*Entrapment of oil firms and evidence against them
*Arraignment of suspects and growing spectre of conflict of interest

Last week, the Economic and Financial Crimes Commission, EFCC, arraigned some directors of some firms allegedly involved in the allegedly wrong collection of claims.  This week’s report will show that whereas an investigation into such a monumental fraud was indeed desirable, the Federal Government of Nigeria may have embarked on a fool’s errand in its approach by going through the needless process of instituting committees to, in the words of the redoubtable Attorney General of the Federation and Minister of Justice, Mohammed Adoke, SAN, fine-tune what the EFCC is doing. “It is complementary to the EFCC report as well as that of the House of Representatives”. As the trial continues, the magnifying spectre of scandals within a scandal is bound to grow.

By Jide Ajani

True or false: At trying times like this, could being the son of the incumbent or former national chairman of the Peoples Democratic Party, PDP, guarantee a bail concession by the courts – without qualms?

For the Attorney-General of the Federation and Minister of Justice, Mohammed Adoke, SAN, his decision to lead the prosecution of alleged subsidy thieves may be no more than an attempt to burnish his image after serial flips and flops on the approach of the Federal Government to the House of Representatives’ report of its investigation into the subsidy management scam.

Fresh information made available to Sunday Vanguard last week suggests that the now infamous sting operation involving President Jonathan’s Economic Management Team member, Femi Otedola, of Zenon Oil and Gas, was indeed meant to “sting the House of Representatives.”

A very dependable source with deep insights into what went down between Otedola and Hon. Lawan Farouk, Chairman, House Committee on Management of Subsidy Funds, informed Sunday Vanguard that “the reason why it took a while before the bribery scandal broke out is because the outcome was supposed to be used to cage members of the House and stop its leadership from continuing to be irritants on the executive branch”.

The source, however, made it clear that the motive was “without prejudice to what may have transpired between Hon. Farouk, as well as some members of the committee and those they were supposed to have probed.”

It was because of this agenda that some senior members of the administration made conflicting statements regarding the status of the report of the House investigations.

For Adoke, moving from statements suggesting that the House report was a mere report, to one that lacks credibility, one that had been compromised, to one that is now being complemented by another committee, he wants to be the star actor in the prosecution to “demonstrate that government is committed to nailing the subsidy thieves”, a source hinted.

There is a whiff of attempted seriousness on the part of the authorities and that would be in the event that sincerity takes a front seat in the case. But if the very first day of proceedings is anything to go by, with an adjournment some three months away and bail granted a few of the alleged thieves, Nigerians should be ready for a long season of anomy.  Yet, the total sum of money allegedly illegally obtained by all those arraigned last Wednesday is just in the neighbourhood of N20billion.

Those who were docked include Mahmud Tukur, son of Alhaji Bamanga Tukur, the incumbent chairman of the Peoples Democratic Party (PDP), Maman Nasir Ali, son of Ahmadu Ali, former chairman of PDP, and Abdulahi Alao, son of an Ibadan based business man, Alhaji Azeez Alao-Arisekola. The three of them were granted bail but Arisekola-Alao’s son, Abdulahi, will not enjoy his freedom until he is granted bail in his second case before another judge, Justice Habeeb Abiru. Two others who were also arraigned are Ochonogor Alex and Abdulahi Alao.

SUSPECTS—From right: Fuel subsidy scam suspects, Mahmud Tukur, Abdulahi Alao, Mamman Nassir Ali and Economic and Financial Crimes Commission (EFCC) official, during the suspects’ arraignment at the Ikeja High Court, Lagos, yesterday. Photo: Bunmi Azeez.

OIL MARKETERS ENTRAPPED
On December 24, 2010, a letter of undertaking was reportedly prepared to be signed by all Oil Marketing and Trading, OM&T, firms.

Dubbed Request for a notarized Letter of undertaking on accuracy of petroleum products supply and evacuation records at the depots nationwide, all OM&Ts were compelled to sign the document.

The letters of the document as obtained by Sunday Vanguard reads:
“That the directors of the company are conscious of the need for accuracy of records on Shore tank discharge figures, supply and distribution data from their Depots and undertakes that any misrepresentation of fact on Shore tank report/documents emanating from their depots with the intent of making falsehood claims from the subsidy fund will render the directors liable for prosecution and such depots be outrightly confiscated by the Federal Government for Auction”.

