December 10, 2008

Obasanjo’s role as petroleum minister illegal – Reps

A report of the House of Representatives ad -hoc committee that probed the oil sector from 1999 to 2007 has said that former President Olusegun Obasanjo held the position of Minister of Petroleum illegally.

It says his action breached Sections 138 and 147 (2) of the 1999 Constitution and raised serious questions on due process of the oil bloc bid rounds conducted by his administration.

The report, therefore, recommended that the Economic and Financial Crimes Commission, the Independent Corrupt Practices and Other Related Offences Commission and the Police should investigate those whose activities led to fraud when the bids were conducted.

Government reportedly lost hundreds of millions of dollars in Signature Bonuses from oil bloc bids during the Obasanjo administration.

Part of the money, if recovered, will be used to fund the over N1tn deficit in the 2009 budget.

Investigations by our correspondents showed that the panel’s report was ready for submission to the House last Tuesday, but was shelved because of the budget presentation by President Umaru Yar’Adua.

The 25-member ad- hoc committee, chaired by Mr. Igo Aguma, blamed the irregularities largely on Obasanjo who, it said, illegally occupied the office of the Minister of Petroleum Resources.

The committee observed that by appointing himself a minister, the former President contributed largely to the shoddy bid rounds that characterised his tenure in office.

Section 138 of the 1999 Constitution states: “The President shall not, during his tenure of office, hold any other executive or paid employment in any capacity whatsoever.”

Section 147 (2) states, “Any appointment to the office of Minister of the Government of the Federation shall, if the nomination of any person to such office is confirmed by the Senate, be made by the President.”

Obasanjo never submitted himself to the Senate for screening as petroleum minister, let alone being confirmed in any form.

According to the committee, Obasanjo never directly interfaced with the bid processes, but related with his aides who might not have received his approval on all their actions.

It said that, without a constitutionally recognised minister in charge of the petroleum sector during Obasanjo years in office, the “legal due process of the bid rounds” was undermined.

Further, it cited Section II of the Petroleum Act to buttress its position.

However, two of Obasanjo aides who appeared before the committee said that they received all instructions from Obasanjo who was also the Minister of Petroleum.

The distortions in the bid rounds, the panel said, led to staggered payment of signature bonuses, some of which had been outstanding since 2001.

It said that in many cases, bid winners never paid the specified amount owing to “preferential treatment of winners at the conclusion of the bid rounds.”

The committee consequently demanded the full recovery of the revenues lost during the bids.

THE PUNCH had earlier reported that debts owed by the 16 oil firms (names withheld) involved in bid round rackets resulted in staggered and preferential treatments amounting to $1.148bn or about N134.34bn .

The committee’s Recommendation, 17 in particular, states, “The various acts of reprehensible conduct exhibited by the administrators (of) the Bid Rounds should be thoroughly investigated by the relevant agencies (the police, EFCC and ICPC, with a view to prosecuting those persons whose actions and conduct were induced by improper motives.”

The panel cited the case of a multinational firm, which won OPL 250 and paid only $75m signature bonus instead of $200m due to the distortion of the guidelines for the bid rounds.

It said, “The ad -hoc committee, therefore, recommends that signature bonuses must be paid in full at the time of the execution of the Production Sharing Contract.

“Even though this field (OPL 250) has been abandoned , the signature bonus balance of $125m should be recovered.”

The committee added that all outstanding signature bonuses should be recovered “subject to the express provisions of the PSCs, from the winners of the blocs who are in default of payment within a reasonable time but not exceeding 60 days from the date of this report.”

It said, “At the expiration of that time frame, the award should be revoked regardless of whether or not the blocs are either in development or production as non-payment of signature bonus is a breach of the fundamental condition for the award of the bloc. Such blocs should be returned to the basket.”

In addition, the panel directed that after recovering such funds, they should be audited to confirm whether they conformed with the true value, “identify and confirm any diverted payments; identify any acts of criminality and fraud in the process.”

The report identified the 2004 bid rounds and marginal field awards as one of the most-distorted. It said the officers charged with the duty of administering the bids and the minister of petroleum “who was in fact, the (then) President,” could not interface appropriately.

Stressing the anomaly of Obasanjo acting as a minister, it said, “The political buffers, namely the Presidential Adviser and the Special Adviser, Petroleum, interfaced between these officers and the minister.

“The officers did not have the opportunity of independent and or direct ministerial confirmation of actions that distorted the system.”

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