MAKING NIGERIA AN EVIAN TRANSPARENCY AND

UNCLAS SECTION 01 OF 03 ABUJA 000035

SIPDIS

E FOR ANNE PENCE
EB/IFD/OIA FOR MARSHA KELLEY AND TIM HAUSER
INL/C FOR DAVID LUNA AND JOHN BRANDOLINO

E.O. 12958: N/A
TAGS: PGOV KCOR ETRD NI
SUBJECT: MAKING NIGERIA AN EVIAN TRANSPARENCY AND
ANTI-CORRUPTION PROGRAMS PILOT COUNTRY

REF: A. 03 STATE 345287


B. 03 ABUJA 2231

C. 03 ABUJA 2216

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SUMMARY
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1. Post believes Nigeria is an important focus for U.S. and
international efforts on corruption and transparency, and
should be a pilot country under the Evian Declaration (Ref
A). Nigeria's Government has started nine different
transparency or anti-corruption programs, several with U.S.
and other G-8 members' assistance. EITI is important among
them, but the extractive industries by no means are, nor
should they be, the sole focus of either the GON's or our
efforts. The Nigerian Government has recently put on trial
the Minister of Labor, two former Ministers, a Permanent
Secretary and others in a procurement scandal, and both the

SIPDIS
Government and the National Assembly announced new committees
last month to tackle budget implementation reform. Making
Nigeria a pilot country under the Evian Declaration would be
an excellent response, and concrete support, for these
nascent moves forward as long as G-8 members are willing to
ramp up and sustain their support. End Summary.

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NIGERIAN GOVERNMENT IS READY
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2. Both the Embassy and the Department have had extensive
discussions with the Nigerian Government on
transparency/anti-corruption efforts, including under Evian.
In post's latest discussion on December 23 with the GON's
anti-corruption czar, Senior Special Advisor to the President
Dr. Ezekwesili, she noted Nigeria's interest in becoming a
pilot country under the Evian Declaration on Fighting
Corruption and Enhancing Transparency, saying the GON is
committed to fighting corruption, implementing transparency
in GON operations to include energy revenues and
budget/procurement implementation, and downsizing government
through the sale of GON parastatals.


3. In response to Ref A's special paragraph for Abuja, the
GON is beginning to address the key issues in budget and
procurement. The main issues in the budget are transparency
and "budget implementation," the latter a Nigerian term for
the fact that GON routinely and often refrains from expending
money for many items approved in its budget. President
Obasanjo told the National Assembly in December, for example,
that the GON's Central Bank had not released money to GON
ministries for approximately half of the allocated items in
the GON's capital budget. The National Assembly believes the
figure is closer to 80 percent not released, and thus the
expenditures never made. Both the Executive and the
Legislative branches are setting up new institutions to
address the budget implementation problem (see below).


4. The GON has improved the 2004 budget transparency process
by including and consulting with the National Assembly at an
earlier stage than before in formulating the budget. The
GON's relation with the IMF is improving, and the IMF has
helped Obasanjo's economic team with its budget framework.
An article IV consultation is scheduled for mid-February.


5. Anti-corruption improvements in procurement were started
earlier and have borne fruit in victories for American
contractors when competitors were forced to bid on a level
field (Ref C details the most recent). Dr. Ezekwesili's
Budget Monitoring and Price Intelligence Unit is a major
component in this effort. Both the GON's procurement system
and anti-corruption effort in procurement, however, are still
not transparent.

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NIGERIAN GOVERNMENT PROGRAMS
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6. ICPC: The Independent Corrupt Practices Commission was
set up in 2000 by an act of the National Assembly to
investigate and prosecute corruption complaints from private
citizens, and operates outside the Executive branch of the
GON. The ICPC emerged from constitutional challenges in
2002, had its mandate partially changed in 2003, and made its
first major arrests in December (see below). The Chairman is
retired Supreme Court Justice Mustapha Akanbi. The initial
staff of investigators seconded from the Police and the State
Security Service (SSS) and prosecutors seconded from the
Ministry of Justice is changing over to the first batch of
dedicated ICPC investigators and prosecutors trained with
support from INL.


7. BMPIU: The Budget Monitoring and Price Intelligence
Unit, also known as the Due Process Office, was established
under the Office of the Principal Secretary to the President
in June 2003. It is run as an operationally independent body
under the leadership of the Senior Special Assistant to the
President on the Unit, Obiageli (Oby) Ezekwesili. The Unit
is designed to act as the clearing-house for all Government
contracts and procurement of goods and services, and
monitors/certifies all GON contracts over 1 million Naira
after a "Due Process Review" to check that anti-corruption
and other laws are followed.