Whereas some OM&Ts resisted – and in some instances some even called their godfathers to prevail – they all were compelled to sign at the end of the day.

THE ALMIGHTY CHECKLIST
Even before the advent of the ‘no tarized Letter of undertaking’, a number of requirements for every importer had been approved.  The requirements are very stringent and, therefore, can only be breached with the connivance of the field operatives along with other government appointed agents.

Made up of a long list of 39 conditions and documentation, it reads:
PPPRA CHECKLIST FOR IMPORT DOCUMENTS
1.Original PPPRA Import permit
2.Evidence from the Bank showing the amount paid on the Transaction and quantity verifiable with Central Bank of Nigeria (CBN)
3.Letter of Credit for the Transaction/Bill of collection (Bill of Exchange)
4.A final Invoice relating to the Transaction
5.Witness page
6.PPPRA approval page
7.Guarantee page
8.Notification of nomination of vessel
9.DPR import permit
10.Marine insurance
11.Form M
12.Proforma invoice
13.Bill of lading – (Mother Vessel)
14.Certificate of origin – (Mother Vessel)
15.Cargo manifest – (Mother Vessel)
16.Ulage Report (port of origin)
17.Certificate of quantity (load port)- (Mother Vessel)
18.Certificate of quality (load port)- (Mother Vessel)
19.Notice of readiness (load port)- (Mother Vessel)
20.Vessel Ulage report on arrival before discharge to shuttle vessel
21.Vessel Ulage report after discharge (ROB) of Mother vessel
22.Vessel’s survey report after loading (mother vessel & shuttle vessels (if any)
23.Vessels survey report before discharge (mother vessel and shuttle vessels (if any)
24.Time log of discharge (statement of fact)
25.Vessel experience factor
26.Tank inspection report
27.Bunker survey report
28.Cargo pumping log
29.Letter of protest (if any)
30.Notice of readiness at discharge port
31.Transfer of Certificate
32.Certificate of quality at discharge port
33.Certificate of quality at discharge port
34.Shore tank report
35.DPR vessel report
36.Nigeria Customs Service clearance
37.Nigeria Navy clearance
38.Letter of Affirmation of discharge from depot of discharge
39.    Covering page on company’s letter head showing detail of transaction
Now, in a country where systemic failure is second nature, these 39 requirements on their own make the issue of false claims tantamount to the biblical passage of a camel through the eye of the needle.

CONFLICT OF INTEREST BROADENS

The Presidential Committee on Verification and Reconciliation of Fuel Subsidy Payments led by Mr Aigboje Aig-Imoukhuede revealed that 21 companies that benefited from subsidy payments were found culpable of fraudulent claims.

Aig-Imoukhuede said out of the N422 billion earlier found to have been unaccounted for, N18 billion was actually a duplication while only N403 billion was verified.

N21 billion was cleared, leaving N382 billion as the sum in contention, the basis for which the committee recommended that the process of recovery should be made.

A total of 116 Oil Marketing and Trading companies (OM&Ts) that participated in the petroleum subsidy scheme in the period under review were invited for interviews.

Six categories of issues, likely fraudulent cases for criminal investigation – you have 21 OM&Ts affected.
Though Aig-Imuokhuede, in his presentation while briefing State House correspondents last week, made the point clearly, asking if it is “likely that we can recover the sum of N382 billion in a process like this”, just as he pointed out that “it will be naïve to think that we can recover the whole amount. The most important thing is that the State diligently pursues recovery to its logical conclusion. At the end of the day having exhausted all means at its disposal, I think the people of Nigeria will know that justice has been done,” he said.

In fact, some are already asking questions whether the arraignment of the sons of a few powerful Nigerians constitutes seriousness.

For instance, arraigning Mahmud Tukur, son of the Peoples Democratic Party, PDP, chairman, Alhaji Bamanga Tukur, does not in any way speak to seriousness because the case is just about to begin.  The senior Tukur was imposed on the PDP by President Goodluck Jonathan at the party’s national convention on March 24, 2012 – against all odds.

How his son is now being arraigned and expected to be convicted is one outcome Nigerians are eagerly waiting for – conviction is what Nigerians are waiting for.  Therefore, Nigerians would wonder whether whenever Tukur meets with President Jonathan the talk about the case involving his son would not be on the table, especially as Adoke is insisting that he would personally take charge of the prosecution.

