US embassy cable - 03LAGOS148

C O N F I D E N T I A L SECTION 01 OF 04 LAGOS 000148 
 
SIPDIS 
 
 
DEPT OF ENERGY FOR CAROLYN GAY 
 
 
E.O. 12958: DECL: 01/08/2012 
TAGS: ASEC, ECON, EPET, EINV, DS/DSS/ITA, DS/IP/AF, DS/DSS/OSAC 
SUBJECT: NIGERIA:  NOT ONLY GAS FLARES IN NIGERIA, ITS' 
PETROLEUM HEADQUARTERS BUILDING ALSO BURNS 
 
 
REF: STATE 241213Z 
 
 
Classified By: CONSUL GENERAL ROBYN HINSON-JONES. REASONS 1.5 (B) AND ( 
 
 
D). 
 
 
1.  (C)  Summary: Arson is strongly suspected in the December 
24 fire that 
destroyed the Nigeria National Petroleum Corporation (NNPC) 
headquarters and 
records. The fire followed by barely a week a newspaper 
article asserting 
that there is solid, extensive and documented proof that GON 
officials have been 
stealing much of Nigeria's oil revenue.  The leader of a 
previously unknown 
group, the Young Democratic Movement YDM claimed 
responsibility for the 
fire, citing "unhappiness with the GON" as the impetus.  He 
and his attorney have 
since been arrested.  The GON has announced there will be 
investigations, but 
observers do not expect anyone to be charged or punished as a 
result.  End summary. 
 
 
------------------------- 
WHAT HAPPENED 
------------------------- 
 
 
2. (C) During the evening of December 24, fire gutted the 
NNPC's Lagos 
headquarters building, which was located on Ikoyi Island in 
Lagos.  Deputy 
Police Commissioner (DPC), Haruna John (Please protect 
accordingly.), 
told  CG and Econoff that the fire began on the eighth floor, 
where the 
offices of the Nigerian Petroleum Investment Management 
Services 
(NAPIM) were located.  NAPIM manages the GON's joint ventures 
with international oil companies (Shell, Mobil, Chevron, 
AGIP, 
Elf, and Texaco).  A second fire later ignited on the second 
floor of the building, where the Pipelines and Products 
Marketing Company 
(PPMC) was housed.  PPMC sells diesel fuel, gasoline, 
kerosene, aviation 
kerosene, and similar products.  PPMC recently began 
importing fuel in 
response to a shortfall on the local market. 
 
 
3. (C) Observers noted the slow response of the fire 
department to the fire. 
The fire fighters who arrived first at the scene did so at 
least an hour after 
the blaze had started.  According to the DPC, firemen 
initially refused to 
respond to the blaze until he personally dispatched policemen 
to the fire 
stations with orders to arrest firemen who refused to go. 
When the firemen 
eventually arrived on site, they lacked the proper equipment 
and had to wait for 
a water tanker.  Hours later, a second blaze started on the 
second floor, six 
floors down from the first fire, and consumed the rest of the 
building. 
 
 
 
 
------------------------------------------ 
WHY HERE AND WHY NOW? 
------------------------------------------ 
4. (U) On December 17, 2002, Barth Obi Oyibo Thompson of Abia 
State placed a 
three-page statement in the "Vanguard", a widely read 
Lagos-based newspaper.  He 
began the article by establishing  his ties to President 
Obasanjo and Andrew Young 
among others and his credentials as a petroleum industry 
expert.  Claiming a 
commitment to Nigeria and to President Olusegun Obasanjo, 
Thompson wrote 
that he was compelled to expose ongoing  fraud and theft of 
Nigeria's 
petroleum revenue through under-reporting of exports. 
 
 
5. (U) Oyibo Thompson purported to have at least fifteen 
years of documentary 
history on Nigeria's oil exports, and stated that he had 
extensive supportive 
data to prove his claim of fraud. He went on that it has been 
an open secret for 
sometime that "an unidentified West African country" has been 
under-reporting 
its oil exports.  According to Thompson, this fact allegedly 
explains why the World 
Bank reports that less than 45% of  Nigeria's oil export 
proceeds end up funding 
Nigeria's federal budget.  Oyibo Thompson concluded his 
accusation by calling on 
President Obasanjo, whom he considers an honorable man, to 
identify the culprits 
and resolve the problem. 
 
 
6. (C) Comment. Post has learned from Chuka Odom, Deputy 
Chief of Staff for Abia 
State (Please protect accordingly), that "Barth Obi Oyibo 
Thompson" is probably an alias. 
Our contact has not been able to locate anyone in Abia State 
who knows this 
Oyibo Thompson but, he surmised that  "Thompson" was a senior 
NNPC official 
or a disgruntled employee who definitely had access to 
information.  Our man 
further speculated that "Thompson" probably did not work 
alone, and that other 
persons inside NNPC were feeding him information.  The 
reference to Obasanjo 
as an "honorable man" may be a subtle hint to the President 
to "do the right thing," 
our source said.  End comment. 
 
