AC Vol 41 No 21
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www.africa-confidential.com 27 October 2000 Vol 41 No 21 AFRICA CONFIDENTIAL NIGERIA I 2 NIGERIA Power and greed Privatisation is keenly favoured by High street havens foreigners and for different reasons The search for Abacha’s stolen money has led to several major by Nigeria’s business class. Western banks and is at last forcing their governments to act President Obasanjo’s sell-off plans are gathering steam but donors Investigators pursuing some US$3 billion of funds stolen by the late General Sani Abacha’s regime complain of delays and worry about between 1993-98 have established that the cash was deposited in more than 30 major banks in state favouritism. Britain, Germany, Switzerland and the United States without any intervention from those countries’ financial regulators. The failure of the regulators to act even after specific banks and NIGERIA II 3 corporate accounts were named in legal proceedings in Britain and congressional hearings in the USA points to a lack of will by Western governments to crack down on corrupt transfers (AC Vol Oduduwa’s children 40 No 23). Quarrels between different departments - with trade and finance officials trying to block any public disclosure of the illicit flows - delayed government action. None of the banks named so President Obasanjo’s efforts to reestablish the nation are at risk far as accepting deposits from Abacha’s family and associates - Australia and New Zealand from violence involving its two Banking Group, Bankers Trust, Barclays, Citigroup, Goldman Sachs, HSBC, Merrill Lynch, biggest ethnic groups, the Yoruba National Westminster Bank and Paribas - have been formally investigated nor had any disciplinary and the Hausa-Fulani. The latest action taken against them. outbreak began in the Middle Belt It was not until this week, more than two years after Abacha’s death, that Britain’s Financial city of Ilorin. Services Authority announced an investigation into how its money laundering controls had failed to block the flow of stolen Nigerian state funds through the City of London. This is several months after LIBYA 5 a formal request for assistance was made by Nigerian government investigators. Similar requests have been made to the German, US and Swiss authorities but so far only the Swiss have responded Gadaffi’s prime time by setting up their own investigation. The bulk of the $3 bn. is reckoned to be in Switzerland, some Rarely has Colonel Gadaffi looked of which has passed through the accounts of the Swiss affiliates of multinational companies. so secure. US politicians accept an end to sanctions is inevitable, Doublethink in the G7 the Islamist insurgency has diminished and oil sales will yield a The Abacha loot saga is particularly embarrassing for Western governments critical of corruption bumper US$11 billion this year. in Africa. The rich countries club, the Group of Seven, meeting in Okinawa, Japan in July, demanded tougher controls on money laundering in states such as the Bahamas, Israel, Lebanon, Panama, the Philippines and Russia. Other countries and principalities such as Monaco, ANGOLA 6 Luxembourg, Liechtenstein, and Switzerland were singled out for lax controls on money laundering Going straight - and for operating tax havens. Yet almost nothing was said by G7 officials about the use of pukkah Western banks in Europe and North America to launder stolen state funds and drug money. again Last December, President Olusegun Obasanjo’s government convinced the Berne authorities to Is President Dos Santos’ investigate accounts set up by Abacha and his allies, and a team of investigators started compiling government serious about dossiers documenting the flow of funds from Nigeria to Switzerland and London. One result is that economic reform at last? Luanda Switzerland’s reputation as a safe haven for stolen funds is collapsing. That’s what Berne had sought officials say yes, pointing to new to avoid by cooperating with what it had hoped would be a controlled inquiry. Switzerland could Finance Minister Julio Bessa and encouraging noises from the IMF. now be a double loser: crooks and despots will no longer trust the legendary discretion of Swiss banks and its financial regulators will be exposed again as encouraging illicit funds. The investigation has led to the Frankfurt, Geneva, London, and New York and offices of several RWANDA/CONGO-K 7 major international banks. The Swiss and Nigerian team’s progress, and detailed revelations in the London daily Financial Times have prompted the British government to take a more high-profile Conditional offers stand on the matter. Although the British Foreign Office and Secret Intelligence Service have The Maputo summit on Congo- discreetly helped the Nigerian-Swiss investigation, we hear that officials in the British Treasury KInshasa failed to win agreement were less keen, insisting they could not act against indivdual account holders unless charges were from the two main rebel groups. laid in Nigeria. And bankers feared more damage to the City of London’s reputation and the loss of lucrative private inflows. Whitehall has now committed to making London-based banks POINTERS 8 cooperate with the probe. Côte d’Ivoire, Germany and the USA have criticised Switzerland, Luxembourg and Liechtenstein for encouraging tax evasion through their private banking facilities and lax controls: now the Abacha saga has Zimbabwe and UK/ rebounded on Berlin and Washington as their banks and companies are linked to the money Africa laundering schemes. 