US embassy cable - 04ABUJA35

UNCLAS SECTION 01 OF 03 ABUJA 000035 
 
SIPDIS 
 
E FOR ANNE PENCE 
EB/IFD/OIA FOR MARSHA KELLEY AND TIM HAUSER 
INL/C FOR DAVID LUNA AND JOHN BRANDOLINO 
 
E.O. 12958: N/A 
TAGS: PGOV, KCOR, ETRD, NI 
SUBJECT: MAKING NIGERIA AN EVIAN TRANSPARENCY AND 
ANTI-CORRUPTION PROGRAMS PILOT COUNTRY 
 
REF: A. 03 STATE 345287 
 
     B. 03 ABUJA 2231 
     C. 03 ABUJA 2216 
 
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SUMMARY 
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1.  Post believes Nigeria is an important focus for U.S. and 
international efforts on corruption and transparency, and 
should be a pilot country under the Evian Declaration (Ref 
A).  Nigeria's Government has started nine different 
transparency or anti-corruption programs, several with U.S. 
and other G-8 members' assistance.  EITI is important among 
them, but the extractive industries by no means are, nor 
should they be, the sole focus of either the GON's or our 
efforts.  The Nigerian Government has recently put on trial 
the Minister of Labor, two former Ministers, a Permanent 
Secretary and others in a procurement scandal, and both the 
 
SIPDIS 
Government and the National Assembly announced new committees 
last month to tackle budget implementation reform.  Making 
Nigeria a pilot country under the Evian Declaration would be 
an excellent response, and concrete support, for these 
nascent moves forward as long as G-8 members are willing to 
ramp up and sustain their support.  End Summary. 
 
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NIGERIAN GOVERNMENT IS READY 
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2.  Both the Embassy and the Department have had extensive 
discussions with the Nigerian Government on 
transparency/anti-corruption efforts, including under Evian. 
In post's latest discussion on December 23 with the GON's 
anti-corruption czar, Senior Special Advisor to the President 
Dr. Ezekwesili, she noted Nigeria's interest in becoming a 
pilot country under the Evian Declaration on Fighting 
Corruption and Enhancing Transparency, saying the GON is 
committed to fighting corruption, implementing transparency 
in GON operations to include energy revenues and 
budget/procurement implementation, and downsizing government 
through the sale of GON parastatals. 
 
3.  In response to Ref A's special paragraph for Abuja, the 
GON is beginning to address the key issues in budget and 
procurement.  The main issues in the budget are transparency 
and "budget implementation," the latter a Nigerian term for 
the fact that GON routinely and often refrains from expending 
money for many items approved in its budget.  President 
Obasanjo told the National Assembly in December, for example, 
that the GON's Central Bank had not released money to GON 
ministries for approximately half of the allocated items in 
the GON's capital budget.  The National Assembly believes the 
figure is closer to 80 percent not released, and thus the 
expenditures never made.  Both the Executive and the 
Legislative branches are setting up new institutions to 
address the budget implementation problem (see below). 
 
4.  The GON has improved the 2004 budget transparency process 
by including and consulting with the National Assembly at an 
earlier stage than before in formulating the budget.  The 
GON's relation with the IMF is improving, and the IMF has 
helped Obasanjo's economic team with its budget framework. 
An article IV consultation is scheduled for mid-February. 
 
5.  Anti-corruption improvements in procurement were started 
earlier and have borne fruit in victories for American 
contractors when competitors were forced to bid on a level 
field (Ref C details the most recent).  Dr. Ezekwesili's 
Budget Monitoring and Price Intelligence Unit is a major 
component in this effort.  Both the GON's procurement system 
and anti-corruption effort in procurement, however, are still 
not transparent. 
 
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NIGERIAN GOVERNMENT PROGRAMS 
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6.  ICPC:  The Independent Corrupt Practices Commission was 
set up in 2000 by an act of the National Assembly to 
investigate and prosecute corruption complaints from private 
citizens, and operates outside the Executive branch of the 
GON.  The ICPC emerged from constitutional challenges in 
2002, had its mandate partially changed in 2003, and made its 
first major arrests in December (see below).  The Chairman is 
retired Supreme Court Justice Mustapha Akanbi.  The initial 
staff of investigators seconded from the Police and the State 
Security Service (SSS) and prosecutors seconded from the 
Ministry of Justice is changing over to the first batch of 
dedicated ICPC investigators and prosecutors trained with 
support from INL. 
 
7.  BMPIU:  The Budget Monitoring and Price Intelligence 
Unit, also known as the Due Process Office, was established 
under the Office of the Principal Secretary to the President 
in June 2003. It is run as an operationally independent body 
under the leadership of the Senior Special Assistant to the 
President on the Unit, Obiageli (Oby) Ezekwesili.  The Unit 
is designed to act as the clearing-house for all Government 
contracts and procurement of goods and services, and 
monitors/certifies all GON contracts over 1 million Naira 
after a "Due Process Review" to check that anti-corruption 
and other laws are followed. 
 
