Corruption: The Only Thing That Works In Nigeria – The Economist
“WHAT HAVE YOU got for me this Sunday?” says the policeman, using his flashlight to tap on the window of your correspondent’s car at a roadblock in downtown Lagos, his AK47 dangling menacingly from one arm. Less than an hour earlier, an immigration official at the international airport had asked: “What have you brought me?” From the moment a traveller sets foot in Nigeria, he is confronted with the corruption that has afflicted the country for decades.
Nigerians are thankful for small mercies, and there has been some progress on fighting petty corruption. In the past travellers often faced harassment by policemen and officials if they refused to pay bribes, but your correspondent was told “you are welcome in Nigeria” whenever he politely declined to grease palms, including that of a guard at the central bank.
Several websites give victims a platform on which to complain. One such, stopthebribes.net, maps incidents of corruption. Another site, Nigeriapolicewatch.com, provided links to videos showing an armed and drunken policeman assaulting two young women that prompted an investigation by the inspector-general of police.
Yet even as petty corruption declined somewhat under the previous government, theft on a grand scale increased exponentially. “Under Jonathan everything was for sale,” says one local businessman. Although no one accuses Mr Jonathan of personal corruption, many mention demands for cash from those in his inner circle. One businessman says he was told, “don’t bring $20,000, bring $200,000.” One way to launder such loot was to buy property in Nigeria, where large transactions are often settled in cash. Another was to take it out of the country. “There was a chartered plane flying cash to Lebanon and Cyprus,” says one businessman. “They have houses full of cash.”
This penchant for cold cash was widespread. The chief executive of a large firm in Nigeria says that when he was invited into the study of a senior Nigerian politician, he saw bundles of dollar notes neatly stacked in the drinks cabinet. After Diepreye Alamieyeseigha, a former governor of Bayelsa state in the oil-rich delta, was arrested by British police on charges of money-laundering, they found almost £1m in cash in his London home.
The numbers involved in grand corruption in Nigeria soon become mind-boggling. Lamido Sanusi, a former governor of the central bank, claimed that over a period of about 18 months some $20 billion in oil revenues had gone missing from the Nigeria National Petroleum Corporation (NNPC), a state-owned firm that manages the government’s shares in oil companies and pays subsidies for fuel imports. Mr Sanusi was promptly fired for his trouble, but a public outcry forced the government to commission a forensic audit by PWC, an international accounting firm. Its report paints a picture of chaos and lawlessness within the NNPC. Billions of dollars were paid for subsidies on kerosene, yet none seems to have been sold at the subsidised price. It was generally available in markets for about three times the official price. In short, some $3.4 billion had simply vanished. Subsidies on petrol are only marginally better-managed.
Even murkier are losses of crude oil being pumped out of the country. Oil theft, which is euphemistically known as bunkering, is thought to account for anything from 100,000 to 500,000 barrels of oil a day, syphoned off from pipelines or illegally pumped. If estimates at the upper end of the range are correct, perhaps one in five barrels of oil produced in Nigeria is stolen. Such thefts require a huge infrastructure, which relies on the connivance of senior politicians and security officials.
Corruption trickles down through most arms of the government. Procurement contracts in particular are notorious for graft. The bigger the project, and the longer it takes to complete, the greater the opportunity to divert cash. Thus big projects in Nigeria routinely take far longer than planned and cost far more than originally budgeted. Many seem to have been built primarily for the purpose of stealing money. One state governor extolled the virtues of a large stadium he had built (“you can see it from space”), but seemed to have a poor grasp of economic indicators in his state, including poverty and literacy levels.
The good life, for some
Extravagant travel and living are two more ways of looting the budget. Many state governors and ministers fly around the world in private jets, stay in palatial mansions and drive expensive cars, all at the taxpayer’s expense. Bullet-proof sedans and SUVs are so popular that Nigeria has become the world’s biggest market for armoured cars, says one executive.
