US embassy cable - 05LAGOS563

C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 000563 
 
SIPDIS 
 
E.O. 12958: DECL: 04/11/2008 
TAGS: NI, PGOV, PREL, EPET 
SUBJECT: SHELL SAYS NIGERIA NEEDS OVERHAUL 
 
 
Classified By: Ambassador John Campbell per 1.4 b and d 
 
1.  (C) Summary:  Shell Petroleum Development Corporation 
(SPDC) Managing Director (MD) Basil Oyimi told Ambassador he 
is concerned with President Obasanjo's "over-personalization" 
of reform.  The lack of institutional underpinnings means 
Nigeria will be "back to square one" in 2007.  Oyimi argued 
Nigeria needs a long-term institutional custodian for reform, 
which would focus on the civil service, security, and 
anti-corruption and good governance throughout every level of 
government.  This structure should be led by someone like 
finance minister Okonjo-Iweala, he maintained.  Oyimi 
solicited USG support in selling the idea to President 
Obasanjo and to the international community.  The Ambassador 
responded that Washington and other capitals would require 
clear reasons for supporting such an initiative and would be 
wary of Nigeria establishing yet another corrective 
institution.  End Summary. 
 
 
Oyimi: We Need Ministry of Transformation 
----------------------------------------- 
 
2.  (C)  SPDC MD Oyimi told Ambassador President Obasanjo had 
achieved modest gains under his reform program.  He worried, 
however, the president had overly personalized the process, 
without creating the necessary institutional framework to 
sustain reform beyond his tenure.  Obasanjo's personalization 
of the reform process meant the next president in 2007 would 
likely follow suit by creating new versions of watch-dog 
agencies such the Economic Financial Crimes Commission (EFCC) 
and Independent Corrupt Practices Commission (ICPC) and 
staffing them with "his people." 
 
3.  (C)  Oyimi argued Nigeria needs "a transformation 
ministry," that would focus on reform over a ten-year 
horizon.  This ministry or structure should receive heavy 
organizational support from the World Bank and UNDP and 
should focus on civil service and police/security reform.  It 
should right-size government, insist on professional 
competency, and most importantly, in Oyimi's view, inculcate 
anti-corruption and good governance values across every tier 
of government. 
 
Ngozi Type Should Lead It; Hand of Oil Companies 
and International Community Must Be Invisible 
--------------------------------------------- - 
 
4.  (C)  Oyimi said normally this type of initiative should 
be spearheaded by the Vice President, but VP Atiku was 
anathema to Obasanjo.  The new ministry could not appear to 
be imposed on Nigeria and the public would accept only a 
Nigerian at its helm.  The leader of the organization would 
also require impeccable international credentials.  Finance 
Minister Ngozi Okonjo-Iweala or "a man like her" would be the 
ideal candidate in Oyimi's view. 
 
5.  (C)  Asked about the role of major oil companies and that 
of the international community, Oyimi replied he is still in 
the brainstorming stage and has not yet broached the concept 
with industry counterparts.  The U.S. and the international 
community are needed to sell the idea to Obasanjo but they 
should not be seen as its architects.  Obasanjo is good at 
"taking a sketch and running with it, but will resist if he 
thinks his hand is being forced." 
 
Use "Legacy" To Hook Obasanjo but 
Where's the Hook for International Community? 
--------------------------------------------- - 
 
6.  (C)  Oyimi predicted the "legacy" argument would resound 
most with Obasanjo.  The proposed structure/ministry would 
complement the president's "economic legacy"  and should be 
pitched to Obasanjo as the "governance legacy."  Through this 
structure, Obasanjo would help ensure that reforms did not 
end with his tenure.  Oyimi's external affairs director 
Precious Omuku stated the National Political Reform 
Conference (NPRC) might serve as a vehicle for advancing this 
proposal. 
 
7.  (C)  Ambassador took note of the proposal and said it had 
apparent merits.  He advised, however, the international 
community would be wary of yet another new Nigerian 
governmental or quasi-governmental body.  The GON, he said, 
had a habit of creating new structures to deal with old 
problems.  Moreover, the Ambassador noted that to some degree 
the problems Oyimi sought to address -- incompetent civil 
servants, bloated state and federal bureaucracies, etc. -- 
were internal Nigerian issues.  The USG other international 
partners would be interested in two things as it considered 
whether to support this initiative: 1) How does the 
redressing of these internal GON deficiencies benefit their 
interests? and 2) What will ensure the efficacy of the new 
proposed structure/ministry? 
 
8. (C) Oyimi responded that "transforming" Nigeria's civil 
service and inculcating anti-corruption and good governance 
values would make Nigeria more attractive to new foreign 
investors.  It would also improve the environment in which 
current investors, including U.S. firms, operate.  The 
uniqueness of this initiative is that it would be the first 
to combine security, transparency, and governmental 
performance under one organizational umbrella. 
 
SPDC Faces Challenges but Progressing Relatively Well 
--------------------------------------------- -------- 
 
9.  (C) Changing gears toward Shell's more traditional 
vocation, SPDC staff told Ambassador that SPDC was doing 
relatively well in Nigeria, but faced serious challenges, 
including community unrest, bunkering, lack of access to 
Ogoni land, aging assets, and pipeline sabotage.  The biggest 
challenge, they maintained, was lack of funding from the GON 
for joint-venture projects.  The president, they said, would 
like to grow oil revenues, but in order to accomplish this, 
SPDC needs more capital investment from the GON. 
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Comment 
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10.  (C)  The proposed "transformation ministry" is 
interesting.  However, Oyimi did not adequately address our 
bottom-line questions of how would such a ministry benefit 
USG interests and why would this body work any better than 
the current structures. The conversation held at Oyimi's 
initiative, illustrates, however, that the biggest single 
player in Nigeria's oil and gas sector is concerned the 
current reform effort has shallow roots and its life span may 
be no longer than Obasanjo's tenure.  End Comment. 
BROWNE