Oil thieves cripple Nigeria's production, cost state $5B a year

Sept. 20, 2013 at 4:43 PM
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ABUJA, Nigeria, Sept. 20 (UPI) -- Nigeria, once Africa's energy powerhouse, is losing an average of $5 billion a year in potential revenue because international criminal networks are stealing at least 100,000 barrels daily, reducing the country's production to a four-year low of less than 2 million barrels a day, a British report says.

The massive and systematic theft, bolstered by deep-rooted official corruption in the West African producer, is fueling growing instability as the country grapples with a savage insurgency by Islamist militants.

But all the signs point to high-level official involvement in the plundering of Nigeria's energy riches.

The report by London's Royal Institute of International Affairs, a think-tank widely known as Chatham House, its headquarters, is the first independent, in-depth investigation to examine the complex and murky trade in stolen Nigerian oil and its international dimensions.

"Nigerian crude oil is being stolen on an industrial scale," it observed. "Proceeds are laundered through world financial centers and used to buy assets in and outside Nigeria."

The report identified the United States, Britain, Dubai, Indonesia, India, Singapore and Switzerland as the most likely culprits for the money laundering.

The United States, Brazil, China, Thailand, Indonesia and the Balkans were listed as probable destinations for the stolen oil smuggled out of Nigeria aboard tankers and barges, often under cover of darkness to larger vessels waiting offshore in the Gulf of Guinea on Africa's Atlantic coast.

The report stressed foreign governments are making little effort to crack down on the massive theft of Nigerian oil, its economic mainstay.

"Oil theft is a species of organized crime that is almost totally off the international community's radar," it noted.

"Nigeria is the main West African hub for other types of organized crime ... notably piracy, drug and arms trafficking. The networks involved sometimes overlap with oil theft."

The proceeds from the oil thefts often find their way back into Nigeria's murky political system, where there are invariably links between politicians and criminal groups.

This is particularly true at election time and right now Nigeria's headed toward a bitter presidential poll in 2015 with the incumbent, Goodluck Jonathan, running for re-election.

Jonathan is from the overwhelmingly Christian Niger Delta in the south, Nigeria's main oil zone and the epicenter of the oil theft operations.

His main rivals are from the Muslim-dominated north, where Islamist militants belonging to a group called Boko Haram, which means "Western education is forbidden," is waging an increasingly ferocious insurgency in which thousands of people have bee killed. North and south are bitter political rivals.

Not all the stealing takes place in the oilfields where gangs siphon off oil from pipelines or storage facilities.

Much of it takes place higher up the ladder. Anti-corruption official Nuhu Ribadu noted recently tens of billions of dollars have been filleted from a federal oil revenue account.

Convictions for corruption against senior officials in Nigeria are extremely rare, so deeply is graft part of the political culture.

In 2007, Diepreye Alamieyeseigha, former governor of Bayelsa state in the heart of the oil-rich delta, was sentenced to two years in prison for embezzling $55 million in oil-fed public funds. The next day he walked.

Ten months later, his political rehabilitation was complete and he was back in the bosom of the ruling People's Democratic Party, campaigning in Bayelsa alongside Jonathan, then vice president.

Finally, in March, Nigeria's Council of state, including retired chief justices, pardoned the former governor, apparently at the behest of Jonathan's government.

On Thursday, Southwark Crown Court in London heard testimony that James Ibori, a former governor of the south's oil-rich Delta State, offered a $15 million cash bribe to the head of Nigeria's anti-corruption agency in April 2007 using a bag so full of banknotes two men were needed to carry it.

Ibori's currently serving a 13-year sentence in Britain after he pleaded guilty in 2012 to fraud and money-laundering involving around $80.5 million. The Financial Times reports the actual sum could run as high as $321.8 million.

The Chatham House report observed despite the arrest of dozens of Nigerian oil thieves recently, there have been no high-level convictions.

"Lines between legal and illegal supplies of Nigerian oil can be blurry," it said. "The government's system for selling its own oil attracts many shadowy middlemen, creating a confusing, high-risk marketplace."

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