Email

Nigeria president unlikely to risk oil graft crackdown

Nigerian President Goodluck Jonathan waves to the crowd as he leaves a campaign rally in Kano, northern Nigeria, March 16, 2011. REUTERS/Joe Penney

By Joe Brock

ABUJA (Reuters) – Nigerian President

Goodluck Jonathan is coming under pressure to prosecute top officials implicated in a $6.8 billion fuel

subsidy fraud, but many of the suspects are allies he is unlikely to go after if wants to keep his

power base intact.

It has been three weeks since

parliament produced a report detailing massive corruption in a state subsidised petrol import scheme

and Jonathan has yet to indicate how he intends to respond.

Inaction on one of the biggest

corruption scandals in Nigerian history will hurt Jonathan’s reformist credentials and further

alienate his government from a disillusioned population. It could also prompt major public

protests.

But some of Jonathan’s closest allies manage the oil industry, which is based in his

home region, and the tentacles of the subsidy fraud spread throughout the political elite, making it

near impossible to untangle.

“In the past pressure for change has usually prompted the casting

aside of a scapegoat,” said Antony Goldman, Nigeria analyst and head of Africa-focused PM

Consulting.

“Too many people in the ruling elite do not want an end to corruption, they just

want their turn. From an external perspective, failure to act may indeed look like weakness; the

domestic environment is more complex.”

Civil society groups have threatened protests if those

they deem responsible for the mess, including Oil Minister Diezani Alison-Madueke, and heads of the

state oil firm, aren’t sacked.

In January, thousands bought the nation to standstill in

protests against an attempted removal of the subsidy.

“The president is hoping this will blow

away and we believe his own vested interests are holding him back,” said Clement Nwankwo, a political

activist with the Abuja-based Policy and Legal Advocacy Centre, one of many that led protests in

January.

Jonathan already has many opponents and is struggling to contain an Islamist insurgency

in the north. In a country where patronage and largesse still determine political success, prosecuting

power brokers is risk he is unlikely to take.

SUBSIDY FRAUD

The report said Nigeria paid

900 percent more in fuel subsidies last year than it budgeted for, handing out billions of dollars to

briefcase companies that had no capacity to import fuel or to firms that sold the petrol to

neighbouring countries.

Criticism focused on fuel importers and government agencies but the

report’s evidence pointed to several ministries and the central bank. If Jonathan implements its

recommendations he will undermine a large section of the team he chose to run the country.

“I

don’t think we’re going to see high level officials in jail … that would imply his regime had

imploded,” said Patrick Smith, editor of Africa Confidential.

“The government didn’t want this

to come out. It isn’t hard to track back some of this to the top people in

government.”

Jonathan this week squashed speculation about a cabinet reshuffle, saying he had

confidence in existing ministers, to the dismay of activists who wanted tough action. He has said

subsidy fraudsters will be prosecuted, but called for patience.

He built his career in the

oil-rich Niger Delta, where much of the fraud took place under the noses of security agents and

politicians he has worked closely with for decades.

Some of the fuel import firms criticised in

the probe have politicians as stakeholders – aviation minister Stella Oduah runs one of them. Others

are owned by oil industry oligarchs who have helped fund Jonathan’s election campaigns.

Femi

Otedola, the CEO of Forte Oil, one of Nigeria’s biggest fuel importers which testified at the hearing

but was not named in the list of fraudsters, was made a member of Jonathan’s economic management team

this year.

“If he is going to act, he needs to be very careful … the scam reaches into many

powerful crannies,” said Kayode Akindele, partner at Lagos-based financial advisory firm 46

Parallels.

COSTLY INACTION

Government sources and political analysts see dismissals of

mid-level officials and the banning of some fraudulent fuel importers, rather than arrests of senior

officials, as a likely compromise.

Swiss-based oil firm Nimex Petroleum was suspended this month

by Nigeria’s fuel regulator for failing to provide documents for fuel shipments, a sign authorities

may target the importers rather than government regulators.

It is unlikely to be enough to

appease an angry public. Some government officials said January’s protests were aided and funded by

political opponents and they believe Jonathan’s rivals may use the subsidy probe to build momentum

against him.

Jonathan won an election a year ago that international observers considered one of

the fairest in decades, but he has not capitalised on early optimism. An insurgency by Islamist sect

Boko Haram has distracted his team and delayed reforms.

How he balances public demands for

action on corruption with the interests of an entrenched elite feeding off it may determine his ability

to implement important reforms such as power privatisation.

“Lack of action has the potential to

further alienate the Goodluck Jonathan government from the general public and reduce support and

momentum for other reforms,” Akindele said.

“This is a defining moment for the Jonathan

government.”

Related posts

Kenya drops airport deal with Adani Group after US indictments

International Criminal Court issues arrest warrants for Netanyahu and Hamas officials

The mausoleum holding Congo independence hero Lumumba’s gold-capped tooth is vandalized