Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM

OIL SUBSIDY PROBE: A Peep into the Capitalists’ Chambers of Fraud

Socialist Democracy July – August 2012 Issue

OIL SUBSIDY PROBE: A Peep into the Capitalists’ Chambers of Fraud

By Segun Sango

The House of Representatives recently made rare peep into certain aspects of the oil sector’s activities. Essentially, the House probed the so-called oil subsidy regime that was in existence between 2009 and 2011. In its findings, the House came up with detailed reports of reckless looting of public resources in the name of “oil subsidy” payment. Amongst several breath-taking instances of sheer looting, the House committee reports that 35 firms collected allocations are not registered with the Corporate Affairs Commission. It recommends that certain marketers be made to refund a huge sum of N1.1trillion for money collected for petroleum products never supplied and asks 3 audit firms to be blacklisted. The House also reveals that the NNPC collected N295.098billion above the recommendation of PPPRA, the official body that has power to manage the so called oil subsidy. It also states that the NNPC unilaterally removed a sum of N108.645billion. To highlight the kind of reckless bonanza that has been going on in the name of “oil subsidy” management, a waste disposal firm was said to have been paid a whopping sum of N1.9billion for products it never supplied! The House probe also found the payments of a sum of N999million recorded 128 times within 24 hours of 12th and 13th January, 2009 by the office of the Accountant General of the federation!

Here we re-call the fact that the probe of the oil subsidy finances, in the first instance was inspired by January’s 9-day nationwide general strike and mass protests led by the NLC and the TUC against the hike of a liter of petrol from N65.00 to N140.00 and their contention that there exists too much corruption on this issue that gave rise to the probe. However the findings by the House probe are, to say the least, dumbfounding. In its first official response to the release of the probe reports, the NLC held that the report is “a mere tip of the iceberg”. In essence, the entire mind boggling revelations of corruption and misdeeds on the oil subsidy management constitute a minute fraction of the gangster looting that is going on in the entire oil sector and the national economy as a whole. Merely based on the House reports, it should be very clear beyond debate that there was nothing the government was subsidizing in oil price and that the so-called “oil subsidy” payment has been nothing but a gargantuan fraud being perpetrated against Nigerians under the false pretense of making petrol price affordable to consumers. Expectedly, the release of this probe result has generated a widespread reactions and anger among the various sectors in the society.

Confronted with the House probe ugly and nauseating findings of corruption and sheer theft, government in its first official reaction described the findings of the House probe as mere general information. This means that it does not intend to take any serious action on the report. However, faced with the avalanche of criticism from the opposition parties and the general public, government has now said that it will urge some special government agencies like the EFCC, police, etc, to further investigate the findings of the House with a view to prosecute indicted elements. However, before any concrete step could be taken in this respect, a new development revealed that the Chairman of the Committee of the House that probed the oil subsidy regime, Hon. Farouk Lawan himself was recorded on tape to have collected, between himself and secretary of the probe panel, a sum of $620,000 from an oil business man, Mr. Femi Otedola, as bribe with a view to strike off the names of his firms from the list of the companies implicated in the oil subsidy looting.

On its part, the Action Congress of Nigeria (ACN), the leading opposition political party in the country, demanded that the President should first apologize to Nigerians for hiking the petrol price in the name of what is now more than a blatant fraud and revert fuel price back to N65 per litre. In addition, it called on the president to sack government advisers responsible for the oil subsidy claim on the basis of the “discovery” that what government has been subsidizing over the years are corruption and inefficiency, not fuel. Several other bourgeois opposition parties, including a number of civil society groups, have also called on the government to prosecute all those indicted in the House probe.


The NLC through its President, Abdulwahed Omar asks that: “Everybody who is found guilty or found wanting must be brought to book so that we sanitise the system and make sure that Nigeria moves ahead. We will resist fuel price increase. We are now being vindicated by reports of the probe panel that corruption is endemic in the system and that by the time you deal with corruption in the system, the issue of subsidy is going to be nothing”. (Vanguard 26/04/12).

Side by side the NLC and the TUC, some civil society groups like the Save Nigeria Group (SNG) have also threatened mass protest to ensure the prosecution of those indicted by the House reports. The Socialist Party of Nigeria (SPN) agrees that all indicted elements in this fraud be prosecuted including the idea of organizing mass protest to ensure their prosecution. However, from our own point of view, all the demands so far being advocated by labour leaders and civil society groups would not go beyond a mere scratch on the surface. This is because the scope and spread of the corruption and sheer looting of public resources revealed by the House probe raises more fundamental questions on how the entire oil sector and Nigeria’s economy as a whole is being run.


Taking all together, the response by the government, the bourgeois opposition parties, trade unions and the civil society groups etc are to say the least very sickening and at best a hollow ritual. Like leading elements in a looters’ paradise, the Jonathan presidency against all the overwhelming facts of looting established by the House probe nonetheless see the entire oil probe reports as still general information. Of course, to give the impression of capitalist “due process”, government has given an undertaking to empower further investigations by crimes related agencies to determine what to do with the probe reports. Under the conventional capitalist looters regime that reigns in Nigeria, this practically means that the government would not take any positive action over the wide ranging and damaging reports and findings by the House. To underscore this conclusion, is the corruption scandal that has emerged against the leaders of the House committee that investigated how capitalist government and corporations were looting Nigeria’s resources under the guise that they are subsidizing petroleum products.

