Corruption's Relentless Foe

Nigeria's president Olusegun Obasanjo has made a solid attack on corruption. Now he says follow-up is everybody's job.

At a conference of Transparency International in Berlin November 7, President Olusegun Obasanjo of Nigeria declared that his country would be openly publishing the revenues it receives from its oil industry.

President Obasanjo stated his support for the principles of the NGO-led campaign, "Publish What You Pay," saying that the public could be forgiven for not having confidence in revenue figures if only one side of the equation were published. Therefore, he said Nigeria will require companies to publish their payments as well.

With this commitment, Nigeria became the first nation to officially participate in the Extractive Industries Transparency Initiative (EITI), which U.K. Prime Minister Tony Blair launched in June 2003.

Peter Eigen, chairman of Transparency International, said: "We are delighted that the President honored us with his presence at the 10th anniversary of our organization, of which he was himself a founding member and for several years chairman of our Advisory Council."

ChevronTexaco immediately announced its support for the commitment. "As a company with a long history of operations in Nigeria, we are fully supportive of the President's bold move to tackle such a difficult issue as transparency and good governance," said chairman Dave O'Reilly." The move was also welcomed by Chris Finlayson, chairman of the Shell companies in Nigeria, who was in Berlin to attend the press conference.

David Murray, deputy chairman of Transparency International (U.K.), added that "We hope other governments, especially where natural resource riches sit alongside extreme poverty, will follow Nigeria's good example and require this degree of fiscal openness."

Reforms Underway
To many, the commitment to transparency in oil revenues by Nigeria appeared ironic, if not laughable. Nigeria is regularly classed as the second-most corrupt country in the world, narrowly missing bottom honors which go to Bangladesh. But a closer look at the situation and the background of President Obasanjo reveals perhaps the strongest effort anywhere to combat corruption.

During his first term beginning in 1999, he made a solid attack on corruption in the Nigerian federal government. He has continued since his reelection in April in a hotly disputed election.

Shortly after reelection, he removed federal subsidies to retail gasoline which raised prices and caused riots and strikes. Nigeria's oil refineries are unable to meet domestic demand so gasoline is imported and costly. It has long been heavily subsidized by the government--one of the few "perks" enjoyed by Nigerian citizens.

Now Nigeria has a program underway to achieve 45 percent local content in the oil and gas sector by 2006--not merely local ownership but also Nigerian participation in human and material terms. The aim is to ensure that not more than 50 percent of Nigerian crude will be exported, while the rest would be processed locally. Obasanjo has said that it is regrettable that 47 years after oil was discovered in Nigeria, the nation is contributing less than 20 percent local content to that vital sector.

Obasanjo has also begun a major reform in the oil and gas industry in a bid to ensure that revenue from this sector has a more meaningful impact on the lives of Nigerians.

The sector reform program includes the following:

  • Review of petroleum laws and the establishment of a statutory basis for comprehensively regulating oil and gas activity.

  • Balancing the interests of consumers, the environment, and operators.

  • Reviewing petroleum products marketing.

  • Reviewing gas laws.

  • Privatizing refineries.

  • Restructuring the Nigeria National Petroleum Corporation (NNPC).

  • A Holistic Approach
    Obasanjo is out ahead of the curve when it comes to needed next steps. He has challenged Transparency International to improve its system of corruption ranking. Rather than mere annual ranking of most corrupt countries in the world, he advocates that TI should publish a list of countries that encourage corruption. He also called on the governments of developed nations to evolve "enforceable sanctions" to be imposed on corporations and individuals by countries of origin for their involvement in corrupt practices abroad.

    In fact, at the Berlin conference, he suggested extending and strengthening Transparency International's Corruption Perception Index as well as evolving other indexes like a Corruption Encouraging Index, and a Corruption Reduction Index. "These three indexes," he noted, "would give the total picture of the campaign against corruption and corrupt practices, nationally and globally," adding that "only such a holistic approach will give us a realistic picture of the task that we have set for ourselves." According to Obasanjo, "TI must publish a list of countries that are encouraging in various ways, corruption and corrupt practices in other nations, receiving stolen funds, and keeping stolen funds."

    Obasanjo said the war on corruption will be stepped up through measures such as the adoption of the Extractive Industries Transparency Initiative, strengthening the Independent Corrupt Practices Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC), as well as establishing a Public Procurements Commission. He also disclosed that, come December, Nigeria would welcome signing the United Nations' Anti-Corruption Convention.

    Not Everybody Is a Believer
    The country's position ranking second among most corrupt nations has been a reference point for government critics who say that it confirms their belief that the Obasanjo administration has not gone beyond talk against corruption. Some attempting business as usual have been surprised.

    Nigeria's notorious confidence artists recently attempted to introduce counterfeit draft financial bills to sabotage plans for the more equitable sharing of oil revenues between central and regional government.

    After several versions were found to be in circulation, Obasanjo took an unprecedented step--asking senators to return their copies of the bill for verification. Though this caused widespread confusion, it thwarted a possible multi-billion-dollar fraud of government funds.

    "Once the authentic bill is ascertained it will be returned to you with my signature," Obasanjo said in a letter to parliamentarians.

    Who Is Obasanjo?
    Obasanjo was born in 1937, in southwest Nigeria. His family were middle-class Baptists and Yorubans, one of the four main ethnic groups in Nigeria.