More importantly, the allegation of the role of banks in the aspect of capital flight is yet to be tackled.
Before the commencement of the probe by the House, sources familiar with the operations of the subsidy scheme disclosed to Sunday Vanguard “the need to look very closely at the roles played by banks and the lack of supervision on the part of the Central Bank of Nigeria.  And that is why some industry players were quick to frown at the choice of Aig-Imuokhuede.

For one of the players, “Aig-Imuokhuede is a super banker and a very thorough individual; nobody is in doubt about that; but when you say as a bank chief executive, who runs a bank that played a major role in facilitating business connected to financing importation of the product in question, Nigerians would definitely raise eyebrows.

“It is like the Managing Director of   HSBC, being appointed to verify claims of business which were financed by banks generally or asking the board of Barclays Bank to play a leading role in investigating the LIBOR scandal in London which forced the resignation of the Managing Director of Barclays Bank in Britain.  Wouldn’t that be laughable and wouldn’t it create a massive dose of conflict of interest?”

At one of the meetings held, it was on the basis of the petition by marketers to relevant government authorities for review of the template to provide for a review of the following cost elements:

i Traders margin @ $15/MT
ii Exchange rate @ N151.00:$1.00
iii Port charges @ $15/ton
iv Finance cost @ $16.70/ton
v. Freight rate @ $27.75/ton
(As at 22nd January, 2009)

Therefore, following the instruction from the Office of the Honourable Minister of Petroleum Resources, that the PPPRA should immediately address the Marketers complaints, a meeting was held on Thursday, January 29, 2009, wherein all the stakeholders were in attendance.

A communique was drawn at the end of the meeting seeking to address the complaints of the OM&Ts and immediately forwarded to the Honourable Minister of Petroleum.

The new template which took effect from February 1, 2009, reads:
Freight rate 2009 world scale flat rate of $17.91/MT applies
Finance cost 7.07% LIBOR for 30 days plus, 60 days subsidy reimbursement @ 22%
Port charges $10.5/MT applies
Exchange rate CBN marginal rate + 2% forex charge
Traders margin $10/MT
Standard deviation As applicableLightering expenses 5 days @ $28,000/day mother vessel (MV) Shuttle vessel (SV) N2/litre and N2.50/litre for Lagos & Port Harcourt respectively plus 10 day @ $28,000/day for MV.
Products loss 0.3% of C-F

Jetty- Thru-put N0.80/litre
Sunday Vanguard learnt that “a lot of technical and documentation issues” that were not clear to the chairman of the committee as argued by the Regulator and industry experts were adjudged to be unproven transaction worthy of refund” Similarly, asking the marketers to refund money to government on the basis of regulatory and pricing decisions of stakeholders done in line with the Act of the National Assembly is akin to a Greek gift to government and a subterfuge for failure in any legal attempt to recover such funds.

There are also allegations of shoddiness on the part of the committee regarding some major OM&Ts that were cleared of blemish. Mercifully, an official of the PPPRA is being arraigned.  But industry experts query why the other field officials from other colluding agencies are not being arraigned along with the PPPRA field operatives such as DPR, Navy, Customs, NPA?

Is it not also possible, for instance, to make public the list of directors of companies and banks that participated in the PSF scheme with a view to actually locating who used what position to get what, where, when and why?  That is already known because the objective was to commit fraud.

In addition, are those being tried now just the only ones who benefited from the scheme wrongfully?

What about the banks and the CBN which allegedly lost oversight control regarding thorough verification of LETTERS OF CREDITS which the banks opened?

Interestingly, Sunday Vanguard was made to understand that “at the committee level, information was provided to the Aig imouekede committee that the auditor was only required to sign the witness page of the imported vessel documents submitted for claims and not the shore tank certificate. This argument was further supported with the fact that the auditor whose signature was queried as omitted on the field was the one that approved the final subsidy.  The import of this is that Nigerians are being set up for what may turn out to be a show trial”.

For the allegations to stick, Sunday Vanguard was told that “one of the very first steps pursuant to making progress is to carry out a thorough forensic investigation into the step by step requirements from the point of the first condition on the checklist, which is the possession of a genuine, Original PPPRA Import permit, to the Covering page on company’s letter head showing detail of transaction.

Again, answer the question: True or false: At trying times like this, could being the son of the substantive or former national chairman of the Peoples Democratic Party, PDP, guarantee for you a bail concession from the courts – without qualms?