US embassy cable - 04ABUJA1653

S E C R E T SECTION 01 OF 03 ABUJA 001653 
 
SIPDIS 
 
NOFORN 
 
E.O. 12958: DECL: 09/22/2014 
TAGS: PREL, PGOV, KCOR, EPET, EAID, NI 
SUBJECT: NIGERIA, CORRUPTION, AND US 
 
REF: A. ABUJA 1486 
     B. ABUJA 1323 
     C. ABUJA 1584 
     D. TD-314/51925-04 
     E. ABUJA 35 
     F. ABUJA 979 AND PREVIOUS 
 
Classified By: Ambassador John Campbell for Reasons 1.5 (B & D). 
 
1. (SBU) Summary:  Corruption is a serious problem for 
Nigeria, and harms U.S. interests.  President Bush took up 
the issue in the G8 transparency/anti-corruption Compact with 
Nigeria at Sea Island, and the next important U.S. effort 
will be at the Nigeria-G8 meeting in Washington October 4. 
Post has consulted with diplomats of the other G8 missions 
and IFI representatives on the ground in Abuja, and offers 
the following as background for that October 4 meeting.  End 
Summary. 
 
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THE ISSUE 
--------- 
 
2. (S/NF) Corruption is endemic and pervasive in Nigeria.  It 
is difficult to overestimate the variety of threats it poses 
to U.S. interests here.  As noted in much of our recent 
reporting, corruption is a major factor in the instability of 
the Niger Delta, whence ten percent of U.S. oil imports come 
(Ref A).  Corruption imperils major U.S. private investments 
in the energy sector, and is an important reason why U.S. 
companies invest so little in Nigeria outside the energy 
sector -- two disruptive influences on Nigeria's economic 
stability.  Corruption is a major preoccupation of Nigeria's 
economic reform program and causes dislocations in U.S. 
exports to Nigeria (Ref B).  Corruption drives and drives off 
course much of Nigerian politics (Ref C), threatening both 
the process and the polity.  And corruption is a major risk 
factor increasing the possibilities for terrorism in and from 
Nigeria (Ref D notal). 
 
3. (S/NF) Although members of President Obasanjo's family and 
some of his senior advisors are involved in corruption (Ref 
B), it also appears true that President Obasanjo strongly 
supports the anti-corruption effort led by his economic 
reform team.  Such dualism is not uncommon as countries long 
under authoritarian rule move toward democracy, as in the 
careers of Roh Tae-woo of South Korea and Taiwan's Chiang 
Ching-kuo.  The GON now has several institutions (listed in 
Ref E) attacking different facets of corruption, and these 
institutions are beginning to target ministerial-level GON 
officials (although not Obasanjo's inner circle) as well as 
mid- and low-level operators (Ref F).  The GON sees its 
anti-corruption programs as a long-term effort to change a 
thoroughly corrupt society, and is making major investments 
in the fight. 
 
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USG RESPONSES 
------------- 
 
4. (C) The U.S. Mission to Nigeria is working several angles 
too.  Transparency/anti-corruption is an important theme in 
lobbying by Embassy officials, and Chiefs of Mission have 
gone so far as to speak out publicly in favor passage by 
Nigeria's National Assembly of specific legislation when that 
was in jeopardy.  The Political Section has added a 
transparency/anti-corruption portfolio to its human rights 
officer's responsibilities, and has organized the G8 missions 
and IFI representatives in Abuja into a G8 
Transparency/Anti-Corruption Working Group (GETAWG) to 
coordinate and advocate efforts.  USAID is an active GETAWG 
participant, and USAID currently spends around six million 
dollars on transparency/anti-corruption programs in Nigeria. 
The other G8 countries and IFIs combined spend a little more 
than that, and GETAWG members including the U.S. are 
supporting 41 different transparency/anti-corruption-focused 
programs in Nigeria. 
 
5. (SBU) The Embassy has also strongly contributed to the G8 
effort to reach a transparency/anti-corruption Compact with 
Nigeria, signed at the Sea Island Summit in June.  Following 
through on that effort is important.  The U.S. will host a G8 
meeting with Nigeria and the three other Sea Island pilot 
countries on October 4.  The Sea Island compact, and 
correspondence since between POTUS and President Obasanjo, 
indicated that the GON is to bring its Technical Action Plan 
to the meeting, and there is supposed to be a discussion of 
how to measure progress. 
 
------------------------ 
HOW TO MEASURE PROGRESS? 
------------------------ 
 
6. (SBU) If the Nigerians ask for any additional assistance 
in their Technical Action Plan, it will likely be technical 
assistance for the new Financial Intelligence Units to be set 
up in each GON ministry under the Economic and Financial 
Crimes Commission (EFCC) -- an important effort because it 
would facilitate faster corruption prosecutions as well as 
facilitate the EFCC's role in overseeing all GON 
anti-corruption activities.  G8 members' current programs 
work with practically all of the GON's other 
transparency/anti-corruption efforts, although there may be 
some niche projects that could usefully be picked up by 
Japan, Canada or Russia.  Those G8 members have little direct 
or indirect anti-corruption funding here. 
 
7. (SBU) How to measure progress against corruption will also 
be important on October 4, and beyond.  The GON has not 
shared either its Technical Action Plan nor its ideas for 
measuring progress with us, apparently saving them for the 
October 4 meeting.  GETAWG met September 22 to discuss 
various measurements for overall progress against corruption 
in Nigeria, to send ideas back to capitals in preparation for 
the October 4 G8 meeting. 
 