    Clues to his chance of success lie in the depth and breadth of his life experiences. He is highly educated and experienced in the ways of the world, including diplomacy and the military--he even did a stretch in a Nigerian prison.

    After secondary school education in Nigeria, he attended military schools in England and India. He was a teacher briefly before joining the army in 1958. He had a 21-year military career, included serving in the UN peacekeeping mission in the former Zaire and commanding the 3rd Marine Commando Division during Nigeria's 30-month Biafran civil war (1967 to 1970).

    In 1975 he was appointed Works and Housing minister, later becoming chief of staff–supreme headquarters, and Nigeria's military ruler following the 1976 assassination of General Murtala Muhammad.

    In 1979 he presided over democratic elections, won by civilian northern politician Shehu Shagari. In doing so, Obasanjo became Nigeria's first military ruler to hand over power to a democratically elected civilian government. After Shagari was ousted from power in 1983, Obasanjo was critical of subsequent military regimes. Then in 1988 he founded the African Leadership Forum, based at his Otta farm.

    He almost became UN Secretary-General in 1991. However, in 1995 he was tried for plotting a coup against military leader General Sani Abacha and sentenced to life in prison. This was later commuted to 15 years after pressure from friends abroad, including South Africa's Nelson Mandela, former U.S. President Jimmy Carter, and former German Chancellor Helmut Schmidt.

    Released from prison after Abacha's death, he returned to politics. Opinions differ on why Obasanjo decided to run for president so soon after coming out of jail. His critics saw him as a pawn of the military elite--previous military rulers visited Obasanjo as he was considering running, and supported his campaign. His supporters consider him to be independent-minded. Obasanjo himself claimed to have "found God" while in prison, which gave him the strength to run for the country again. He was reported to have said that his mission was to restore Nigeria and defeat separatism.

    Obasanjo won his first presidential election in 1999 with 62 percent of the vote. His party, the People's Democratic Party (PDP), won about the same majority in the two houses of the National Assembly, state houses, and the state legislature. Obasanjo's rival, Olu Falae of the combined Alliance for Democracy/All People's Party (AD/APP), challenged the result in court, claiming that the PDP had bought votes, but actually had lost.

    The Chances for Success?
    The question is, with his impressive credentials and obvious abilities in the face of so much ingrained corruption, what are Obasanjo's chances of winning the crusade? One guess is: Surprisingly good.

    First, there is no downside to the attempt; things could hardly be worse for Nigeria.

    Second, he has a program for a "zero-corruption-tolerant Nigeria" and the experience to get it enacted.

    Third, the record so far is good. In his first term beginning in 1999, his government established measures that Obasanjo classifies in seven areas:

  • Open and competitive tender arrangements for government contracts.

  • A "due process" mechanism to vet contracts and eliminate excess fat.

  • "Massive" anti-corruption campaigns involving all public officials.

  • Reforms to reduce if not eliminate opportunities for corruption.

  • Focus on privatization and government licensing by auction.

  • Independent anti-corruption agency and an economic and financial crimes commission to increase exposures of poor governance and corrupt practices.

  • A policy and programs monitoring unit to follow up on presidential decisions, monitor programs, and build a comprehensive database.

  • Fourth, international governments and the international business community are now enthusiastic about transparency, and willing, it appears, to help. And help is sure to be needed.

    At the Berlin TI conference, Obasanjo emphasized the difficulty of early achievements. "…[W]hat is important here is that we had the courage to make these moves in a society where corruption had become almost institutionalized. Though there are enough laws in our books to take care of corrupt practices, we have been able to make these laws relevant and enforceable through reforms in the justice, police, prisons, and other related sectors."

    Help Wanted
    Now it is getting tougher. And Obasanjo says Nigeria needs support to meet the challenges ahead. Rather than criticizing Nigeria and classifying it as a corrupt nation, the international community should help, and first steps involve meeting two major challenges.

    First is institutionalizing the multitude of reforms in the public sector, internalizing them, and building ownership so they can survive changes in the political arena and political actors. Now Obasanjo says there is a "feeling in some quarters" that the Nigerian judiciary and legislature don't match the enthusiasm of the executive branch. There are positive signals, however, that Obasanjo sees in recent efforts of the chief justice to improve and "sanitize" court processes.

    Second, by the Nigerian constitution, state and local governments are not obligated to follow federal reforms. For now, only "moral suasion" can be applied to encourage transparency and accountability. This results in a perception that "transparency is a sliding scale, high at the federal level, low at the state level, and near absent at the local level." And it is at the root of this perception that corruption still is widespread. Legislation is under design in a Fiscal Federalism and Responsibility bill that Obasanjo hopes will address state and local corruption.

    But above all, Obasanjo says is the fact that Nigeria can't achieve this alone. The international community needs to play a key role: moving international businesses toward non-corrupt competition for markets and procurement in developing economies, and establishing global standards. This includes helping developing countries with technical and financial support they may require to adequately respond to the standards. Performance in this area needs to be monitored as well.

    It's a tall order. But Obasanjo foresees a day when companies and nations may find themselves listed in a Corruption Encouraging Index, a Corruption Perception Index, and a Corruption Reduction Effort Index--all contributing to a zero-corruption-tolerant world.