The Transparency and Accountability of an Organisation: Case Study of the Malabu Scam

The Transparency and Accountability of an Organisation: Case Study of the Malabu Scam

The concepts of accountability and transparency are central to the very concept of good governance. These two concepts go hand in hand, as you cannot fully adhere to the requirements of one without the other. The Institute of Fundraising in the UK defines accountability as being responsible to someone for actions taken; being able to explain, clarify and justify actions. It further defines transparency as being easy to understand, and being open, frank and honest in all communications, transactions and operations.

Most important to note, however, is that providing lengthy and technical explanations of the tiniest of details, with the key facts buried beneath an enormous volume of information is far from the concept of transparency or accountability. Fortunately, in such situations, a quote by T.R. Wallace rings true: “The truth can only stay hidden for so long”. If there were any doubts before, the turn of events of the Malabu Oil and Gas company scam, which has marred the image of several prominent business leaders, and high ranking members of the Nigerian government, is testament to this fact.

Let’s go back to the beginning. OPL 245 is believed to be the largest oil block in Nigeria, estimated as a 9 billion barrels’ crude oil reserve. Interestingly, its producing license falls under the indigenous licence program, whose contract stipulates not more than 40 percent ownership of the block by foreign entities. The oil block was originally leased to Malabu Oil and Gas Company (MOGC), an indigenous company, in 1998 by the General Sani Abacha administration. Over the years, MOGC engaged in a Joint Venture Agreement, in line with the stipulation of the license contract, with Shell Nigeria Ultra Deep Limited (SNUD) as its technical partner.

In 2002, the block’s license was revoked and reallocated to SNUD by the President Olusegun Obasanjo administration under a Production Sharing Contract (PSC), which allowed SNUD to explore the field at its sole financial expense and receive payment through cost recovery oil on production. This, however, attracted a lawsuit by MOGC, the then rightful owner of the lease, especially that they suspected foul play from their technical partner. Needless to say, a tussle ensued, forcing the Nigerian government restore the block to MOGC on the House of Representative’s recommendation, while SNUD was compensated with another block.

However, this was not a satisfactory solution for SNUD given their PSC expenses, and so, they also filed litigation against the government. To finally bring an end to the protracted situation, the Jonathan administration brokered a deal where SNUD paid MOGC a settlement fee of $1.1 billion, while the Federal Government received its signature bonus, in addition to royalty and taxes which were to be paid. Shell Nigeria Exploration and Production company (SNEPCO) and Nigeria Agip Exploration Limited then together paid the specified amount.

Which brings us to the first question: why did the federal government lease that oil block to foreign companies when it should have been allocated to an indigenous company as dictated by policy? It soon came to light that there were many other elements involved, including greed and complete disregard for the law, buried under layers of untrue statements from the IOCs, past and then government officials, as well as the true ‘owners’ of MOGC.

Recent developments reveal that from inception, MOGC was registered with the Corporate Affairs Commission (CAC) with fictitious credentials by the convicted former Nigerian oil minister, Mr. Dan Etete. Further reports, court allegations, charges and testimonies – in addition to exposed emails – also prove that substantial bribes went under certain tables to enact the settlement between both parties. These are bribes that Oil international’s, Shell and Eni, have both had to admit that SNEPCO and NAE were aware that certain fractions of the $1.1bn settlement paid to the government for MOGC was going into bribery of top government officials, including former President Goodluck Jonathan; former Petroleum Minister, Diezani Madueke; former Attorney-General Mohammed, Bello Adoke,; one-time counsel to the Nigerian Federal Government, Dele Adesina; former Attorney General of the Federation, Bayo Ojo; former Special Adviser on Petroleum to President Obasanjo, Edmund Daukoru; among others.

In an ideal situation, we would have had this convoluted dispute that needed to be resolved; a rightful block owner who demanded justice; and an IOC deserving of due compensation and settlement. However, the tussle was marred by shrouded acts of ambiguity, false claims and duplicitous acts in this infamous Malabu oil deal. Unfortunately, events have drawn out for so long that it remains in the legal proceedings several countries and global institutions. Hence, we watch closely to see that the scales of justice mete fitting fates to owners who lay claims founded on fraudulent registration; to the profit-oriented international syndicates given rights to operate in foreign lands with no recourse for local policies; and to elected and appointed custodians who consistently choose personal gratification over defending and upholding their due diligence to their electorates.


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