8. EFCC: The Economic and Financial Crimes Commission
exists as the GON's internal equivalent of the ICPC,
monitoring and prosecuting economic and financial crime
within the Government and looking for waste and leakage in
public finance, as well as investigating financial fraud (419
scams) and money laundering. The Commission was established
in 1993 as part of the National Drug and Law Enforcement
Agency (NDLEA),but was given greater independence in 1999
and today coordinates anti-corruption efforts of the Central
Bank, NDLEA, the Nigeria Police, the Nigerian Telephone
Company (NITEL),and other GON institutions.


9. EITI: The GON recently agreed to participate in the
Extractive Industries Transparency Initiative, but thus far
has taken no transparency actions under EITI.


10. BPE: The Bureau of Public Enterprises, which oversees
management of the Nigerian Government's equity in parastatal
organizations, has an Anti-Corruption and Transparency Unit
that could become important under EITI.


11. Finance Ministry "Cash Commission:" According to
Nigeria's Minister of Finance, a cash management commission
will be set up within the executive branch of government,
with IMF assistance, by mid-January 2004 to improve budget
implementation. The Cash Commission will monitor GON
revenues and guide the release of funds from the Central Bank
to GON ministries for expenditures already approved under the
budget. The Commission may also receive responsibilities to
monitor and evaluate ministers' and other senior GON
officials' job performance, transparency in contracting, and
productivity.


12. National Assembly's Legislative Budget and Research
Committee: The House of Representatives has announced that
it will set up this Committee to address budget
implementation, as well as to provide budget revenue and
expenditure data similar to the Congressional Budget Office
in the U.S.


13. CCB/CCT: The Code of Conduct Bureau and Tribunal were
created in 1999. This executive branch bureau is intended to
monitor the declaration of assets by publicly elected
officials, but only does so at the time of election and
departure from office. The declarations and the audits of
them are not public.


14. Nigeria Police: All of Nigeria's police are Federal,
not state or local, and constitutionally headed by the
Inspector General of Police. The Inspector General has
dedicated anti-bribery and anti-fraud units. Numerous
arrests of police officers for corruption were made during
2003, but few trials have started and no punishments have
been made public.


15. Auditor General and Accountant General: These oversight
positions track funds in the GON's expenditures and revenues
respectively.

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FIRST FRUITS?
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16. After a one-year investigation, the ICPC on December 3,
2003 announced its arrest and detention of seven persons,
including the current Minister of Labor, for taking kickbacks
and bribes in a project to create a national identity card.
President Obasanjo fired the Labor Minister the following
day. Several of those arrested served in the Ministry of
Internal Affairs from 1999 to 2003, including two former
Ministers and the current Permanent Secretary. After nearly
a month in jail, the suspects were all arraigned on December
29 and granted bail two days later. There is no indication
of a trial start date.


17. The defendants in this case represent the
highest-ranking officials ever formally investigated by the
government. Current indications are that the trial will be a
showy production for the current administration to show a
tough stance on corruption. Once the trial begins, which may
not be for another month or two, it can be expected to last
for several months.

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PRESENT USG AND OTHER G-8/IFI PROGRAMS
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18. USAID works with several international and civil society
organizations to promote transparency, accountability, and
rule of law among the general public, often in projects
coordinated with the BMPIU, ICPC, National and State
legislatures, the Independent National Electoral Commission,
political parties, and the Economic Planning Commission.
USAID provided major assistance to the BPE, and helped revamp
it into an internationally entity. USAID also works with
state courts to improve judicial performance and
implementation of the Judicial Code of Conduct.


19. INL has long worked with the ICPC and will send select
ICPC investigators and prosecutors to Hong Kong in February
for a comparative study of anti-corruption efforts. In FY
2005, INL will add a program to provide advisory technical
services to the EFCC, and to procure equipment for the
Financial Intelligence Unit (FIU). Treasury provides
training assistance to the EFCC and other Nigerian law
enforcement bodies.


20. The UK's transparency and anti-corruption activities in
Nigeria have been centered on the ICPC and other GON
institutions, and are adding a focus on EITI. The UK's
Department for International Development also supports one
NGO, Business Integrity, that is set up to provide a "quality
mark" for Nigerian businesses it investigates and determines
are free from corruption.


21. The World Bank has extensive anti-corruption programs
with the Finance Ministry, BPE, Auditor General, and other
GON institutions. The IMF is heavily involved in the budget
process.


22. Italy has various programs directly and through the EU
with GON offices investigating money laundering and other
corruption linked to trafficking in drugs and persons.


23. The other G-8 members do not have major transparency or
anti-corruption programs of their own in Nigeria, although
some G-8 members such as Germany and France are major donors
to EU programs for Nigeria in these fields. The Netherlands
and Canada are starting direct programs in Nigeria. In
Abuja, the donors' Governance Group should be able to
identify gaps as it works with the GON to establish an action
plan under Evian for transparency and anti-corruption
activities, and steer support from these other G-8 countries
toward those gaps.
Roberts