits for the
country’s oil and gas industry covering 1999 and 2004 was undertaken by a
consortium led by the London-based Hart Group in conjunction with a Nigerian
auditing firm, S.S. Afemikhe and Company.

With publication of the audit report, which identified several
weaknesses related to the management of oil revenues as well as poor governance
issues, an Inter-Ministerial Task Team (IMTT) put together a comprehensive
remediation action plan for implementation by the government.

The remediation plan covered five key areas: developing a
revenue-flow interface among government agencies; improving Nigeria’s oil and
gas metering infrastructure; developing a uniform approach to cost determination;
building human and physical capacities of critical government agencies; and
improving overall governance of the oil and gas sector.

With the passage of the NEITI Act on May 28, 2007, Nigeria
became the first EITI-implementing country with a statutory backing, while the
country was accepted as an EITI Candidate country on 27 September 2007, with
its final Validation report sent to the EITI Validation Committee on May 5,
2010, ahead of August 2010 deadline for the submission of its final report. The
deadline for Nigeria’s validation is September 9.

Nigeria is one of 28 EITI Candidate countries that would undergo
validation process to be listed as EITI Compliant country. Other Candidate
countries which have validation deadline ranging variously between September 9
and March 9, 2011, include Afghanistan, Madagascar, Albania, Mali, Burkina
Faso, Mauritania, Cameroon, Mongolia, Central African Republic (CAR),
Mozambique, Chad, Niger, Côte d´Ivoire, Democratic Republic of Congo, Norway,
Gabon, Peru, Ghana, Republic of the Congo, Sierra Leone, Iraq, Tanzania,
Kazakhstan, Yemen, Kyrgyzstan Republic, Yemen and Zambia.

Only three countries – Azerbaijan, Liberia and Timor-Leste – have so far
achieved EITI Compliant status.