These are interesting times. On Thursday, February 13th 2014, at the Senate Finance Committee hearing on the $20 billion oil money which Mr. Sanusi Lamido Sanusi (SLS), Central Bank of Nigeria’s Governor alleged had been diverted, misappropriated or was not remitted or accounted for, by the Nigerian National Petroleum Corporation (NNPC), the NNPC, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke and Finance Minister and Coordinating Minister of the Economy, Dr. Ngozi Okonjo Iweala, after dithering and engaging in reconciliation pantomime for weeks, eventually “rendered” an account of how $10.8 billion out of the $20 billion was spent.
In December, 2013, the two Ministers and the NNPC had pledged that the $10.8 billion, which they believed ( contrary to Mr Lamido Sanusi’s assertions) was the outstanding sum, would be reconciled. That was not done for more than two months, with officials said to be “complaining of lack of documents detailing specific expenditure.”
The NNPC Group Managing Director, Andrew Yakubu, armed with documents, explained that out of the $10.8 billion, which the NNPC claimed was the outstanding sum yet to be accounted for, $8.76 billion had been used to settle “unpaid petroleum products subsidy”; crude oil and products losses had allegedly gulped $0.76 billion; national strategic reserve holding cost had taken $0.46 billion; while pipeline maintenance and management cost had consumed $0.91 billion.
The documents the NNPC produced before the Senate Finance Committee which it claimed it obtained from the PPPRA, showed that the $8.76 billion was paid out in favour of NNPC as subsidy payments on kerosene and petrol between January 2012 and July 2013.
When reportedly asked if she could vouch for the authenticity of the accounts rendered by the NNPC, the Finance Minister Mrs. Okonjo-Iweala said her Ministry lacked the “capacity and expertise” to guarantee the authenticity of documents, and that her Ministry would prefer an independent forensic audit to “satisfy Nigerians”, saying that “we believe in transparency; that is why we are seeking an independent forensic team for this to satisfy Nigerians.” Consequently, the Senate Finance Committee ordered a forensic review of documents presented by the NNPC.
In his presentation earlier submitted to the Committee, the CBN Governor, SLS, had maintained that payment of subsidy on kerosene between January 2012 and July 2013 as claimed by the NNPC could not be true, as there was a subsisting presidential directive embargoing kerosene subsidy payments, since 2009.
But, as the Senate Finance Committee noted, even if it was assumed that NNPC had spent the money on kerosene as claimed, NNPC would have done so in contravention of the provisions of the Constitution and the law, as such payments were without appropriation or budgetary authorization or allocation. In plain language, it would mean that NNPC earned money for Nigeria and spent it, without recourse to the Constitution and due process.
Perhaps, the most shocking assertion before the Senate Finance Committee was made by the Minister of Petroleum Resources, , Diezani Alison-Madueke , who, in her defence of NNPC ( that had initially lied that it did not receive the presidential directive stopping kerosene subsidy payments) reportedly said that the directive of President Umar Yar’Adua in 2009 stopping further subsidy payments on kerosene lacked the force of law because it was not contained in a gazette; and that ( in any case) after the order was released by the President, a ministerial committee met and decided to suspend the directive as it considered Nigerians would have had to purchase kerosene at a very exorbitant rate.
In this intervention, we address three issues: whether it is legal for NNPC to have claimed, as refunds, subsidy payments without appropriation?; whether a presidential directive to the NNPC that is not published in an official gazette of the Federal Government of Nigeria lacks the force of law, has no binding force and is reversible by a ministerial committee? and whether the Senate Finance Committee or the Senate as a whole can investigate the alleged misappropriation of oil funds or order the Finance Ministry to carry out a forensic audit of a specific or general NNPC accounts?.
The resolution of the first poser can be found in Section 80 (1-4) of the Constitution of the Federal Republic of Nigeria, 1999, as amended. It provides thus: “(1) All revenues or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation;
(2) No moneys shall be withdrawn from the Consolidated Revenue Fund of the Federation except to meet expenditure that is charged upon the fund by this Constitution or where the issue of those moneys has been authorized by an Appropriation Act, Supplementary Appropriation Act or an Act passed in pursuance of Section 81 of this Constitution;
(3) No moneys shall be withdrawn from any public fund of the Federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of those moneys has been authorised by an Act of the National Assembly; and (4) No moneys shall be withdrawn from the Consolidated Revenue Fund or any other public fund of the Federation, except in the manner prescribed by the National Assembly.”
Since there is no provision in the NNPC Act that authorizes the NNPC to earn oil revenue on behalf of the Federation, withhold it, refuse to remit it into the consolidated revenue fund of the Federation kept with the CBN, and spend from it “on behalf of the Federation” without appropriation, before remitting the balance to the Federation, we submit that a clear and indefensible constitutional violation has been established..