This, it must be recalled, was similar to the process that bedeviled the probe by the House about four years ago during the House special probe of the sum of $16billion allegedly spent under the former president Obasanjo’s regime on the electricity sector. The leading officers of the House led by Godwin Ndudi Elumelu, subsequently got themselves embroiled in corruption scandal and at the end of the day and up till today, the only lingering reality is that Nigeria’s electricity remain as horrible as before the $16billion was allegedly spent and none of the persons and corporations indicted as having financially benefitted has ever been brought to trial let alone being convicted. Thus, from point of view of the capitalist politicians in power, this is just business as usual.

Similarly, the proclamation of the trade unions and civil society that they will fight to the end to ensure that those indicted in the current oil subsidy probe are prosecuted is sheer grandstanding and an attempt to give the impression that corruption is being combated. To start with, neither these trade unions nor the civil society groups waxing eloquent on the prosecution of indicted persons appear to fully understand the enormity of the rot within the system that make possible the kind of horrendous crimes in issue. These elements also tend to give the false impression that the judiciary is not afflicted by the general rot of the capitalist society. Even if the judicial officers can be trusted to properly sanction every indicted person or corporation found guilty, the fact still remains that under the prevailing legal system, only very few elements can be convicted at the end of the day. We recall cases where only a few of previously indicted elements were ever brought to trial and even when convicted, merely received what is no more than a slap on the wrist as punishment in the name of “plea bargaining”.

The crimes revealed by the House probe report in issue are very colossal. But sadly, this is no more than a mere tip of the iceberg as rightly stated by the NLC in its first official reaction. This conclusion cannot but be true because the probe only covers a minute aspect of the oil sectors activities. The probe does not cover the entire activities of the oil sector as well as the other sectors of the economy. Samplers!

“Shell estimates that over 150,000 barrels of crude oil are lost to oil thieves daily. The Minister of Finance, Dr. Ngozi Okonjo-Iweala, has a higher estimate of about one-fifth of the nation’s daily oil revenue being lost to oil thieves. It would translate to about 500,000 barrels, or $50 million or N8 billion daily and N2.92 trillion annually, more than half of the 2012 budget”. (Vanguard, June 22, 2012 editorial).

“The Senate, yesterday, ordered that the Chairman, Pension Task Team, Mr. Abdulrasheed Abdullahi Maina, John Yusuf, B.G. Kaigama and all the members of the team be sacked, and that the Inspector-General of Police Abubakar Mohammed must immediately arrest and prosecute them.

“According to the Senate, the order became imperative following their involvement in fraud, embezzlement, misappropriation, misapplication, illegal virement, contract splitting, award of contract to non existing companies, award of contract without appropriations and outright stealing of pension funds. The Senate said the stolen funds must be recovered from them”. (Vanguard, June 22, 2012 editorial)

“Although the Nigerian economy has not been out of the woods since the 1980s, it’s present state is even more precarious. While the Federal Government paints a picture of an economic boom with a Gross Domestic Product (GDP) yearly growth rate of seven per cent, the reality is that the economy is in a shambles. Whether it is Boko Haram, kidnapping, armed robbery, corruption, poverty, poor infrastructure and any other vice, the root cause is the same.” (The Guardian, June 25, 2012).


What is self evident in the above stated premises is that there exist a fundamental rot affecting all the key economic and political sectors. Therefore, the Socialist Party of Nigeria (SPN) would contend that only a thorough and democratic socialist transformation of Nigeria’s economy and polity can begin to put things in the proper shape. Fundamentally, the working people must be prepared to remove from power the current capitalist elements that hold sway in the economy and polity from political power and their stranglehold on the economy. The prevailing capitalist system only openly promotes and defends the interest of the rich at the expense of the needs of the majority. This is why, despite Nigeria’s stupendous human and natural resources, vast majority of Nigerians are condemned to live in total abject poverty. This also explains why all current government policies and officials pursue economic agenda that will further make the rich richer while the poor becomes poorer. This is why most public officials indulge in outright looting of the country’s resources, either “legitimately” as under the principle of Public Private Partnership (PPP) or through outright large scale looting as was recently revealed through the oil subsidy probe report.

What the Socialist Party of Nigeria (SPN) wants the working people and the entire poor to do is to build a powerful pan-Nigeria political platform that is fundamentally and ideologically opposed to all the existing capitalist parties. We believe that only a thorough democratic socialist agenda can properly plan and mobilize Nigeria’s natural and human resources to primarily cater for the needs and aspirations of ordinary Nigerians. Yes, the socialists support the demand that all public official and private companies indicted of looting or any act of financial impropriety against Nigeria must be tried and appropriately sanctioned. However, under the prevailing money-first capitalist dispensation, only a few of such elements can be expected to be dealt with in this situation. The probe report in issue reveals instances where individuals and corporations indulged in huge and unbudgeted expenditures. All these and other nefarious activities are made possible by the prevailing bourgeois and undemocratic economic and political set up of the country. Therefore, to frontally attack and undermine the citadel of capitalist corruption, the Socialist Party of Nigeria strongly urge the ordinary working masses, the youth and the poor to put pressure on labour leaders to join and lead the fight for total emancipation from the inherently roguish capitalist system.

To fundamentally address the multifarious problems confronting the oil sector and the economy as a whole, we urge the working masses to insist that the current pro-capitalist and neo-liberal policies be dropped and replaced with an arrangement wherein the commanding height of the economy including oil sector, infrastructural development, healthcare, housing, jobs creation, etc, are commonly owned and democratically managed to ensure adequate oil products, manpower, social development, etc.

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