8.  EFCC:  The Economic and Financial Crimes Commission 
exists as the GON's internal equivalent of the ICPC, 
monitoring and prosecuting economic and financial crime 
within the Government and looking for waste and leakage in 
public finance, as well as investigating financial fraud (419 
scams) and money laundering.  The Commission was established 
in 1993 as part of the National Drug and Law Enforcement 
Agency (NDLEA), but was given greater independence in 1999 
and today coordinates anti-corruption efforts of the Central 
Bank, NDLEA, the Nigeria Police, the Nigerian Telephone 
Company (NITEL), and other GON institutions. 
 
9.  EITI:  The GON recently agreed to participate in the 
Extractive Industries Transparency Initiative, but thus far 
has taken no transparency actions under EITI. 
 
10.  BPE:  The Bureau of Public Enterprises, which oversees 
management of the Nigerian Government's equity in parastatal 
organizations, has an Anti-Corruption and Transparency Unit 
that could become important under EITI. 
 
11.  Finance Ministry "Cash Commission:"  According to 
Nigeria's Minister of Finance, a cash management commission 
will be set up within the executive branch of government, 
with IMF assistance, by mid-January 2004 to improve budget 
implementation.  The Cash Commission will monitor GON 
revenues and guide the release of funds from the Central Bank 
to GON ministries for expenditures already approved under the 
budget.  The Commission may also receive responsibilities to 
monitor and evaluate ministers' and other senior GON 
officials' job performance, transparency in contracting, and 
productivity. 
 
12.  National Assembly's Legislative Budget and Research 
Committee:  The House of Representatives has announced that 
it will set up this Committee to address budget 
implementation, as well as to provide budget revenue and 
expenditure data similar to the Congressional Budget Office 
in the U.S. 
 
13.  CCB/CCT:  The Code of Conduct Bureau and Tribunal were 
created in 1999.  This executive branch bureau is intended to 
monitor the declaration of assets by publicly elected 
officials, but only does so at the time of election and 
departure from office.  The declarations and the audits of 
them are not public. 
 
14.  Nigeria Police:  All of Nigeria's police are Federal, 
not state or local, and constitutionally headed by the 
Inspector General of Police.  The Inspector General has 
dedicated anti-bribery and anti-fraud units.  Numerous 
arrests of police officers for corruption were made during 
2003, but few trials have started and no punishments have 
been made public. 
 
15.  Auditor General and Accountant General: These oversight 
positions track funds in the GON's expenditures and revenues 
respectively. 
 
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FIRST FRUITS? 
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16.  After a one-year investigation, the ICPC on December 3, 
2003 announced its arrest and detention of seven persons, 
including the current Minister of Labor, for taking kickbacks 
and bribes in a project to create a national identity card. 
President Obasanjo fired the Labor Minister the following 
day.  Several of those arrested served in the Ministry of 
Internal Affairs from 1999 to 2003, including two former 
Ministers and the current Permanent Secretary.  After nearly 
a month in jail, the suspects were all arraigned on December 
29 and granted bail two days later.  There is no indication 
of a trial start date. 
 
17.  The defendants in this case represent the 
highest-ranking officials ever formally investigated by the 
government.  Current indications are that the trial will be a 
showy production for the current administration to show a 
tough stance on corruption.  Once the trial begins, which may 
not be for another month or two, it can be expected to last 
for several months. 
 
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PRESENT USG AND OTHER G-8/IFI PROGRAMS 
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18.  USAID works with several international and civil society 
organizations to promote transparency, accountability, and 
rule of law among the general public, often in projects 
coordinated with the BMPIU, ICPC, National and State 
legislatures, the Independent National Electoral Commission, 
political parties, and the Economic Planning Commission. 
USAID provided major assistance to the BPE, and helped revamp 
it into an internationally entity.  USAID also works with 
state courts to improve judicial performance and 
implementation of the Judicial Code of Conduct. 
 
19.  INL has long worked with the ICPC and will send select 
ICPC investigators and prosecutors to Hong Kong in February 
for a comparative study of anti-corruption efforts.  In FY 
2005, INL will add a program to provide advisory technical 
services to the EFCC, and to procure equipment for the 
Financial Intelligence Unit (FIU).  Treasury provides 
training assistance to the EFCC and other Nigerian law 
enforcement bodies. 
 
20.  The UK's transparency and anti-corruption activities in 
Nigeria have been centered on the ICPC and other GON 
institutions, and are adding a focus on EITI.  The UK's 
Department for International Development also supports one 
NGO, Business Integrity, that is set up to provide a "quality 
mark" for Nigerian businesses it investigates and determines 
are free from corruption. 
 
21.  The World Bank has extensive anti-corruption programs 
with the Finance Ministry, BPE, Auditor General, and other 
GON institutions.  The IMF is heavily involved in the budget 
process. 
 
22.  Italy has various programs directly and through the EU 
with GON offices investigating money laundering and other 
corruption linked to trafficking in drugs and persons. 
 
23.  The other G-8 members do not have major transparency or 
anti-corruption programs of their own in Nigeria, although 
some G-8 members such as Germany and France are major donors 
to EU programs for Nigeria in these fields.  The Netherlands 
and Canada are starting direct programs in Nigeria.  In 
Abuja, the donors' Governance Group should be able to 
identify gaps as it works with the GON to establish an action 
plan under Evian for transparency and anti-corruption 
activities, and steer support from these other G-8 countries 
toward those gaps. 
Roberts