INTERVIEW: There Will Soon Be Law To Guide Management Of Recovered Assets – Malami

In this interview, the Minister of Justice and Attorney General of the Federation, Abubakar Malami, examines the one year stewardship of the Group Managing Director of the Nigerian National Petroleum Corporation, (NNPC) Mallam Mele Kolo Kyari and expressed satisfaction with the giant strides which he has so far achieved. He insists that the Malabu Oil deal saga remains the biggest fraud in Nigeria’s recent history, reiterating that $73 million has been recovered from the Malabu Deal from the United Kingdom. He also made other frank revelations connected to recovery of looted funds.


The Petroleum Industry Bill (PIB) is believed to be a law that will harmonise about 17 laws in the oil and gas sector. Yet it has not been passed by successive National Assemblies. What support are you offering now to ensure that the efforts to have the petroleum legislation in place by the last quarter of the year do not fail?

The Petroleum Industry Bill seeks to establish a framework for the creation of viable, commercially oriented and profit-driven entities in the Nigerian oil and gas industry to ensure value addition and internationalization of the petroleum industry and also to promote transparency and accountability in the administration of petroleum resources of Nigeria. This sector is no doubt very critical to the economy and sustenance of Nigeria.

As things stand, the legislature and the executive are working hard to ensure that the oil and gas sector is well regulated via relevant and realistic legislation that ensures a good framework for implementation of its objectives for the common good of all Nigerians. I have no doubt that sooner rather than later, the National Assembly would pass the Petroleum Industry Bill into law after the challenges identified with the earlier version have been reviewed and corrected. My office is working in collaboration with other stakeholders to ensure that the legal, technical and industry concerns or issues that informed the initial decline of assent are fully addressed.

There are suits pending at the Federal High Court and others for the Federal Government to halt the Marginal Fields Bid Round, yet the government is determined to go ahead with the process on June 21. What is your position on this?

I am aware that the Director, Department of Petroleum Resources (DPR), Engr. Sarki Auwalu, issued a statement to the effect that the said oil fields under litigation are not part of the 57 oil fields offered by the Federal Government for the competitive bid round. His statement informed the public that the 57 oil fields listed for bidding are small oil fields that major oil companies considered unprofitable and auctioned to indigenous companies under a competitive bidding round. Since due diligence must have been carried out to ensure that none of the 57 fields is subject to any litigation, the DPR has the right to carry out the competitive bid. Where there is a valid injunction or order of court restraining the Federal Government from carrying out the exercise, you can be assured that the Federal Government would be guided by such orders and in such guidance, take necessary available legal steps to establish its rights and interest. We will be guided by the rule of law, the public interest, and the interest of justice in our conduct as a government.


Recently, President Buhari signed the amended Deep Offshore Act with a lot of commendations from Nigerians. What changes do you think this has brought to the upstream sector of the oil industry?

On Monday, November 4, 2019, His Excellency, President Muhammadu Buhari, GCFR, assented to the Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Act, 2019 (“the Deep Offshore Amendment Act”) following its passage by the National Assembly in October 2019. The amendment is in line with the provisions of Section 16 of the Deep Offshore and Inland Basin Production Sharing Contracts Act, Cap D3, Laws of the Federation of Nigeria, 2004 (DOIBPSCA or “the Act”) which requires the Federal Government of Nigeria (FGN) to review the provisions of the Act when the price of crude oil exceeds $20 per barrel in real terms, or within a fixed number of years (15 years from commencement of the Act and 5 years thereafter).

The Act originally provides for the legislative framework guiding Nigeria’s Deep Offshore Oil Production and was driven by the need to encourage upstream investments in offshore acreages. Unfortunately, the provision of Section 16 of the Act and the obligation imposed thereby had long been abandoned hence the enactment of the Deep Offshore (Amendment) Act, 2019 which has ushered in a new regime as well as an increase in revenue for the Oil and Gas sector.

The 2019 Amendment Act in the main seeks to augment Nigeria’s earnings from the Oil and Gas sector thereby increasing the revenue of the Federal Government and establishing enforceability and compliance of our laws in our business and economic life and relationship with the investors. By virtue of the Amendment Act, royalties would now be calculated on a field basis, dependent on the chargeable volume of the crude and condensates produced per field. The Act also includes a new section 17 which prescribes that all PSCs shall be reviewed every eight years. The Amendment also imposes an additional royalty rate to account for an increase in the price of crude in excess of $20 per barrel. The Amendment Act, however, introduces four key changes to the original Act, as follows:

(1) Provide more fiscal certainties in the sector on the part of the government and the contractors/operators.


