The Accidental Public Servant
Page 20
was once upon a time known as BP Nigeria. President Obasanjo nationalized the company in 1978 as
a retaliatory manoeuvre against Margaret Thatcher's British government for allegedly selling our oil
to South Africa during the apartheid era and changed the name to African Petroleum (AP). For some
20-odd years the Nigerian government, through its national oil company, the Nigerian National
Petroleum Corporation (NNPC), owned 100 per cent of the company, with a minority portion of it
subsequently listed on the stock exchange. In 1999, the BPE plan was to sell 40 per cent of the
company to an investing group that would also have management control.
We advertised the sale and received responses from a handful of companies interested in
participating in the bidding process: BP South Africa, a company called Sadiq Petroleum, and a third
company which then bowed out before we even got underway. Sadiq Petroleum was a Nigerian
company owned by a man named Peter Okocha, a very close friend of Vice President, Atiku
Abubakar. Both BP South Africa and Sadiq Petroleum passed our pre-qualification hurdles without
any difficulty. However, just before we began the bidding process, the representative of BP South
Africa whose task was to conduct the due diligence – a Nigerian – surprised all of us by submitting a
curtly-worded letter withdrawing from the bidding process. In a meeting with me, he explained that
they were going to write a more detailed letter explaining their withdrawal but there were at least
two reasons that he could cite up front. The first reason was that the health, safety and environmental
(HSE) standards of the company were so poor that if BP South Africa bought the company, upgrading
the company to be aligned with BP’s global environmental standards would cost so much money that
the bid price they would have to submit to justify it would be so low that they were going to lose the
bid anyway. This was the official reason the forthcoming letter would detail. The second reason,
which would not be mentioned in the letter, or anywhere, really, outside of our private conversation,
was quite disturbing:
“In addition to this reason that we intend to make official, off the record, since you have been so
helpful to us, you need to know that African Petroleum has a huge financial hole in its accounts of
more than $20 million. At least, some twenty million dollars have been systematically stolen from the
company. We discovered this while conducting our due diligence. The money is reflected in the
books as income but it does not exist anywhere in cash or assets, and was never ever there.”
I took a moment to digest this. “Wow. Can you give me the financial due diligence report which
reveals that?”
He promised to send it to me as a favour and 'unofficially'. Then he disappeared and the next time I
saw him was about four years later at an oil and gas conference in London. He had moved to another
major oil company, and explained that there was no way he could have shared the report with me
then. Even though he failed to send me the report, I had the unconfirmed information in my
consciousness. In the meantime, we ended up with a single bid from Sadiq Petroleum. Aware of this
new information about AP's finances, and because it was our very first ‘core investor’ transaction, a
single bidder situation would send the wrong signal, particularly if that single bid came from a friend
of the vice president. We therefore decided to be cautious because if there is only one bid, there can
only be one winner, which would defeat the entire purpose of competitive bidding at this early,
critical stage of our programme. I consulted with the chairman of the privatization council’s technical
committee, Mr Akin Kekere-Ekun, who agreed with me that we should abort the bid process, re-
advertise the sale of the company and re-bid at a future date. Without informing any of the BPE staff
or council members, I went with Akin to see the vice-president.
“Mr Vice-President, we have ended up with only one bid. Our recommendation would be to cancel
the auction and advertise again at a future date.”
“But why? You went through all the required steps,” he asked.
“Yes,” Akin said, “but you know; if we end up with only one bid and the winner is your friend, it will
look like it was all pre-arranged, so it is not in your interest as the chairman of the privatization
council for us to go ahead with this.”
I joined Akin Kekere-Ekun in weighing in along similar lines, and Atiku agreed with both of us, that
we should cancel and rebid in the near future. He suggested that we bring the matter to the
privatization council for discussion and ratification.
Quite honestly, to me, at the time (and indeed throughout most of my time in BPE), Atiku came across
as a fairly objective person for accepting the recommendation. After the council approved the
cancellation of the bid process, the vice-president made some comments before the council that struck
me as quite strange but commendable for its openness.
“I am happy the council has approved the cancellation of this process and we particularly appreciate
the efforts of the chairman of the technical committee and the director-general,”– that was me – “for
having the courage of conviction to bring this recommendation to the council.” He continued, “Let me
tell you a story. Just before this council meeting started, the president called me and said one of the
members of this council, and he was not going to reveal who it was, went to him yesterday and said,
‘Mr President, Sadiq is the same name in Arabic as Abubakar. So Sadiq Petroleum is owned by the
vice-president, whose name happens to be Atiku Abubakar.’ One of the members, one of the people
sitting here, went to the president and said I owned this company. I hope that person will go back to
the president and say that I presided over the cancellation of an open and fair process which this
company would have undoubtedly won.”
