Corruption: Beyond The Nigerian Oil Industry

In Nigeria, it would amount to an understatement to say the oil industry is plagued with endemic corruption. In one of the scandals involving the Nige...

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In Nigeria, it would amount to an understatement to say the oil industry is plagued with endemic corruption. In one of the scandals involving the Nigerian National Petroleum Corporation (NNPC), the country’s official audit revealed that around $19 billion of oil revenues went missing through corruption and oil theft in 2014 alone. An independent investigative analysis by the Natural Resource Governance Institute (NRGI) had revealed that over $32 billion oil revenue was lost to NNPC’s mismanagement of Domestic Crude Allocation (DCA), opaque revenue retention practices and corruption-ridden oil-for-product swap agreements.

While the impeachment of Brazil’s former President, Dilma Rousseff, officially cites allegations that she manipulated the federal budget to disguise a growing deficit, it was a sprawling scandal at Petrobras, the state-owned oil company, which had taken a greater toll on her government that helped generate support for her removal. Though Rousseff was not accused of any crime, but before assuming the Brazilian presidency in 2011, she was chairman of Petrobras between 2003 and in 2010, when much of the corruption allegedly took place. The opposition alleges her presidential election campaigns of 2010 and 2014 were funded by corruption, charges her political party denies.

Remarkably, Statoil, the Norwegian multinational oil and gas company, appears to be the most corruption-riddled International Oil Company (IOC), going by the avalanche of allegations of corrupt practices against it and some of which the company had been convicted. For instance, between 2002 and 2003, Statoil reportedly resorted to extensive use of corruption in Iran in an attempt to secure lucrative oil contracts for the company in that country. This, according to documented evidence, was mainly achieved by hiring the services of Horton Investments, an Iranian consultancy firm owned by Mehdi Hashemi Rafsanjani, son of former Iranian President Hashemi Rafsanjani. Statoil was said to have paid $15.2 million to Horton Investment to influence important political figures in Iran to grant oil contracts to Statoil. A Norwegian court had on June 29, 2004, found Statoil guilty of corruption and ordered to pay NOK 20 million. And also on October 13, 2006, Statoil reached a settlement with the United States authorities for its involvement in the case and was ordered to pay $21 million in fines

In February 2016, investigators at Norway’s anti-crime agency, Okokrim, started looking into what happened to hundreds of millions of Kroner (the Norwegian currency) that Statoil paid to Angola’s state oil company, Sonangol, over the past several years. The money was supposed to be used for a research center that’s never been built, and for “social contributions” to Angola that remain unclear, and Statoil’s management knew they posed a “considerable” risk to Statoil’s reputation. The payments, which date back to 2011, were reportedly tied to Statoil’s bid to win licenses and operating responsibility on Angola’s Kwanza oil field.

The catalogue of corruption cases involving Statoil is seemingly endless. A company inherited by StatoilHydro was enmeshed in a messy deal in Libya. StatoilHydro, according to the October 7, 2008 edition of the New York Times, may have made payments to win business in Libya that breached the United States and Norwegian anti-corruption rules. The executive vice-president for Exploration and Production Norway, Tore Torvund; and executive vice-president for Projects, Morten Ruud, had resigned with immediate effect in the wake of the allegation. Also in 2014, a Norwegian Business School Professor, Petter Gotts chalk, had queried why Statoil employed the Judge who administered a case in which the company was a party. He said it was much greater cause to examine Statoil’s role.


– Okubanjo is a Lagos- based public  affairs analyst

Source: Corruption: Beyond The Nigerian Oil Industry |