Thieves of State: Why Corruption Threatens Global Security (19 page)

This is the environment in which Boko Haram launched its campaign of attacks on the police. Even among Nigerians who disapprove of
the group’s aims, the violence elicits a degree of approval. “When they attacked police stations,” says Ibrahim Aliyu Nassarawa, the chairman of the Kano State bar association, “people were happy. They didn’t join, but they were happy.”

V
ENALITY
hardly stops at the police in Nigeria.

The first tipping point on the road to acute, systemic corruption, says former Global Fund for Peace president Pauline Baker, who lived there for decades, came in the 1980s. That was when the oil boom began. “There was military rule, meaning no accountability, and then free money from oil.”

Nigeria is a case study in what has come to be called the “resource curse.” Valuable raw materials are discovered in a country lacking robust institutional safeguards, and the “rents” these resources produce rupture any contract between rulers and ruled. Quality of life changes negligibly, or even negatively, for regular people, despite the bonanza. At roughly two and a half million barrels of crude per day, Nigeria is the world’s thirteenth-largest oil producer and the largest in Africa. (The United States imports some 40 percent of the country’s production.) But Nigerians’ life expectancy, educational achievement, and average income, taken together, is about the same as that of their resource-poor neighbors.
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Official oil revenues are split between the federal government on the one hand, and the thirty-six state and more than seven hundred local government executives on the other.
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This downward distribution of national revenue contrasts with Afghanistan’s system, in which provincial governors receive almost no share of the national budget, but get carte blanche to extract resources at their own level however they want.

Not all of Nigeria’s oil revenues make it into the official budget, though. On January 20, 2014, Nigerian finance minister Ngozi Okonjo-Iweala announced that nearly $11 billion earned from the sale of crude between January 2012 and July 2013 was missing from the federation account. “We must see the justification, with receipts where the money has been spent,” declared the former World Bank managing director.
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A month later her colleague, Central Bank governor Lamido Sanusi, was
fired. In testimony before the Nigerian senate, he had estimated the missing funds at closer to $20 billion. And, he later told the
New York Times
, he was beginning to investigate the private banks that he suspected of laundering the money.
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This leakage of national wealth is typical, attests the MacArthur Foundation’s Kole Shettima. “There are always shortfalls in the federation accounts. It’s a permanent fight between the Finance Ministry and the Nigeria National Petroleum Corporation—where the real issue is. It’s a big cartel feeding off the backs of the people.”

In the view of a Western official in the capital, Abuja, Nigerian president Goodluck Jonathan “has not been as clever as his predecessors. He and his circle have been taking too much oil money before it gets into the budget.” Another high-ranking Western diplomat remarks sardonically that the oil minister, Diezani Alison-Madueke, is “just doing her job—providing Jonathan with money.” An official at a different embassy, who monitors the oil producing south, dubs her “Jonathan’s ATM.”

Nor is this off-budget money the only loss of Nigeria’s oil revenues. Former members of government, according to several Nigerians, receive a block of oil rights upon retirement, to sell as they wish.
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They often use the cash to sponsor others to run for political office—who are expected to pay back the favor with interest.

Then there’s “bunkering.” That’s the wholesale theft of crude oil as it flows between the wells where it is extracted and the tankers waiting offshore to carry it to foreign buyers. In the romantic image, small-time local thieves tap into the tangle of oil pipes snaking through the swamplands of the Niger Delta and refine the pilfered crude in barrels deep in the tropical jungle.

But such small-scale Robin Hood theft is the least of the problem. “This is not a hammer-and-chisel job,” says the Western embassy official who monitors the Nigerian south. “It’s very sophisticated siphoning. This can only be the work of industry people. It’s too technical. People get a slot. The security services allow it.”
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“The state is part of the illicit siphoning,” concurs an oil company official.