Everybody was silent. We started looking at people and began suspecting who may have said what.
God forgive me, but I thought it was a certain cranky member of the council that I did not get along
with. It was not until many years later, at some point that President Obasanjo and I were between
quarrels that I learned who told him the story: it was not any member of the council – it was another
senior government official familiar with Arabic names. Indeed, in the Islamic world, it is true that
Abubakar and Sadiq are interchangeable names, but Abubakar was not Atiku’s name but his father’s.
Months later, we re-advertised African Petroleum for sale. We again received an expression of
interest from Sadiq Petroleum, as well as from Consolidated Oil, which is owned by Mike Adenuga.
We went through the pre-qualification process and Sadiq Petroleum submitted a much higher bid
price than Consolidated Oil, so Sadiq ended up buying the 40% stake afterall.
But this time, with the fore-knowledge of suspicions about Sadiq's ownership, we decided to conduct
more extensive investigations into the company to accompany the memo to the council. We found that
Sadiq Petroleum was incorporated in late 1980s or thereabouts and that the original subscribers were
Peter Okocha and his family members, including his son, Sadiq Okocha, among other names. BPE’s
lawyers obtained the original incorporation documents and looked at
all the changes filed in
directorships and ownership of the company’s shares over the decade of the company’s existence.
Atiku Abubakar did not feature even once, at any time in the history of the company as a shareholder
or director. In fact, we found out where the Sadiq name came from - the son of Peter Okocha. It may
well be that the son was named in honour of Atiku’s deceased father, a practice common in our
culture between friends, [31] but found nothing more to establish a factual nexus between Atiku and
the company.
Our memo to the council concluded accordingly and noted that the fact that the chairman or owner of
the company happened to be a friend of the vice-president's should not disqualify him from bidding
for privatization assets. The guidelines for the privatization had been published and did not exclude
friends of council members from buying shares or privatization assets. Under the rules and regulations
(and our self-imposed ethics), only the vice-president, council members and BPE staff were
disqualified from bidding on or buying any assets. Any other person, Nigerian or foreign, had a legal
right to bid if technically qualified. In fact, technically, even the president could purchase any
privatization asset since he was not a member of the Privatization Council or within the decision loop
of the divestiture process. I made a very passionate case for approving the transaction and it was
approved without much comment. After we approved the transaction and announced it, Obasanjo
called and asked me to see him.
“I hear that you have given AP to Sadiq Petroleum. I got the papers,” he said. “I have seen all your
arguments, you’ve done a very good job, but you know, are you sure that there is nothing and no-one
behind this company?”
“I can’t be sure of anything that is behind the company, sir,” I said. “I can only deal with facts, logic
and what I can see. Only God knows everything. I can’t know what is not documented; neither can we
rely on beer-parlour rumours. Those that allege should come out and provide proof. Based on every
document that we came across, what I presented was what we saw. I do not see how Peter Okocha
would be so foresighted that he would incorporate a company in the 1980s for the sole purpose of
waiting some 16 years later to buy a company when his friend would be vice-president. If he had that
kind of foresight, then we really should concede and give the company to him in spite of our unproven
suspicions.”
Obasanjo seemed satisfied with this. “But you know what, Mr President?” I continued. “I have not
mentioned this in the memorandum because I am yet to have the documentary evidence, and could not
therefore put it on the record anywhere. But that company is suspected of having a $20 million hole.
So if they bought it – the VP and this man – they might be in for a surprise. Only a person with deep
pockets and commitment can clean up that company. It has some valuable assets that could be sold to
cover the financial gap; it is an old company, the first company to sell gasoline in Nigeria. It is British
Petroleum, remember, so they have assets, particularly real estate assets, all over the place, petrol
stations, two lube blending plants, and so on. With good management and financial reengineering, they
may be able to get out of it, but there is a big hole there.”
“Really? How? What happened?”
I proceeded to relate to him the story the BP South Africa representative told me. Obasanjo looked
visibly more relieved.