 
---------------- 
WHO DID IT 
---------------- 
 
 
7. (U) Chris Nwozobia, leader of the previously unknown Youth 
Democratic 
Movement (YDM), has claimed responsibility for the fire.  He 
reportedly said he 
set the building afire because of "unhappiness with the 
performance of the Federal 
Government".  Nwozobia told the media that his group, based 
in Lagos, has members 
throughout the country.  Nwozobia turned himself over to 
State Security headquarters. 
Nwozobia and his attorney, Festus Keyamo, were later arrested. 
 
 
8. (C) The Deputy Police Commissioner told us on January 8 
that it is unlikely 
that the YDM had a direct hand in the fire.  If it was 
involved at all, it was 
probably at the instigation of some person or group in an 
effort to cover up 
unethical practices at NNPC. He asserted that it would not 
have been unusual 
for such a group to be hired by a third party for such an 
act. 
 
 
9. (U) Many observers think the fire was an inside job by 
persons interested in 
covering their tracks following wrongdoing.  The fire began 
on the eighth floor, 
where  important documents relating to GON investments were 
kept including 
joint venture contracts and production sharing agreements 
which may yield billions 
of dollars in revenue to the GON. The projects cover 
pipelines, oil field 
services, supply production facilities, and field 
development. 
 
 
10. (U) Among the documents on this floor were those relating 
to cash calls. The 
GON recently paid 24 billion naira (approximately 240 million 
USD) in cash call 
arrears dating to the Abacha years (1994-99). The oil 
companies and the GON 
disagree on the exact amount of the U.S. dollars owed for 
that period. The GON 
says it owes the international oil companies 300 million USD, 
the companies say 
500 million USD. 
 
 
11. (U) Documents relating to the daily sale of petroleum 
products were located 
on the second floor where fire also broke out.  Since the 
NNPC's consignees 
typically obtain 30-day credit from the company, some of the 
documents that 
burned may have been essential to a determination of the 
exact amount owed 
to the NNPC.  Current data on fuel imported or refined 
locally was also lost. 
12. (C) On January 13 Econoff met with Chuka Odom, Chief of 
Staff of the 
Governor of Abia State, who opined that the government will 
most probably 
never determine the cause of the blaze.  Odom pointed out 
that ninety percent 
of Nigeria's foreign revenue derives from the oil sector, yet 
this is the only sector 
without a cabinet ministry.  Odom asserted that almost any 
senior GON official 
now has unrestricted, and possibly undocumented, access to 
NNPC records. 
 
 
-------------------------- 
LIKELY OUTCOME 
-------------------------- 
 
 
13. (U) Many Nigerians ad public officials have called for a 
thorough 
investigation of the fire.  President Obasanjo, noting the 
loss of vital oil 
sector documents, established a panel of inquiry and the 
police and fire 
departments are also investigating the fire. 
 
 
14. (C) The Deputy Police Commissioner said a police panel 
comprising as 
many as fifteen persons is investigating the matter, but he 
expects no significant 
findings.  According to him, senior officials are not 
interested in the truth. 
Although asked to be a member of the investigative panel, 
the DPC said he 
refused to join, fearing reprisals if the investigation were 
done correctly and 
preferring not to be involved if it were botched.   "It would 
be politically and 
professionally foolhardy," he said, " to uncover and expose 
the perpetrator if that 
person is moneyed or high-powered. This could result in death 
to the person who 
reveals the wrong-doing." 
 
 
------------------------- 
WHAT NOW NNPC 
-------------------------- 
 
 
15. (U) The GON was not the only loser as a result of the 
inferno.  The 
headquarters' 200 employees found themselves potentially 
jobless on 
Christmas Day.  NNPC office workers are temporarily housed at 
the 
headquarters' guest quarters but some employees, such as 
domestics, are 
now unemployed.  Because of crime in Lagos, many NNPC 
employees kept 
passports, school certificates, money and jewelry at their 
offices and  will 
find it difficult to replace these items. 
 
 
16. (U)  An AmCit oil company executive told ConGen that  the 
oil companies 
have copies of documents pertinent to their businesses at 
their offices in  Nigerian 
and abroad at their corporate headquarters.  NNPC should have 
copies of these 
documents in their Abuja offices, however, NNPC will most 
likely look to the 
oil companies to fill in the gaps. 
 
 
17.  (C) Comment.  NNPC may have suffered a blow to its 
reputation, which 
was not high in any event.  Many people suspect the 
authorities will never 
disclose the real cause of the fire.  Lagos has a long 
history of unsolved fires 
gutting government properties.  For example, the Defense 
Building burnt in 
1991 during a probe of its activities.  Nigeria External 
Telecommunications (NET) 
building burnt twenty years ago as the result of a fire in 
the accounts department. 
Its reconstruction has been in progress for as many years. 
Odua, an investment 
group comprising  five southwestern states,  has lost two of 
their buildings to 
fires in the last seven years.       The skeptics say that 
NNPC will continue to 
conduct business as usual, even if from temporary quarters, 
and the memory 
of the fire and destroyed records will fade.  Long-time Lagos 
residents say 
the various investigating panels will produce reports, but 
these will never be 
released to the public.  Panel members might legitimately 
fear for their personal 
safety if they were to delve too deeply into the 
circumstances of what really 
happened on Christmas eve. 
HINSON-JONES