In dealing with the second poser, which is on the validity or invalidity (effectuality or ineffectuality) of ungazetted presidential directives, we shall refer to certain provisions of the Nigerian National Petroleum Corporation (NNPC) Act, Cap N 123, Vol. 12, LFN, and Petroleum Products Pricing Regulatory Agency [PPPRA] ( Establishment) Act No 8 of 2003, Cap P. 43, Vol. 14, LFN, 2004, which vest in the President of Nigeria overarching superintendent powers over the affairs of NNPC and PPPRA, which put the validity of ungazetted presidential directives relating to NNPC and PPPRA’s operations beyond any disputation.
Before doing so, we make haste to say that we are aware of the provision of Section 6 (1&2) of the Petroleum Act, Cap P10, Vol. 13, LFN, 2004 which provides as follows: ” (1) The Minister may, by order, published in the Federal Gazette fix the prices at which petroleum products or any particular class or classes thereof may be sold in Nigeria or in any particular part or parts thereof; (and) (2) The Minister may, by Notice, in writing require any person appearing to him to have or to be likely to have access to information which is relevant to the fixing of any prices of the kinds mentioned in subsection 1 of this Section to supply that information to the Minister, and any person so required shall be legally bound to use his best endeavours to supply the information, accordingly.”
We contend, however, that the statutory power of the Minister of Petroleum Resources to fix the prices of petroleum products is not an authority for unauthorized payment of money, as subsidy for kerosene importation, without appropriation, in violation of the provisions of the Constitution; or a statutory power to disregard a duly communicated order or directive of the President stopping such payment. Fixing a price of petroleum products is one thing, paying out government money to subsidize the price is another. The two are not the same.
Now, Section 5 (2) of the NNPC Act ( General Duties of the Corporation) provides that ” it shall be the duty of the Corporation, from time to time, when the President so requires, or the Corporation considers it appropriate to undertake a general review of the affairs of the Corporation and of any subsidiaries thereof for the purpose of determining how the management of the activities of the Corporation or any subsidiary thereof can most efficiently be organized and, where appropriate, to make a report to the President, upon the Corporation’s conclusion arising from the review.”.
Section 6 (1) of the NNPC Act ( Powers of the Corporation) defines the powers of the Corporation, providing that the “corporation shall have powers to do anything which in its opinion is calculated to facilitate the carrying out of its duties under this Act.”
Very instructively, Section 6 (2) of the NNPC Act provides that ” notwithstanding Subsection 1 of this Section, any contract relating to any project of a value of more than N 5,000,000.00 ( or such higher limit as may be directed from time to time by the President) shall be referred by the Corporation to the President, for approval before the award of any such contract is made by the Corporation.”
It is submitted that payments of the $8.76 billion must have arisen from kerosene importation contracts ( project), NNPC could not have legally ” paid to itself” the humongous amounts, without appropriation, in flagrant disregard of a presidential directive, and without recourse to the President.
Section 7 (1,2& 5) of the Act ( Financial Provisions) provides that ” (1) the Corporation shall keep proper accounts and proper records in relation thereto in a form which shall conform with the best commercial standards; (2) the Corporation shall as soon as may be after the end of the financial year to which the accounts relate cause its accounts to be audited by auditors, appointed by the Corporation, with the approval of the President, from the list of auditors and in accordance with the guidelines laid down by the auditor-general for the Federation; and that (5) the Corporation shall submit to the President not later than three months before the end of each financial year estimates of its expenditure and income relating to the next following financial year.”
Section 8(2) of the Act ( borrowing powers) provides that “the Corporation shall not without the approval of the President, borrow any sum of money whereby the amount in aggregate outstanding on any loan or loans at any time exceeds such amount as is for the time being specified by the President.”; and Section 9 of the Act ( disposal of surplus funds) provides that “the President may issue to the Corporation such directions as he may think necessary as to the disposal of any surplus funds of the corporation, and subject to any such directions, the Corporations may invest its funds and maintain a general reserve.”
Section 7 of the PPPRA Act defines the functions of PPPRA, and these include: “( a) determining the pricing policy of petroleum products; (b) regulating the supply and distribution of petroleum products: and (d) moderating the volatility in petroleum products prices, while ensuring reasonable returns to operators”
Now, Section 12 of the PPPRA Act states that “(1) the Agency shall not later than 30th September in each year, submit to the President an estimate of its expenditure and income ( including payments to the Agency) for the next succeeding year; and that (2) the Agency shall keep proper accounts in respect of each year and proper records in relation to those accounts and shall cause its accounts to be audited within six months after the end of each year by auditors appointed from the list and in accordance with the guidelines supplied by the Auditor-General of the Federation”
Section 13 of the PPPRA Act provides that ” the Agency shall prepare and submit to the Federal Executive Council, through the President, not later than six months after the end of each year, a report in such form as he may direct on the activities of the Agency during the immediate preceding year, and shall include in such report a copy of the audited accounts of the Agency for that (year) and the Auditor’s report on the accounts.