(2) Upward review of royalty rates payable which will also reflect the current price of crude and not just the distance or location of the oil fields.

(3) Flexible approach to amending the PSCs which ultimately means more revenue for the Nigerian people.

(4) Guide investment decisions in a way that does not place any party at an undue advantage.

A lot of the cases that the agencies under your ministry are either investigating or prosecuting now are linked to the oil and gas sector under the last administration. What is your ministry doing to ensure that such malpractices are proactively prevented from happening in the future through institutionalised checks?

There have been allegations of misconduct and mismanagement that are currently being investigated and where such allegations are confirmed the cases would be duly prosecuted. The ministry is taking steps in the right direction to curb such malpractices and misconducts and make culprits face the law.

For instance, I have created a system in the Federal Ministry of Justice (in the Office of the Hon. Attorney General of the Federation and Minister of Justice) to check and evaluate risk and vulnerabilities in government contracts with a view to taking pro-active steps to deal with the identified challenges. We have received contracts form several ministries, departments, and agencies. I have experts who are specifically dedicated to ensuring that there are compliance and contract implementation. Findings from their activities will form the basis for variation of contracts, or even termination as the case may be. Also, recommendations will be made for institutional reforms to prevent the recurrence of the identified lapses that must have enabled the vulnerabilities identified.


Another high-profile case being prosecuted by your ministry is the Malabu case, what is the status now?

You will agree with me that the Malabu Oil deal saga remains the biggest in our recent history. Under this Malabu Oil deal, most of the cases are ongoing in Italy while locally, cases connected with the transaction are also ongoing and we await the decisions of the courts in various jurisdictions in the case. I should add that the Federal Government through the Ministry of Justice had also recovered $73 Million connected with the Malabu deal from the United Kingdom.

What is the status of the P&ID case?

The Process and Industrial Developments Limited (P&ID) claimed that they signed a contract with the Federal Government (Ministry of Petroleum Resources) Gas Sales and Purchase Agreement. The deal subsequently broke down. This led to a lawsuit filed against Nigeria in the UK and an arbitral award against Nigeria that has accrued interest to the tune of $9 billion over the past twenty years.

However, from new evidence that has come to light in recent investigations, it is clear that the original contract was a sham transaction and was designed to fail from the outset. The alleged fraud was only recently discovered as a result of President Muhammadu Buhari’s anti-corruption efforts and objection to the payment. Consequently, we have instituted an action against the company in the United Kingdom and charges have been preferred against local collaborators who were involved in the fraud. All proceedings are ongoing and we are quite optimistic that the Federal Government of Nigeria will be successful in overturning the award.

We have consistently succeeded in staying execution and enforcement of the award in multiple jurisdictions including the UK and US.

Nigeria was able to secure a stay of enforcement of the judgment of the UK Business and Commercial Court that recognized the award in August 2019. Our appeal against the judgment is also pending before the UK Court of Appeal. Meanwhile, we are currently pursuing an application before the UK Business and Commercial Court for extension of time to enable Nigeria file an application for the setting aside of the award on grounds of fraud, misrepresentation and suppression of facts. This is based on the convincing findings by the EFCC and the Nigeria Police that P&ID indeed cut corners and compromised government officials back then in the negotiation and execution of the Gas Supply and Processing Agreement. The investigations and proceedings are still ongoing.

How much has your ministry recovered from looters in the oil sector?

We recovered over $73 million as ordered by the United Kingdom Commercial Court being part of proceeds from the sale of OPL 245 by Malabu Oil and Gas Company to Eni/Shell. We have successfully repatriated over $311 million from the US relating to Abacha loot. These are major recoveries and there are other recoveries of less volume. Other associated cases are pending in the courts in Nigeria and Italy.

It was really surprising that the Federal Government lost some of the cases abroad. Any hope of appealing the cases?

With specific reference to the oil and gas sector, the Federal Ministry of Justice is not always responsible for filing of those cases. However, when we are fully briefed, we will appraise the cases on their merit before deciding on the way forward. Nigeria will exercise all legal and diplomatic options available to her to ensure that cases are objectively reviewed and that trials are transparent. But we have a history of success both in terms of prosecutions and defence that translated to huge savings for the Federal Government.

There are a lot of cases filed against oil companies over environmental degradation both locally and internationally by oil-bearing communities. Are there steps your office is taking to back these communities to get justice?