8. (SBU) Perhaps the best known broad survey is Transparency 
International's Corruption Perceptions Index (CPI), but 
GETAWG members have long believed it not suitable for 
measuring transparency/anti-corruption success in Nigeria 
especially in the Nigeria-G8 context.  Among the reasons: 
 
-- It is a comparison against other countries, hence 
Nigeria's rating is not dependent on Nigeria alone; 
 
-- There is a huge lag time involved with any perceptions 
polling; 
 
-- Transparency International itself acknowledges that it 
cannot be used to measure a country's performance over time. 
CPI 'scores' are standardized around a common mean each year 
to ensure a distribution of scores.  Because there is no 
consistent baseline, an increase in the 'score' from one year 
to the next does not imply a reduction in corruption; 
 
-- The index measures perceptions only, not hard indicators; 
and 
 
-- The perceptions are weighted towards the international 
business community, not people within the country itself. 
 
9. (SBU) There are other, perhaps more appropriate, broad 
survey tools to measure the extent of corruption within a 
single country, where corruption occurs, what types of 
corruption occur, the costs and effects on household and 
services and causal factors of corruption.  The Nigerian 
Ministry of Finance published a Governance and Corruption 
Survey in 2003, for example, using a diagnostic model 
designed by the World Bank. 
 
10. (SBU) Another means for general measurement of progress 
would be a combination of benchmarks derived from areas of 
the Nigeria-G8 Compact signed at Sea Island.  GETAWG members 
put forward the following, organized by sections of the 
Compact: 
 
----------------------------- 
JOINT ACTION WITH G8 PARTNERS 
----------------------------- 
 
-- Facilitation of information/evidence sharing between 
Nigerian and G8 governments on bribery by G8 nationals, with 
a purpose of prosecuting G8 nationals/companies under G8 
countries' anti-bribery laws. 
 
-- Implementation of a new G8 partnership to detect, recover 
and return illicitly acquired proceeds of corruption. 
 
-- Number/size of proceeds of corruption asset recoveries. 
 
-- Corrupted public officials denied safe haven. 
 
-- Measures implemented by G8 countries of the 40 revised 
FATF recommendations. 
 
--------------------------------------------- -- 
INSIDE NIGERIA:  BUDGET AND FISCAL TRANSPARENCY 
--------------------------------------------- -- 
 
-- Full publication monthly of the Nigerian Government's 
revenue allocations to all levels of government, and full 
publication yearly of appropriations from all levels. 
 
-- Publication of the Nigerian Government's budget 
implementation figures (i.e. actual spending compared what 
was budgeted, usually rather less than what was appropriated). 
 
-- Transparent accounting for the Excess Crude Account 
(where, how regularly?) 
 
-- Number of Auditor General's reports published within the 
time allowed. 
-- Risk assessments by World Bank or Fiscal and Data 
Requirements report by IMF. 
 
-- Passage of the (not yet submitted) Fiscal Responsibility 
Bill, and its implementation. 
 
--------------------------------------------- ------------ 
PUBLIC PROCUREMENT LEGISLATION, POLICY AND ADMINISTRATION 
--------------------------------------------- ------------ 
-- Savings to government from the 'Due Process' initiative 
and subsequent procurement reforms. 
Note: The 'Due process' initiative has undoubtedly saved 
Nigeria substantial sums of money from inflated contract 
bids.  However, there is a risk that the vetting process may 
also stop or delay legitimate expenditure in the capital 
budget.  We should check that the benchmark measures real 
savings, not legitimate expenditure that has been delayed by 
the vetting process. 
 
-- Extension of the Due Process initiative to line ministries 
(already started). 
 
-- Passage of legislation to set up a new Public Procurement 
Regulation Agency. 
 
------------------------------------------- 
EXTRACTIVE INDUSTRY TRANSPARENCY INITIATIVE 
------------------------------------------- 
 
-- EITI Bill passed, and evidence of enforcement. 
 
-- First audit of oil and gas revenues published, and plans 
for subsequent audits. 
 
-- Publishing revenue information in formats/language useful 
to all stakeholders and understandable by the general public. 
 
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ANTI-CORRUPTION INSTITUTIONS 
---------------------------- 
 
-- Funding and implementation of the EFCC's Financial 
Intelligence Unit offices in each ministry. 
 
-- Adequate budgets for EFCC and the Independent Corrupt 
Practices Commission (ICPC). 
 
-- Number of prosecutions brought by ICPC and by EFCC. 
 
-- Number of completed prosecutions/acquittals in cases 
brought by ICPC/EFCC. 
Note: It is unlikely that the number of convictions alone 
could be used as a benchmark, because this might lead to 
legal complications where defendants could allege the 
government was bringing cases merely to improve their 
performance against this benchmark.  The number of completed 
cases is a measure of the performance of the legal process. 
 
-- Value of crime proceeds recovered by ICPC/EFCC and other 
specialist units. 
 
-- Meeting the criteria for Financial Action Task Force 
de-listing. 
 
-- Enforcement of recently approved anti-money laundering 
legislation. 
 
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PUBLIC SERVICE REFORM 
--------------------- 
 
-- Number of 'ghosts' eliminated from the payroll (Federal, 
State), and subsequent cost savings. 
 
-- Implementation of civil service restructuring plans (the 
five current pilots, then all ministries). 
 
11. (SBU) The Embassy looks forward to the results of the 
October 4 meeting. 
CAMPBELL