The legislature gets in on the act too. The chairmen of parliamentary committees routinely ask for kickbacks in exchange for an easy ride in hearings. Those who refuse to pay are pilloried. In one incident, screened on live television, the head of Nigeria’s Securities and Exchange Commission, Arunma Oteh, accused the chairman of the House Committee on Capital Markets of demanding bribes before the hearing. The chairman was charged with accepting $4,000 for a trip to a conference that he did not attend, but the court threw out the charges on appeal.
Shakedowns by local government often take the form of taxes and may even have a thin veneer of legality. Small businesses say they get stung for licence fees that are suspiciously negotiable and have a tendency to rise before Christmas and Easter, when officials need cash. In Lagos few firms display their names on their offices or factories because that would attract the attention of the Lagos State Signage and Advertising Agency, which would require many forms to be filled in and hefty annual fees to be paid. Other government agencies also put their hand out. The boss of one Nigerian consumer-goods company says he has to get the permission of eight government agencies each time he wants to run a promotion. The boss of another curses Nigeria’s lottery commission, which demands a fee worth 25% of any prizes offered to winners of promotions. Local authorities in small towns along major highways insist that lorries travelling through their territory must be licensed—for a fee. Such wheezes drive up the cost of distributing consumer goods by about a quarter, says the boss of one big firm.
The judiciary, which is meant to prevent such excesses, actually serves as a useful tool for extortion. One common practice employed by legal trolls is to wait until a large project such as a factory or apartment block is almost complete and then to ask the courts for an injunction against it being finished, often on spurious grounds. The courts may impose a temporary injunction that can take years to be reviewed and lifted. The quickest way to resolve these is to make a large out-of-court settlement.
It is difficult to find an arm of government that is not crooked. A survey in 2013 by Transparency International, a Berlin-based anti-corruption watchdog, found that large numbers of respondents had paid bribes to officials in the previous year (see chart, previous page).
Many of the institutions intended to fight corruption have themselves been compromised. The country’s most efficient anti-corruption agency is the Economic and Financial Crimes Commission (EFCC), but a weak judiciary and presidential pardons have undermined its successes. Its convictions are often overturned on appeal or end in a pardon. A striking example was that of Mr Alamieyeseigha (the man with the $1m cash stash in London). After jumping bail in Britain, he returned to Nigeria and was convicted by a court, but Mr Jonathan pardoned him.
Cleaning the stable
Many Nigerians also believe that anti-corruption investigations are used as a cover to settle scores and eliminate political rivals. Mr Buhari will have to ensure that such investigations are not partisan: a few scalps from each of the two big parties would send the right signals, as would a requirement for public figures to publish details of what they own. Mr Buhari has insisted that members of his cabinet do so. State governors, senators and members of the national assembly should follow suit.
Mr Buhari says that fighting corruption will be one of his main priorities, but it will be a long, hard slog, despite his own impeccable credentials. He leads an austere life and will not brook any excesses in his inner circle. According to one report, soon after his election he gathered his extended family together to tell them they could expect no immunity if they broke the rules. But many in his party, including some of those thought to have helped fund his campaign, may have had their fingers in the till. “By the time you’ve lifted the veil, you may be shocked by what you see,” says Bishop Matthew Kukah, a leading religious figure and moral authority in Nigeria. “This is not a country that is morally convinced about [the evils of] corruption: corruption is the only thing that works.”
In order to reduce opportunities for graft, Mr Buhari needs to go much further in making government transparent. The most shocking revelation at the NNPC was not that money had gone missing but that a state agency responsible for billions of dollars in revenue did not publish independently audited accounts.
The cost of all this graft vastly exceeds the actual amounts stolen. Investors are reluctant to put money into a country if they cannot be sure that contracts will be honoured. Local businesses deliberately stay small, hoping to stay beneath officialdom’s radar. Citizens are generally loth to pay taxes because they assume the money will be stolen. Billions of dollars in state spending are wasted on useless projects. On the outskirts of Sokoto in the far north of Nigeria a brand new power plant is going up, years behind schedule and over budget. The delay may be a mercy, for once it is switched on it will instantly start racking up big losses.
Graft has also been one of the factors behind an insurgency in Nigeria’s north which its army, hollowed out by corrupt generals, has struggled to contain.
Culled from the Economist