Author Topic: Oil & People: PIB And Dodd-Frank 1504 Anti-Corruption Act (2)  (Read 185 times)

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Oil & People: PIB and Dodd-Frank 1504 Anti-Corruption Act (2)

By Felix Ayanruoh

Part one of this article reviewed the legal framework of Dodd-Frank, calling attention to its transparency and disclosure provisions in the global extractive industry.

The greatest challenge to the impact of Dodd-Frank 1504 in Nigeria is not the global extractive sector and its allies, but the political leadership of our nation vis-?-vis its petroleum resources. So far, there has been no indication of a high-level systematic response to Dodd-Frank 1504 by the nation?s legal and regulatory regimes, including the proposed PIB.

Furthermore, weak technical capacity in key state institutions responsible for oil and gas industry governance ? state regulators and legislatures exacerbates lapses in enforcing disclosure rules. It is doubtful that Dodd-Frank 1504 will stop institutionalized petroleum sector corruption without strong local mechanisms for public accountability and transparency.

Widespread impunity and repression of critical reports such as that of the Ribadu?s committee and Nigeria Extractive Industries Transparency Initiative (NEITI) will continue to diminish resource rents further. Under-reporting of payments made to governments by oil and gas companies is a serious problem in Nigeria ? the recent investigation by the Honorable Minister of Petroleum Resources, Mrs. Deziani Allison-Madueke into the management of 445,000 Barrel Per Day (BPD) domestic Purchase by the Nigeria National Petroleum Company (NNPC) and remittance to the Federation account is a case in point.

The country?s 2006-2008 EITI audit report found that oil companies did not comply with guidelines on the assessment of tax liabilities, and there was inadequate information on payments of signature bonuses and royalties. Also, the Nuhu Ribadu headed Petroleum Revenue Special Task Force designed to enhance probity and accountability of the petroleum industry discovered that between 2002 and 2011, the nation has been defrauded at almost every state of accounting for oil and gas revenues. The task force went on to state that signature bonuses and royalties amounting to billions of dollars have gone unpaid.

As regards the Nigeria Liquefied Natural Gas (NLNG) joint venture owned by NNPC (state owned entity) and some oil majors, the task force observed problems with its accounting and disclosure methodologies, and went on to say that, ?The estimated cumulative of the deficit between value obtainable on the international market and what is currently being obtained from NLNG, over the 10-year period, amounts to approximately $29bn.? And that Shell withheld US$ 946 million in gas sales from a strategic offshore concession in 2009.

The impact of Dodd-Frank 1504 can be further enhanced by the application of related anti-corruption legislation such as the U.S. Foreign Corrupt Practices Act, the UK Bribery Act 2010 and the Organization for Economic Co-operation and Development (OECD) Anti-Bribery Convention in our legal regime.

In the aftermath of the Dodd-Frank 1504 reform, to improve extractive sector governance, the National Assembly should ensure that, in its deliberations in enacting the Petroleum Industry Bill, the following recommendations should be taken into consideration:

?    Harmonize domestic legislation and guidelines on the disclosure of oil and gas payments (such as EITI and extractive regulatory codes) with Dodd-Frank 1504.

?    Honor international commitments on extractive sector transparency, human rights and anti-corruption legislation such as the U.S. Foreign Corrupt Practices Act, the UK Bribery Act 2010 and the OECD Anti-Bribery Convention.

?    Strengthen and enforce Corrupt Practices and other Related Offences Act (ICPC Act), Economic and Financial Crimes Commission (Establishment) Act, and Money Laundering Prohibition Act among others on erring oil and gas companies and public officials.

?    Strengthen the capacity of regulatory institutions to monitor petroleum sector companies.

?    Provide access to information on petroleum industry operations to the general public and civil society, to improve public accountability.

?    Strict rules on reporting and accountability in the Oil and Gas industry.

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