27 October 2000 Africa Confidential Vol 41 No 21 Power and greed Privatisation is keenly favoured by the international community and based Dangote Industries (with no record in cement making), - for quite different reasons - by Nigeria’s own business people. middle-belters from Benue accused Vice-President Abubakar of President Olusegun Obasanjo’s privatisation plans, although behind promoting Hausa capitalism and the interests of Aliko Dangote, schedule, are gathering momentum as an expensive government the successful company’s owner. roadshow tours Western capitals, wooing foreign investors. With the sale of the local oil marketing companies, most of the Donor officials complain of delays, and worry about state first phase of privatisation is over. The second phase includes favouritism. But a Western banker told us: ‘. Obasanjo is trying insurance companies, vehicle assembly plants and newspapers, and to do the right things while the Bank and the Fund have become a real is several months behind schedule, partly because of attempts to problem in Nigeria’. The critics tend to ignore the fact that, after counter allegations of regional favouritism. Several of the firms decades of government interference, the sale of state companies is are already privately managed and should go to buyers with heavily politicised. And now the cut-throat competition among the preemptive rights. business elite is starting to look like a battle. The third phase, due to start next month, includes the biggest and The key figure, attracting equal praise and blame, is Mallam Nasir most discredited of the public entities: the National Electric Power Ahmad el-Rufai, Director General of the Bureau of Public Enterprises Authority (Nepa), Nigerian National Petroleum Corporation (NNPC) (BPE). Rufai, aged 40, is a quantity surveyor whose family runs and Nigerian Telecommunications (Nitel). Rufai has persuaded the successful businesses in Lagos. He worked on public sector reform politicians to give his bureau funds to speed up the sales, and the under Obasanjo’s predecessor, General Abdulsalami Abubakar, World Bank and bilateral donors are offering extra resources. He and was reluctant to stay in government service. He doesn’t blame has managed to fight off most of the economic nationalists who Nigerians for cynicism, but insists the privatisations are open to any railed against foreign investment in telecoms and power, and the public scrutiny. He answers to the National Council on Privatisation, government bigwigs who want to continue appointing directors and headed by Vice-President Atiku Abubakar. Rufai’s problems were awarding contracts to friends. But Rufai must still disprove charges illustrated recently, in the bidding for two large companies. of managerial inexperience. The government offered for sale its controlling stake in a big The toughest job is to establish procedures and workable petroleum products firm, National Oil and Chemical Marketing timetables. A national telecoms policy has been published, but Company (Nolchem), a former affiliate of Royal Dutch Shell. Nigerian there is still no new telecoms law. Rufai has asked a consortium of investors in Petrochem, a local oil marketing company, accused Rufai foreign and Nigerian consultants headed by Booz Allen Hamilton of favouring South Africa’s Engen, whose bid of 25.20 naira per of the United States to propose new laws; he assured last week’s share was far below four rival bids - but, said the critics, would be Nigerian Economic Summit in Abuja that Nitel would be ready for favoured on ‘technical and managerial considerations’. sale next March. Obasanjo’s chief economic advisor, Philip The suggestion was that policy-makers in the National Council on Asiodu, has promised there would be three new cellular phone Privatisation (NCP) had hidden motives for favouring Engen - either operators by the end of this year. that its Malaysian majority shareholders had a record of buying Electric power is further behind; the power policy and a power African assets cheap, using unorthodox negotiating techniques; or bill are to be drawn up together, helped by Britain’s National that the government wanted to increase its oil sales to South Africa. Economic Research Associates. Asiodu said that electric power They complained that they got only one hour each for their face-to- had already been deregulated, with the Lagos state government face negotiations on 20 October, and that the chairman of the United negotiating directly - against the advice of the World Bank - with Bank for Africa, Keem Belo-Osagie, was brought in at the final stage foreign contractors such as Enron, of the US.