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Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI

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Jonathan, Etete, Shell in fresh N155billion scandal


Premium Times

By Idris Akinbajo

May 21st, 2012

Four years after he was convicted of money laundering in France, Dan Etete, a former Petroleum Minister, through his company Malabu Oil, has become a billion dollars richer, courtesy of the Nigerian Government and Shell.

According to documents (filed March 22, 2012) before the Supreme Court of the State of New York in the US, President Goodluck Jonathan discreetly approved the transfer of the sum of $1.1bn to Mr. Etete on April 29, 2011, two weeks after he was re-elected.

The money was first paid to the Federal Government by two multinational oil companies: Nigeria Agip Exploration Limited (Agip) and Shell Nigeria Exploration and Production Company Limited (Shell) in respect of oil block OPL 245.

But shortly after the funds were credited to the Federal Government’s account, Mr. Jonathan ordered that it should be secretly transferred to a London account of Mr. Etete’s company, Malabu Oil.

It is not clear what deal Mr. Jonathan struck with Malabu, and on what basis the payment was made. President Jonathan’s spokesperson, Reuben Abati did not answer or return calls seeking his comment for this story. He also did not respond to a text message sent to him for the same purpose.

The government made the payment to Mr. Etete’s company even when it had repeatedly insisted that the award of the oil block to Malabu was done in violation of laid down procedures.

Shell insisted it had no knowledge that the government passed the funds to Mr. Etete’s company.

OPL 245: History

While serving as Petroleum Minister under late Head of State, Sani Abacha, Mr. Etete awarded his own company, Malabu, an oil block, OPL 245 in 1998.

The allocation was however reversed by the Federal Government under President Olusegun Obasanjo in 2001 when the FG described the allocation process as dubious. The block was allocated to Shell in 2002.

Following the revocation, a prolonged legal battle ensued with Malabu taking the Federal Government to court. In 2006, the Federal Government reversed itself and re-allocated the oil block to Malabu. This angered Shell which then filed arbitration proceedings in Washington.

Following the protracted legal battles, an agreement was reached between all parties.

The agreement

In an agreement titled “Block 245, Malabu resolution agreement” dated April 29, 2011 between Malabu and the Federal Government, the FG agreed to pay Malabu $1,092,040,000 in “full and final settlement of all its claims, interests or rights relating to OPL245.” The agreement also stated that the rights to the oil block would be reallocated to Agip and Shell.

In a separate agreement between Shell and Nigeria, titled “Block 245 resolution agreement,” the two multinationals (Agip and Shell) agreed to Pay the same sum “for the purposes of FGN settling all and any existing claims and/or issues over Block 245…”

In other words, the multinational oil firms agreed to pay $1.1bn to the FGN with the knowledge that the money would be used to settle any existing claims that existed by any other party to the oil block…Read more.

Ethiopian Public Procurement Law applicable only to the private sector


Ethiopian Legal Brief

By Abrham Yohannes

February 16th, 2012

In developing countries like Ethiopia, the provision of services to the citizen is one of the central functions of government. To fully realize it’s in providing services which meet the standard of the best quality, but at the same time with the minimum cost, the government in Ethiopia, uses the best mechanisms available, which may generally be categorized in to two. First, in areas where the private sector is considered to be at an infant stage, the government directly involves itself in the management and operation of the provision of services. The provision of electricity, telecommunication and water for instance, is under the exclusive control of government. Second, in areas which do not require direct involvement of the government, the provision of public services will be realized by involving the private sector for carrying out works and providing goods and services. Even in the second case, the government is not totally out of the picture. Public enterprises and other government business organizations equally participate in this process. Similarly, the direct provision of services by the government, to some extent allows the participation of the private sector. To a certain degree, the private sector plays a role in carrying out public works and providing goods and services in areas under the exclusive control of the government.

Irrespective of the role played and the level of participation of the government or the private sector, the provision of the best quality of services with a minimum cost, requires an efficient and effective system of public procurement. “Public procurement is a central instrument to ensure an efficient management of public resources. Promoting good governance in public acquisition system aims at providing best value to its citizens through processes that are transparent and results-oriented.”

Irrespective of variations in the existing political, economic and legal environment peculiar to a specific country, an efficient and effective system of public procurement is ultimately built upon four basic pillars: procurement laws and regulations, procurement workforce, procurement process and methods, and procurement organizational structure. Ideally, procurement laws and regulations should be clear, consistent, comprehensive, and flexible. (Khi V. Thai, procurement: concepts and practices, in International handbook of public procurement ed. Khi V. Thai p6-9).

Generally speaking, the regulatory framework of public procurement as tool in the formulation and implementation of an effective and efficient system of public procurement should be guide by some internationally accepted basic principles. These principles are: transparency, accountability, objectivity, fairness and non-discrimination.

The principle of transparency helps to attract a greater number of participation, thereby encouraging competitiveness. It also makes the whole procurement process open and fair, thus avoiding the possibility of favoritism and discrimination. Transparency also makes it easy for procuring entities and officials to be accountable. Most importantly, it is an effective tool to curb corruption.

The Ethiopian procurement law is still at an infant stage. In recent years, the Federal government has taken measures to revise the existing law, so as to make it responsive to the growth and expansion of the quantity and quality of provision of public services. Each year, a significant portion of public money is allocated as a result of  award of contracts for the construction of public works, supply of goods and provision of services…Read more.

Nigeria: Jonathan orders screening of contractors


Vanguard

By Rotimi Ajayi

October 20, 2011

In a bid to reduce corruption and non-performing contracts in the Federal Civil Service, President Goodluck Jonathan  has ordered comprehensive screening of contractors and service providers for the Federal Government.

The directive was said to have been issued following a review meeting with some members of the National Economic Management Team after the recent retreat with members of the Organized Private Sectors where it was agreed that there was need to put sanity to awards of Federal Government contracts and jobs.

An indication towards the implementation of the Presidential directive was contained in a statement issued yesterday in Abuja by the Bureau of Public Procurement (BPP).

The statement issued by the Director General of the Bureau, Emeka Ezeh, pointed out that arrangements had been concluded to commence registration, categorisation and classification of all Federal Government contractors, consultants and service providers.

The Director-General stated that the project would revolutionise government procurement process and encourage more transparency and efficiency in the procurement process.

According to him, the objective of the database is to register, classify and categorize contractors, consultants and service providers as a platform of verification by Ministries, Departments and Agencies (MDAs), other entities, and interested organisations. It will also ensure that contractors, consultants and service providers of equal competencies and capabilities bid for specific jobs.

He added that the project would create an electronic interface with stakeholders and deepen the capacities of Ministries, Departments and Agencies (MDAs) and their leaderships to attain full compliance with the provisions of the Act in order to positively transform the economy of Nigeria.

He said, “the usefulness of the Act in Government’s obvious responsibilities, particularly in implementing strategic and sustainable plans to develop infrastructural facilities cannot be overemphasized. This is not just to fulfil a basis responsibility of government but also in order to attain the proposed Vision 20:2020.

“The benefits of the procurement reform process importantly correlate with the present administration’s transformation agenda.  This agenda, as articulated by government seeks to vigorously implement the initiatives or programmes that will enhance the Administration’s strategic plans for Economic Growth.

“The ultimate objective of the Bureau is to ensure that all Federal procurements are strictly done in compliance with the provisions of the Public Procurement Act, 2007, and that all ongoing projects are in line with sectoral targets and priorities. It is when viable ongoing projects are adequately funded, completed and commissioned that the populace will be the better for it.”

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