Saturday, the 14th day of July, the peace and serenity of the government reservation area of Okene town in Kogi State was disturbed when a combined team of security agencies raided the country home of Mohammed Bello Adoke, former attorney-general of the federation and minister of justice. It was the fourth in a series of raids on his known residences in Kano, Abuja and student apartment in the Netherlands. The raids were in connection with his prosecution for his alleged role in the controversial Malabu Oil affair. This latest raid, like previous ones, did not yield anything because no incriminating document was recovered and not a pound, dollar or naira was found anywhere in these properties, including the overturned overhead water tanks and sceptic tanks.
The man in the centre of the Malabu Oil affair has consistently maintained his innocence, insisting that there was no wrongdoing in the discharge of his legitimate duties as a minister as delegated to him by the President and Commander-in-Chief. Therefore, the criminal prosecution of Adoke has further deepened the mystery shrouding the entire Malabu Oil affair. In resolving the mystery that is now the Malabu Oil deal, it is important to look beyond the plethora of opinions being promoted by the various interested parties in the public space by distilling facts from fiction, to have a true picture of how a huge chunk of Nigeria’s oil mineral resources was mismanaged.
Sometime in 1998, the former head of state, Sani Abacha, awarded OPL 245 to a company known as Malabu Oil and Gas Ltd. However, it was not an ordinary government business transaction, because the first family, through their eldest son, Mohammed Abacha, who is listed as a shareholder in Malabu Oil as Mohammed Sani, had a substantial stake, up to 50 per cent interest in the oil block. Another shareholder, Kweku Amafegha, was also discovered to be a fictitious name that in reality represented the personal interest (30 per cent) of Dan Etete, the minister of petroleum at the time of the award of OPL 245 to Malabu Oil. Clearly, a sitting head of state and his minister of petroleum, through a grand scam, appropriated a sizeable chunk of Nigeria’s oil and gas resources to themselves in the worst case of nepotism and conflict of interest in Nigeria’s corruption history.
The signature bonus on OPL 245 was fixed at $20 million but only $2 million was paid by Malabu Oil. Shell Petroleum was promptly engaged as a technical partner to Malabu in the operation of OPL 245.
Following the death of Abacha and the subsequent inquiry into the massive looting of Nigeria’s treasury under that rogue regime by the succeeding administration of Abdulsalami Abubakar, the former first family cleverly concealed their interests in Malabu in clear violation of Decree 53, which mandated them to declare all assets corruptly acquired from Nigeria’s common patrimony. By this time, Etete had emerged from the shadows of the fictitious Kweku Amafegha to assume full ownership and control of Malabu Oil’s OPL 245, acting ostensibly as a front for the former first family.
Following the transition to democratic rule in 1999 and President Olusegun Obasanjo’s reorganisation of state structures and institutions by scrutinising some policies, programmes and actions of previous administrations, the hammer fell on Malabu Oil when, in 2001, OPL 245 was revoked and re-awarded to no other entity than their technical partner, Shell. After a series of legal actions by Malabu against the Obasanjo-led federal government to reclaim its title over OPL 245, both parties eventually resolved to enter an out-of-court settlement, which was further solidified when all agreements were reduced to a consent judgement that was legally binding on all parties by 2006. The high point of the 2006 agreement was the full restoration of OPL 245 to Malabu and this was given life by a letter of conveyance to that effect dated December 2, 2006, written by the federal ministry of petroleum and signed by Edmund Daukuro, Obasanjo’s minister of state for petroleum. The agreement between the Obasanjo government and Malabu Oil effectively converted the 1998 scam into a deal that was legally binding on Nigeria. However, that was just the beginning of what was to be a prolonged and complicated business transaction.
The Obasanjo administration’s mismanagement of the Malabu Oil affair, arising from its poor judgement of all matters therein, led to more complications. Following the restoration of OPL 245 to Malabu, Shell, which was initially awarded the oil block, headed to the International Centre for Settlements of Investment Disputes (ICSID) in Washington claiming $2 billon in losses against the federal government, arising from its huge investments at de-risking the huge hydro-carbon reserves in order to make it commercially viable. The Obasanjo administration and that of President Umaru Yar’Adua could not resolve this complicated web of conflicting business interests until 2011 when the Goodluck Jonathan administration lived up to the federal government’s responsibility of implementing the 2006 agreement, by applying an alternative dispute resolution mechanism guided by former AGF, Adoke, as the chief law officer of the country.
In what is known as the resolution agreement of 2011, Malabu agreed to give up its stake entirely in OPL 245 in exchange for $1.3 billion, which was the premium price of the oil block to be paid by Shell and ENI. After the deal was brokered, all went quiet and it was hoped the last had been heard of the Malabu Oil affair.
That was not to be, as the resolution of the various disputes over OPL 245 has been trailed by controversies, half-truths, denials, outright lies, accusations and counter-accusations. Contrary to the impression in the public, this money ($1.3b) was not paid to Malabu from the federation account. The money was a private investment capital from Shell, which was only domiciled on behalf of all parties to the deal in an escrow account with JP Morgan and paid to Malabu for the purpose of total acquisition of the oil mineral asset; a transaction that Malabu was empowered to do in line with the 2006 agreement that restored to it full ownership of OPL 245.
Essentially, the Malabu deal was a private business transaction between two entities with the federal government only acting as a mediator in a dispute it actually created, because neither OPL 245 nor the $1.3b belonged to the federal government. All the federal government was entitled to was the signature bonus, which was fixed at $210 million that was promptly deducted from source. From available documents in the public space, the deal went through due diligence and inputs from all relevant stakeholders, including the ministries of petroleum resources and finance and the DPR, with all approvals sought and received from the President and Commander-in-Chief.
The Malabu Oil deal was simply making the best of a messy situation created by the Abacha and Obasanjo administrations. Interestingly, this agreement achieved the important twin objectives of freeing the hydrocarbon resource-rich oil block for commercial utilisation and saving Nigeria from the possibility of paying the sum of $2 billion in penalties as claimed by Shell.
The current characterisation of the Malabu deal as a fraud and the consequent stigmatisation of Adoke as its poster boy have only obscured the facts of the matter while promoting fiction that has further mystified the whole affair.
The Malabu deal is not so different from the business transaction between T.Y. Danjuma’s South Atlantic Petroleum, when $2 billion was paid by Chinese investors for a sizeable stake in its OPL 246. Similarly, Folorunso Alakija became the richest woman in Africa when her company, Famfa Oil, received from Chevron a huge amount of money for a divested stake on their Agbami fields oil block.
In each of these cases only the fixed signature bonus was paid to the federal government; the signature bonuses paid to the federal government was fixed at $20 million only. Therefore, the criminal prosecution of Adoke for his role in brokering the Malabu deal is nothing but persecution in a war on corruption that is selective and highly politicised.
There is no doubt that all is not well with the Malabu Oil affair. However, what is wrong is not the role of the former AGF in the implementation of an agreement that was entered into by the Obasanjo administration, which was binding, but the allocation of the oil block in the first place by the Abacha family to a company it had interests in.
Until nepotism and conflict of interests, which are the fundamentals of corruption, are criminalised unambiguously in our laws, the war on corruption has not even begun.