S E C R E T SECTION 01 OF 03 ABUJA 001653

SIPDIS

NOFORN

E.O. 12958: DECL: 09/22/2014
TAGS: PREL PGOV KCOR EPET EAID NI
SUBJECT: NIGERIA, CORRUPTION, AND US

REF: A. ABUJA 1486

B. ABUJA 1323

C. ABUJA 1584

D. TD-314/51925-04

E. ABUJA 35

F. ABUJA 979 AND PREVIOUS

Classified By: Ambassador John Campbell for Reasons 1.5 (B & D).


1. (SBU) Summary: Corruption is a serious problem for
Nigeria, and harms U.S. interests. President Bush took up
the issue in the G8 transparency/anti-corruption Compact with
Nigeria at Sea Island, and the next important U.S. effort
will be at the Nigeria-G8 meeting in Washington October 4.
Post has consulted with diplomats of the other G8 missions
and IFI representatives on the ground in Abuja, and offers
the following as background for that October 4 meeting. End
Summary.

--------------
THE ISSUE
--------------


2. (S/NF) Corruption is endemic and pervasive in Nigeria. It
is difficult to overestimate the variety of threats it poses
to U.S. interests here. As noted in much of our recent
reporting, corruption is a major factor in the instability of
the Niger Delta, whence ten percent of U.S. oil imports come
(Ref A). Corruption imperils major U.S. private investments
in the energy sector, and is an important reason why U.S.
companies invest so little in Nigeria outside the energy
sector -- two disruptive influences on Nigeria's economic
stability. Corruption is a major preoccupation of Nigeria's
economic reform program and causes dislocations in U.S.
exports to Nigeria (Ref B). Corruption drives and drives off
course much of Nigerian politics (Ref C), threatening both
the process and the polity. And corruption is a major risk
factor increasing the possibilities for terrorism in and from
Nigeria (Ref D notal).


3. (S/NF) Although members of President Obasanjo's family and
some of his senior advisors are involved in corruption (Ref
B), it also appears true that President Obasanjo strongly
supports the anti-corruption effort led by his economic
reform team. Such dualism is not uncommon as countries long
under authoritarian rule move toward democracy, as in

the
careers of Roh Tae-woo of South Korea and Taiwan's Chiang
Ching-kuo. The GON now has several institutions (listed in
Ref E) attacking different facets of corruption, and these
institutions are beginning to target ministerial-level GON
officials (although not Obasanjo's inner circle) as well as
mid- and low-level operators (Ref F). The GON sees its
anti-corruption programs as a long-term effort to change a
thoroughly corrupt society, and is making major investments
in the fight.

--------------
USG RESPONSES
--------------


4. (C) The U.S. Mission to Nigeria is working several angles
too. Transparency/anti-corruption is an important theme in
lobbying by Embassy officials, and Chiefs of Mission have
gone so far as to speak out publicly in favor passage by
Nigeria's National Assembly of specific legislation when that
was in jeopardy. The Political Section has added a
transparency/anti-corruption portfolio to its human rights
officer's responsibilities, and has organized the G8 missions
and IFI representatives in Abuja into a G8
Transparency/Anti-Corruption Working Group (GETAWG) to
coordinate and advocate efforts. USAID is an active GETAWG
participant, and USAID currently spends around six million
dollars on transparency/anti-corruption programs in Nigeria.
The other G8 countries and IFIs combined spend a little more
than that, and GETAWG members including the U.S. are
supporting 41 different transparency/anti-corruption-focused
programs in Nigeria.


5. (SBU) The Embassy has also strongly contributed to the G8
effort to reach a transparency/anti-corruption Compact with
Nigeria, signed at the Sea Island Summit in June. Following
through on that effort is important. The U.S. will host a G8
meeting with Nigeria and the three other Sea Island pilot
countries on October 4. The Sea Island compact, and
correspondence since between POTUS and President Obasanjo,
indicated that the GON is to bring its Technical Action Plan
to the meeting, and there is supposed to be a discussion of
how to measure progress.

--------------
HOW TO MEASURE PROGRESS?
--------------


6. (SBU) If the Nigerians ask for any additional assistance
in their Technical Action Plan, it will likely be technical
assistance for the new Financial Intelligence Units to be set
up in each GON ministry under the Economic and Financial
Crimes Commission (EFCC) -- an important effort because it
would facilitate faster corruption prosecutions as well as
facilitate the EFCC's role in overseeing all GON
anti-corruption activities. G8 members' current programs
work with practically all of the GON's other
transparency/anti-corruption efforts, although there may be
some niche projects that could usefully be picked up by
Japan, Canada or Russia. Those G8 members have little direct
or indirect anti-corruption funding here.


7. (SBU) How to measure progress against corruption will also
be important on October 4, and beyond. The GON has not
shared either its Technical Action Plan nor its ideas for
measuring progress with us, apparently saving them for the
October 4 meeting. GETAWG met September 22 to discuss
various measurements for overall progress against corruption
in Nigeria, to send ideas back to capitals in preparation for
the October 4 G8 meeting.