Section 15( 2 &3) of the PPPRA Act states that “the Agency shall not, without the approval of the President, borrow money which exceeds, at any time, the amount set by the President; and (3) notwithstanding subsection 1, of this section, where the sum to be borrowed is in foreign currency, the Agency shall not borrow the sum without the prior approval of the President“
Section 23 of the PPPRA Act provides that “the President may give to the Agency or the Executive Secretary such directives of a general nature or relating generally to matters of policy with regard to the exercise of his functions as he may consider necessary and the Agency or the Executive Secretary shall comply with the directive or cause them to be complied with” and Section 24 of the Act provides that ” the Agency may with the approval of the President, make such regulations as is in its opinion are necessary or expedient for giving full effect to the provisions of this Act and for the administrations of its provisions”
From the forgoing provisions of both the NNPC and PPRA Acts, it is very clear that at every turn and bend, the NNPC and PPPRA must have recourse to the President. The question then is, when the President gives a directive to either the NNPC or PPPRA, and when both submit reports to or seek approvals from the President, is it legally required that this must be done through a gazette? The answer, of course, is no. There is no provision in the two legislations to back such a tellingly erroneous assertion.
We make bold to assert that unless a particular declaration, notice or communication of government directive, business or transaction is compelled by law to be published in an official gazette, such requirement cannot be mischievously imported to attempt the invalidation of the directive, business or transaction. A presidential directive is not a proclamation of a state of emergency that must be published, as mandated by the Constitution.
In any case, by virtue of Section 130(2) of the Constitution, “the President shall be the Head of State, the Chief Executive of the Federation and Commander-in-Chief of the Armed Forces of the Federation,” and by virtue of Section 148 (1) of the Constitution, “the President may, in his discretion, assign to the Vice-President or any Minister of the Government of the Federation responsibility for any business of the Government of the Federation, including the administration of any department of government.”
Unpalatable as it may appear, a President can function without a Minister of Petroleum Resources. President Olusegun Obasanjo did so for eight years. For a Minister of Petroleum Resources to then assert that a presidential directive is ineffectual because it was not published in a gazette is nothing but a demonstration of abysmal ignorance of working of a presidential system of government.
We now deal with the third and final issue, which is whether the Senate Finance Committee (Senate) or Ministry of Finance ( or the Federal Executive or President) can audit the accounts of the NNPC.
We say yes they can, and we say so because of the clear and unambiguous provision of Section 85 of the Constitution which provides as follows: “(1)There shall be an Auditor-General for the Federation who shall be appointed in accordance with the provisions of section 86 of this Constitution; (2) The public accounts of the Federation and of all offices and courts of the Federation shall be audited and reported on to the Auditor-General who shall submit his reports to the National Assembly; and for that purpose, the Auditor-General or any person authorised by him in that behalf shall have access to all the books, records, returns and other documents relating to those accounts;
(3) Nothing in subsection (2) of this section shall be construed as authorising the Auditor-General to audit the accounts of or appoint auditors for government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly, but the Auditor-General shall – (a) provide such bodies with – (i) a list of auditors qualified to be appointed by them as external auditors and from which the bodies shall appoint their external auditors, and (ii) guidelines on the level of fees to be paid to external auditors; and (b) comment on their annual accounts and auditor’s reports thereon: and (4) The Auditor-General shall have power to conduct checks of all government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly.”
The law, from the literal reading of Section 85, is that the Auditor-General of the Federation does not have the power to directly audit the accounts of or appoint auditors to audit the accounts of statutory corporations or agencies; he only has power to conduct checks of these agencies and corporations. The directive by the Senate Finance Committee that the Ministry of Finance should ensure that the NNPC accounts of the expenditure of the $ 10.8 billion be audited is, therefore, in order. Same cannot be faulted.
Under Section 88 (1) of the Constitution, “each House of the National Assembly shall have power by resolution published in its journal or in the Official Gazette of the Government of the Federation to direct or cause to be directed investigation into – (a) any matter or thing with respect to which it has power to make laws, and (b) the conduct of affairs of any person, authority, ministry or government department charged, or intended to be charged, with the duty of or responsibility for – (i) executing or administering laws enacted by National Assembly, and (ii) disbursing or administering moneys appropriated or to be appropriated by the National Assembly.”
And Under Section 88(2) of the Constitution, “the powers conferred on the National Assembly under the provisions of this section are exercisable only for the purpose of enabling it to -(a) make laws with respect to any matter within its legislative competence and correct any defects in existing laws; and (b) expose corruption, inefficiency or waste in the execution or administration of laws within its legislative competence and in the disbursement or administration of funds appropriated by it.”
NNPC and their spin doctors should realize that Nigerians are no fools. Let the guilty own up, and as it is the practice, let charges be preferred, let their plea-bargaining arrangement be made, let them be discharged and acquitted and in the unlikely event that a slap on the wrist is handed down, let us have a presidential pardon.
Mr. Ogunye, constitutional law expert and author, writes from Lagos where he manages his legal practice. He is also legal adviser to Premium Times.