“This has moved so far beyond bunkering, you wouldn’t believe,” says one of the most distinguished American scholars of Nigeria, who
knows many of the key players personally. “These are government enterprises. Everyone in a position of authority signs off. Oil is diverted by the barge-load.” The military too, which by law protects the pipelines, “is up to the eyeballs in oil theft.”
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Indeed, such majors as Shell and Italy’s ENI began temporarily shutting down pipelines in 2013, wherever significant siphoning was detected. “The scale of these activities has reached unprecedented levels,” wrote Shell Nigeria chairman Mutiu Sunmonu in a company report, calling the theft “a parallel industry.”
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Nigeria does not convert its own crude into consumer products, moreover. The country’s four refineries languish in disrepair. The government imports fuel from abroad and sells it at a subsidized rate—another opportunity for corrupt scams.

Given the unique opening that oil, like other types of mineral wealth, provides for centralizing production and capturing the resulting wealth, it is perhaps unsurprising that other segments of the Nigerian economy have been allowed to wither.
¹⁵

In a country where rains lash much of the territory for half the year and seeds need merely to be scattered to grow—the envy of a parched place like Afghanistan—the diversity and productivity of Nigeria’s agriculture have plummeted since the 1960s. At that time, it was an agricultural exporter; now it imports basic foodstuffs, its overall productivity barely higher than what it was a half century ago. And according to the Nigerian government’s own figures, public investment has been “exceptionally low,” even by African standards.
¹⁶
Underinvestment in transportation infrastructure and power generation has also damaged the food industry.

Innovators in a sector that still absorbs most of the country’s manpower crave the least sign of official encouragement. The eyes of a taxi driver in the capital, Abuja, who had graduated college in agriculture, lit up as he described the business he dreamed of founding: a closed-system farm, where he would produce high-quality meat for Abuja’s upscale hotels and restaurants, by planting soy for oil and feeding the nourishing stalks to the cattle. He had a plan all mapped out but could not obtain a loan at less than a crippling 26 percent interest rate.

Nigeria’s manufacturing, like Egypt’s, has also largely died out—victim,
say residents, of privatization to cronies under pressure from the IMF, and customs and tariff regimes designed for members of the kleptocratic networks to work around. The Kano State civil servant took me on a tour of shuttered factories and warehouses: Bata shoes, an electronics factory, despairingly empty.
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The result of this oil “monoculture” is a winner-take-all economy, in which unemployment and penury rise steadily, while political office guarantees a space at the Nigerian version of Tunisia’s feeding-trough state. The
official
salary of a senator tops one million U.S. dollars per year. With such fabulous sums in play, Nigerian politics has become a blood sport.

For in the view of most Nigerians and country experts, the second tipping point on Nigeria’s path to kleptocracy was—ironically—its conversion to civilian rule in 1999.

Competition can be gruesome. Just to be designated a political candidate costs money—some $10 million for a recent election for state governor, estimate local observers of Nigeria’s political economy. “Godfathers,” often former officials who amassed a corrupt fortune when in power, sponsor a client to run for office by covering the fee, on the expectation of rich dividends after a successful campaign.

Then come the expenses of the campaign itself—and of ensuring the results. Candidates, or their godfathers, arm and pay urban youth gangs to rough up opposition rallies. Or office seekers collude with extremist groups for this purpose—Christian or Muslim or animist or some combination.
¹⁷

Or the police may be rented to serve as enforcers. “The governor pays the police commissioner to ‘protect’ him during the election,” says the Abuja taxi-driver-cum-agricultural-engineer. “If he’s not getting enough votes, the police kidnap the box and they print ballot papers.”

If his candidate wins, “the godfather gets access to the state coffers.
Often he is the one who appoints the directors of key departments,” concludes the director of a local NGO working in the democracy-building and justice sector.
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Presidential voting in 2007 and in 2011 (especially the aftermath), was marred by paroxysms of violence, as youth “cults” or militias, often outlandishly garbed and paid and equipped by political bosses, attacked candidates, election officials, houses, schools, churches, and mosques. Hundreds died during and after both elections.
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In this context, it is no wonder that many Nigerians—who gained the right to vote so recently—are increasingly disgusted by the electoral process. “I don’t vote,” says Ruth, a determined young woman with the heart-shaped face and curved eyebrows of a Buddha, who cleans houses for a living.
^†
“Why stand on line for people who are just enjoying themselves? Their perfume is fresh and their hair is wet, and they don’t help with a better road or education for our children. I’d rather sit in my house and drink a glass of juice.”

