The Attorney-General of the Federation and Minister of Justice, Abubakar Malami, has defended the decision of his office to approve payment of five per cent of recovered sums as commission to an international company, Trobell Limited.
The contract is in respect of the government’s effort to recover over $62 billion the government said some multinational oil companies owe Nigeria.
The debt claim arose from unremitted funds from the production sharing contracts (PSCs) signed between Nigeria and oil multinationals.
President Muhammadu Buhari had expressed consternation over the contract with Trobell Limited and directed the minister to suspend the contract, describing the agreed commission as excessive. The president, in a letter by his Chief of Staff, Abba Kyari, as reported by The Cable newspaper, had stressed that the government does not need the help of the company to recover the debt as the Supreme Court had already directed the companies to pay up.
But in a statement sent to journalists by his aide, Umar Gwandu, the minister defended the debt recovery contract, saying the five per cent commission was a fraction of what was offered by previous administrations.
Mr Malami cited the example of the administration of a former president, Goodluck Jonathan, which it said paid a 30 per cent commission for similar recoveries.
Prior to the signing of the Deep Offshore and Inland Basin production sharing contract (PSC) Act by President Buhari on November 4, Mr Malami had moved to recover shares from oil revenues due to Nigeria from international oil companies.
As part of the effort, Mr Malami approved a request by Trobell Limited in 2018 to proceed with the requirements for the recovery of the funds at a cost of five per cent of the recovered sum, once the legal framework was set by the signing of the Act.
But in the letter from the Chief of Staff, Abba Kyari, the president described the five per cent cost of recovery as unnecessary and added that the Supreme Court had instructed the multinational companies to make the said payments following a suit by three oil producing states of Rivers, Cross River and Bayelsa.
The presidency described as “incredible” the requested recovery cost, which amounts to $2.15 billion or N774 billion — at the initial estimate of $43 billion,” the Cable reported.
However, in his reply to the presidency’s directive, Mr Malami said the federal government should focus rather on the amount that would accrue to Nigeria from the unpaid arrears and understand that the immediate past administration of President Goodluck Jonathan paid as high as 30 per cent for similar recoveries.
Mr Malami was also quoted as saying “the volume of the fees payable to the recovery agents which in all cases is contingent upon recovery, has never been a subject of executive contention in this matter.”
The minister said the total amount accrued to Nigeria from the unremitted fund was $62,190, 679,793.00 and described as unreasonable and illogical a decision by the government to forgo the recovery process because of the payment of five per cent commission.
“It does not accord with reason and logic for the federal government of Nigeria to overlook, forgo and condone loss of $64 billion on account of mere five per cent fee payable upon recovery.
“When you convert $62, 190,679, 793 billion dollars into naira it will give you an amount more than 20 trillion naira.”
Mr Malami said the decision to pay five per cent was an innovation, which should not be jettisoned over an unrelated estimate made by the president in comparing the expected recovery cost to the budget of Lagos State.
“The five per cent as a recovery fee is a product of innovation introduced by the Federal Government upon the assumption of office of President Muhammadu Buhari as against 30 per cent and above which was the traditional fee by the previous administration.”