The President at the beginning of this administration demonstrated his commitment towards a healthy environment throughout the country especially in the oil producing region when he commissioned the cleanup of Ogoni land. Recall that in 2012, members of the Bodo Community in Niger Delta filed a lawsuit against Shell Petroleum Development Corporation in a London High Court seeking compensation for two oil spills and losses suffered to their health, livelihoods, and land. The suit also sought orders directing the cleanup of the oil pollution caused their community by Shell. Years later, Shell accepted responsibility for the spill and agreed to a £55 Million out of Court settlement and to assist in the cleanup. Just like the Bodo community, the Federal Government (and of course my Office) is working on ensuring that other communities equally affected by oil spills and pollution get justice against any environmental degradation caused by activities of the IOCs. My office is ready to assist the communities within the ambits of the law.

A huge amount running into billions of Naira has been recovered by the EFCC since 2015. As the supervising Minister of the EFCC, what are you doing to ensure that the money is intact?

The recovery of assets is not only the mandate of EFCC, other anti-corruption agencies, and law enforcement agencies also have some powers to recover stolen assets within their laws. In the President’s press release on 12th June, 2020, he informed Nigerians that N800 billion was recorded within one year. This is recovery that the Federal Ministry of Justice is aware of and is also monitoring. Unfortunately, we have witnessed attempts or failure to report recovery in a manner that is consistent with extant financial laws in Nigeria.

As a result of this, under my supervision, the Federal Ministry of Justice has designed and initiated various policies on anti-corruption, and to reduce lack of transparency in asset recovery including but not limited to:

(a) The National Anti-Corruption Strategy Framework which is standing on Five Pillars including the transparent management of recovered assets;

(b) The Open Government Partnership initiative including the Commitment on the establishment of accountable management of recovered assets

(c) The issuing of Regulations 2019 on the Management of Recovered Assets

(d) The establishment of the Asset Recovery and Management Unit

(e) The drafting of a comprehensive Bill on Proceeds of Crime to ensure that all the anti-corruption and law enforcement agencies are held accountable for all recovered assets and to establish a centralized process for the management of assets

(f) Working with the Federal Ministry of Finance and the Central Bank of Nigeria to establish central recovery accounts in the CBN and adding recovered funds as a source of revenue under the Appropriation Act;

(f) The Federal Ministry of Justice is responsible for international recovery and has recorded more than $634million (six hundred and thirty-four million) between 2018 and 2020. The Federal Executive Council, for investment in social investment programmes and the support for infrastructure development, approved these funds, particularly the construction of the Abuja-Kano expressway, Lagos to Ibadan road and the Second Niger Bridge managed by the Nigeria Sovereign Investment Authority.

I want to assure Nigerians that soon there will be an institutional framework for effective management of recovered assets when the Proceeds of Crimes Bill is passed by the National Assembly and eventually assented to by the President. This law will hold all agencies, including EFCC accountable for every penny that is recovered on behalf of the Federal Government of Nigeria.

The current management of the NNPC will be one year in office next month. How would you rate the management team led by Mr. Mele Kolo Kyari and what advice do you have for him?

In preparation for a year in Office as GMD of the NNPC, I note that Mr. Mele Kyari recently listed some of his achievements including: Uninterrupted Fuel supply, EGTL Dispute Settlement, NLNG T7 FID, DOA Amendment, Making NPDC the largest Gas supplier to the Power Plants, Production of above 2.1 million barrels per day, except for the recent OPEC cut occasioned by the Covid-19 Pandemic, effective Leadership of the Oil and Gas Industry response to COVID-19 and Automation of NNPC Business processes, including sales processes.

The GMD has also caused the reduction of unit operating cost of production from $35/bbl to $25/bbl and targeting $10/bbl as well as commenced the refinery rehabilitation programme, to be ready by 2023. All these were done in barely one year. With the foregoing, which are easily verifiable, I can reasonably say that the GMD has done very well.

Above all, the transparency and accountability disposition of the GMD in providing an audited account of the NNPC, which is unprecedented, is also commendable.

My advice for him, however, is that he should not rest on his oars and should ensure consistency in his commitment to taking the NNPC to greater heights. There is no doubt that the impact of Covid-19 on the global oil and gas industry is very dire, nevertheless with commitment, effective leadership, vision, agility and innovation, I believe the GMD would take our oil and gas sector to greater heights before he leaves office.


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