Still, while the disgust is palpable, and the dramatic political violence—often laced with sectarianism—grabs international headlines, Nigerians direct much of their ire not at elected officials but at the civil service.

“We call them ‘evil servants.’ ” The CLEEN Foundation’s executive director, Kemi Okenyodo slaps at a newspaper on her desk, where the latest scandal, the aviation ministry’s $1.5 million purchase of armored BMWs that were never delivered, is plastered across the front page. “Politicians can’t navigate the terrain without the civil servants.”

“The civil service is more corrupt than the politicians,” echoes Shettima.

“The worst,” concurs the Kano bureaucrat, “is the civil service. Politicians can’t do anything without the civil service.”

For while billions in off-budget oil money may go directly to Jonathan and a few cronies at the top of Nigeria’s kleptocratic system, vast oil revenues do make it into national coffers and, by way of the allocation system, down to the states. Once the money is thus integrated into official
budgets, the best way to siphon it off is through the complex public procurement process. Venal functionaries—cut from the same cloth as the Alexandria engineer, Gamal the Thief—draft fraudulent contracts for unnecessary projects. The documents are deftly designed to favor select contractors and to inflate costs. In this way, instead of contributing to economic development or education, public spending is hijacked for private gain.

“Let’s say Kano State is going to build a health facility,” explains Ya’u of the information technology NGO, which works on budget accountability. Funds for the project come from Kano’s share of the oil money. “The minister suggests the design. He puts it out for tender. That’s where the corruption takes place. The ministry draws up the bill of quantities—that’s done by the technical people, the commissioner. The bill is padded. There’s money for the permanent secretary, for members of his or her family, and for higher levels we don’t see. A contractor is called. ‘I’ll give you this contract. The job will cost 50 million. But I’ve budgeted 150 million.’ Often a bid is not necessary. In some cases the contracting companies that win the bid belong to the commissioner himself. The contractor is told: ‘We will give you 50 million.’ You, the contractor, sign for 150, and return the balance to the commissioner. Then, knowing the greater amount of money has gone to others, you want to maximize your profit. So you deviate from the plan. You do substandard work. You know nobody’s checking.”

“People leave people inside the bureaucracy when they retire, to help them get contracts.” Ruth, the housekeeper, provides real-world detail. “Sometimes marriages are made for this purpose, to hide it at least a little. If the child’s spouse who’s in the civil service doesn’t deliver, then there’s a divorce.”

Ruth’s sister works in the defense ministry IT department, a good observation post. She walked me down a dilapidated ministry hallway, to a spare office. The plastic veneer on the cheap desks was cracked, the computers out of date. In a pained, low-pitched voice, she described a feeding frenzy.

“When it comes to a contract or a job that attracts money, only the director and the deputy director, and maybe one other person, have knowledge of the real terms of the deal. The electronic copy shows
something different. No contract is awarded without someone inside. If someone unconnected brings a proposal, the insiders can rearrange it in their own way, make it sound like their idea. Then they call in a contractor they can get their share from. Every minister checks the money on a project first—not its usefulness. If it’s 10 million, the director says, ‘Make it 12 million.’ Procurement will say, ‘Make it 15 million.’ And the permanent secretary says, ‘Make it 25.’ This is so common now that everyone is looking for an avenue to get something out of everything. You have to get your own portion.”

Such an atmosphere prevails in almost every structure, large or small.

“There are supposed to be four students per dormitory room,” says Muhammad Aliyu, who teaches economics at Bayero University in Kano. He and dozens of colleagues were on strike to protest conditions. “Right now they are packing them in, ten to sixteen per room. For each bed space, budgeted at four million
naira
[about $25,000], you can buy a small house! We are teaching four hundred to six hundred students per class, especially in sought-after subjects like economics, math, and chemistry. The wealthy don’t even bother. They’re all sending their children outside to study.”