8. (SBU) Perhaps the best known broad survey is Transparency
International's Corruption Perceptions Index (CPI), but
GETAWG members have long believed it not suitable for
measuring transparency/anti-corruption success in Nigeria
especially in the Nigeria-G8 context. Among the reasons:

-- It is a comparison against other countries, hence
Nigeria's rating is not dependent on Nigeria alone;

-- There is a huge lag time involved with any perceptions
polling;

-- Transparency International itself acknowledges that it
cannot be used to measure a country's performance over time.
CPI 'scores' are standardized around a common mean each year
to ensure a distribution of scores. Because there is no
consistent baseline, an increase in the 'score' from one year
to the next does not imply a reduction in corruption;

-- The index measures perceptions only, not hard indicators;
and

-- The perceptions are weighted towards the international
business community, not people within the country itself.


9. (SBU) There are other, perhaps more appropriate, broad
survey tools to measure the extent of corruption within a
single country, where corruption occurs, what types of
corruption occur, the costs and effects on household and
services and causal factors of corruption. The Nigerian
Ministry of Finance published a Governance and Corruption
Survey in 2003, for example, using a diagnostic model
designed by the World Bank.


10. (SBU) Another means for general measurement of progress
would be a combination of benchmarks derived from areas of
the Nigeria-G8 Compact signed at Sea Island. GETAWG members
put forward the following, organized by sections of the
Compact:

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JOINT ACTION WITH G8 PARTNERS
--------------

-- Facilitation of information/evidence sharing between
Nigerian and G8 governments on bribery by G8 nationals, with
a purpose of prosecuting G8 nationals/companies under G8
countries' anti-bribery laws.

-- Implementation of a new G8 partnership to detect, recover
and return illicitly acquired proceeds of corruption.

-- Number/size of proceeds of corruption asset recoveries.

-- Corrupted public officials denied safe haven.

-- Measures implemented by G8 countries of the 40 revised
FATF recommendations.

-------------- --
INSIDE NIGERIA: BUDGET AND FISCAL TRANSPARENCY
-------------- --

-- Full publication monthly of the Nigerian Government's
revenue allocations to all levels of government, and full
publication yearly of appropriations from all levels.

-- Publication of the Nigerian Government's budget
implementation figures (i.e. actual spending compared what
was budgeted, usually rather less than what was appropriated).

-- Transparent accounting for the Excess Crude Account
(where, how regularly?)

-- Number of Auditor General's reports published within the
time allowed.
-- Risk assessments by World Bank or Fiscal and Data
Requirements report by IMF.

-- Passage of the (not yet submitted) Fiscal Responsibility
Bill, and its implementation.

-------------- --------------
PUBLIC PROCUREMENT LEGISLATION, POLICY AND ADMINISTRATION
-------------- --------------
-- Savings to government from the 'Due Process' initiative
and subsequent procurement reforms.
Note: The 'Due process' initiative has undoubtedly saved
Nigeria substantial sums of money from inflated contract
bids. However, there is a risk that the vetting process may
also stop or delay legitimate expenditure in the capital
budget. We should check that the benchmark measures real
savings, not legitimate expenditure that has been delayed by
the vetting process.

-- Extension of the Due Process initiative to line ministries
(already started).

-- Passage of legislation to set up a new Public Procurement
Regulation Agency.

--------------
EXTRACTIVE INDUSTRY TRANSPARENCY INITIATIVE
--------------

-- EITI Bill passed, and evidence of enforcement.

-- First audit of oil and gas revenues published, and plans
for subsequent audits.

-- Publishing revenue information in formats/language useful
to all stakeholders and understandable by the general public.

--------------
ANTI-CORRUPTION INSTITUTIONS
--------------

-- Funding and implementation of the EFCC's Financial
Intelligence Unit offices in each ministry.

-- Adequate budgets for EFCC and the Independent Corrupt
Practices Commission (ICPC).

-- Number of prosecutions brought by ICPC and by EFCC.

-- Number of completed prosecutions/acquittals in cases
brought by ICPC/EFCC.
Note: It is unlikely that the number of convictions alone
could be used as a benchmark, because this might lead to
legal complications where defendants could allege the
government was bringing cases merely to improve their
performance against this benchmark. The number of completed
cases is a measure of the performance of the legal process.

-- Value of crime proceeds recovered by ICPC/EFCC and other
specialist units.

-- Meeting the criteria for Financial Action Task Force
de-listing.

-- Enforcement of recently approved anti-money laundering
legislation.

--------------
PUBLIC SERVICE REFORM
--------------

-- Number of 'ghosts' eliminated from the payroll (Federal,
State), and subsequent cost savings.

-- Implementation of civil service restructuring plans (the
five current pilots, then all ministries).


11. (SBU) The Embassy looks forward to the results of the
October 4 meeting.
CAMPBELL