Prior to the second round of bid, I had quietly and privately counselled Peter Okocha that I have
heard rumours of a financial hole. This information neither surprised nor alarmed him. He seemed to
be vaguely aware of it, and was nevertheless determined to go ahead with the bid. As soon as Sadiq
took control of AP, we hired an accounting firm to undertake a governance audit into the affairs of
AP. The findings were sobering to say the least. It was found that the company’s NNPC-appointed
management had made unauthorized borrowings of 11.75 billion naira through the issuance of
Commercial Papers and Bankers Acceptances and obtained other bank loans without following due
process. It had also purchased and sold assets without providing adequate details of sale proceeds
and the identity of the buyers. In addition, it not only failed to reconcile huge debts owed to NNPC
(estimated at between four and ten billion naira) but was also alleged to have been involved in
insider trading, diverting revenues from bunkering and marine activities, and other general abuses.
Sadiq Petroleum, the core investors, claimed that not only were these issues not disclosed, they were
actively concealed from them during their pre-sale due diligence on the company. In order to
establish the legitimacy of these claims, BPE held meetings with the core investors, Mr Umar Abba
Gana (the former Managing Director of AP), the issuing house which supervised the due diligence
exercise and Ernst & Young, the statutory auditors of the company, to resolve the conflicting records.
For months, none of the parties could agree on the money owed to NNPC, the banks and other
creditors and this remained unresolved throughout my tenure.
Sadiq Petroleum was not an innocent victim in this whole imbroglio either. The company was found
to have colluded with the issuing house (NAL Merchant Bank) and the registrars (IMB Securities
Ltd.) to corner the 20 per cent shares sold to the public on the open market; withheld refunds to
unsuccessful applicants and went as far as forging NIPOST despatch records to facilitate these
dubious transactions. We reported the capital market operators to the Securities & Exchange
Commission (SEC) and the Attorney-General for further action.
In the end, neither the management of Sadiq Petroleum nor the findings of the governance audit fully
established the size of the accounting hole until a couple of years later, after I had moved on to
administer Abuja. Of course, this discovery was compounded by other issues which led to Sadiq
demanding an immediate refund from the government. They found the hole largely because the NNPC,
a government-owned company, supplied products to African Petroleum on credit, had better records
and insisted on full payment of all outstanding accounts. AP's successive managements simply sold
the products on to dealers and distributors, but apparently failed to remit the proceeds into AP's
accounts, but allegedly diverted the proceeds to various private pockets – those running African
Petroleum since 1978 were all seconded NNPC staff. They simply collected products from their
parent company on credit, sold, and did not pay NNPC back - and literally stealing the money, and
many of them had retired and were living happily ever after, in affluence.
Sadiq first approached BPE for a refund of purchase price, but we referred Peter Okocha and his
directors to the disclaimers in the contract that BPE sold the company “as is, where is” and my
warnings to him about the existence of the accounting hole. Sadiq Petroleum even engaged political
operator and PDP chieftain Abba Dabo as consultant to facilitate the cancellation of the sale but he
too was rebuffed. In the end, a couple of years after I left BPE, the company was re-nationalized and
the government directed the BPE to refund Sadiq Petroleum the original proceeds of the sale. AP was
then re-privatized a few years after that, this time sold to Jimoh Ibrahim, someone alleged to be close
to Obasanjo, and similar speculations began, except that this time, it was Obasanjo rather than Atiku
that became the suspected 'owner'. It was all very amusing to me. Subsequently, AP was acquired
without any involvement of the BPE by Femi Otedola, another close friend of successive presidents,
who has renamed it Forte Oil.
The rumours of Atiku’s interest in the AP deal continued to make the rounds until we left office In any
event, Atiku was a sitting vice-president at the time, there was nothing anyone could do because he
had constitutional immunity from prosecution even if pursued. At any rate, even if true, I am not sure
any crime was committed. A breach of administrative rules and NCP’s code of conduct, yes!
Unethical behaviour, perhaps, but not a violation of any law that I know of since any public servant
can be a shareholder in any business, but is prohibited from being a director while in office, except it
is an agricultural enterprise. By the time Atiku left office, the whole thing became a moot point and
Nuhu Ribadu, who would have had the courage to pursue the matter further, got kicked out of his job
anyway.
Nobody was going to take on somebody like Atiku Abubakar except the US Senate, [32] which has
now published a report showing that his wife, a US citizen, laundered some $40 million through her
personal bank accounts in the United States, including a $2.8 million wire transfer acknowledged by
Siemens AG of Germany. Atiku and his wife, Jennifer, left the US in good time before the FBI got to
ask them some questions. He is back in political contention in Nigeria as a leading member of the
ruling party and a presidential hopeful for 2015.
Mike Adenuga Sends Cash
Not all manoeuvres in BPE’s universe were as covert as the vice-president’s alleged stake in Sadiq