"Dear Mr. President, The NNPC Has Stolen $50 Billion Of Crude Oil Earnings"- Transcript Of The Letter From The CBN Gov To President Jonathan

The Governor of the Central Bank of
Nigeria, Mallam Sanusi Lamido Sanusi
(CON), Governor, Central Bank Of Nigeria,
alarmed at the unbridled theft of crude oil
earnings by the Nigerian National
Petroleum Corporation (NNPC) and cronies
of President Goodluck Jonathan wrote and
hand delivered the letter reproduced
below to the president on September, 25
2013.
H.E. Dr. Goodluck Ebele Jonathan
President and Commander-in-Chief
Federal Republic of Nigeria
State House
Abuja
Your Excellency,
Subjects:
Non-Repatriation to the Federation
Account by Nigerian National Petroleum
Corporation (NNPC) of $49.8 Billion
representing 76% of the value of crude oil
liftings in 2012 and 2013
Failure of NNPC to pay N22billion Nigerian
Export Supervision Scheme (NESS) Levy
Other Related matters
I am constrained to formally write your
Excellency, documenting serious concerns
of the Central Bank of Nigeria (CBN) on
the continued failure of the Nigerian
National Petroleum Corporation (NNPC) to
repatriate significant proportions of the
proceeds of crude oil shipments it made
in gross violation of the law. Sources of
Federation Account Revenues include
proceeds from Export of Nigeria’s crude
oil by the NNPC, Petroleum Profits Taxes,
and Penalties for gas flaring, oil
exploration licenses and concession block
allocations, etc.
Our analysis of the value of crude oil
export proceeds based on the
documentation received from pre-
shipment inspectors shows that between
January 2012 and July 2013 NNPC lifted
594,024,107 barrels of crude valued at
$65,332,350,514.57. Out of this amount,
NNPC repatriated only
$15,528,410,098.77 representing 24% of
the value. This means the NNPC is yet to
account for, and repatriate to the
Federation Account, an amount in excess
of $49.804 billion or 76% of the value of
oil lifted in the same period.
Your Excellency, I have attached as an
appendix, a table giving the analysis of
the crude oil lifting and repatriations as
prepared by staff of Trade & Exchange and
Banking & Payments System Departments
of the CBN based on the firm
documentation in their possession. The
failure of NNPC to repatriate these
amounts constitutes not only a violation
of constitutional provisions but also of
both the Foreign Exchange (Monitoring
and Miscellaneous Provisions) Act No. 17
of 1995 and the Pre-Shipment Inspection
of Exports Act No. 10 of 1996 which
stipulates that “An exporter of goods,
including petroleum products, shall open,
maintain and operate a foreign currency
domiciliary account in Nigeria into which
shall be paid all exports proceeds
corresponding to the entire proceeds of
the exports concerned”.
Your Excellency, you will recall that as far
back as late 2010, I had verbally
expressed deep concern about what
appeared to be huge shortfalls in
remittances to the Federation Account in
spite of the strong recovery in oil price. At
a recent NEMT meeting in the Presidency,
I also expressed a strong view that while
Government needs to continue its effort to
combat oil thieves, vandals and illegal
refineries in the Niger-Delta, the major
problem is transactions taking place
under legal cover with huge revenue
leakages embedded therein.
Your Excellency, it is my respectful view
that a place to begin is to insist on NNPC
to account fully for all proceeds that were
diverted away from its accounts with the
CBN and the Federation Account. There
are also other lines of inquiry which your
Excellency may wish to authorize and
pursue. These include;
1. A thorough audit of activity on any
domiciliary accounts held by NNPC
outside of the CBN. This is because
the CBN has no record of either the
dollar proceeds of these diverted sales
or the naira equivalent being
transferred to the Federation Account.
2. An examination of banking records of
companies involved in Oil lifting and
swap deals, including audit trails of
regular payments to third-parties;
3. An independent review of the terms
and condition of Oil lifting and swap
contracts for fairness and equity and
transparency;
4. Investigation and prosecution of
Bureau de change (BDC) that have
purchased hundreds of millions of
dollars from the inter-bank market and
are unable to account for these
monies. We have compiled a list of
these companies with
recommendations for prosecution
under Anti-money Laundering Laws;
5. Investigation of obvious avenues for
money laundering, such as companies
that sell private jets to Nigerians.
The Central Bank stands ready to render
full assistance and provide as much data
as possible to assist these inquiries.
Your Excellency, as an indicator of how
bad this situation has become, please
note that in 2012 alone, the Federation
Account received $28.51billion in
Petroleum Profits and related taxes but
only $10.13billion from crude oil
proceeds. In the period January-July
2013 the corresponding figures are
$16.65 billion and $5.39 billion,
respectively. This means, Your Excellency,
that in the first seven months of the year,
taxes accounted for 76% of the total inflow
from this sector, while NNPC crude oil
proceeds, accounted for only 24%.
You will also note, Your Excellency, that
NNPC liftings amounted to 64% of total oil
liftings from Nigeria during the reference
period, and yet its remittance represented
only one-third of the taxes paid by the oil
companies that exported the balance of
54%.
Finally, your Excellency, we would like to
report that NNPC has failed to keep up
with payments of its levies under Nigerian
Export Supervision Scheme (NESS) in line
with this law, and currently owes the
Federal Government N22 billion.
As banker to the Federal Government and
Economic adviser to the President, I am
obliged to draw the President’s attention
to these serious issues of which you have
most probably never been aware in this
detail.
To sumamarise, my recommendations are
to respectfully advise the President to:
1. Require NNPC to provide evidence for
disposal of all proceeds of crude sales
diverted from the CBN and the
Federation Account;
2. Investigate crude oil lifting and swap
contracts, as well as the financial
transactions of counter-parties for
equity, fairness and transparency; and
3. Authorise prosecution of suspects in
money-laundering transactions,
including but not limited to BDCs who
are unable to account for hundreds of
millions of dollars.
I trust your Excellency will find the content
of this letter useful and hereby reaffirm the
support of Central Bank of Nigeria for your
Government’s transformation agenda and
effort to serve the Nigerian people.
While thanking you for your consideration,
please accept, Mr. President, the renewed
assurances of my highest regards.
Yours Sincerely,
Mallam Sanusi Lamido Sanusi (CON)
Governor, Central Bank Of Nigeria