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Nigeria financial audit reveals oil corruption Original Source Link: (May no longer be active)    http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-01-12T171400Z_01_ALL262223_RTRIDST_0_OZABS-NIGERIA-OIL-20060112.XML&archived=False http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-01-12T171400Z_01_ALL262223_RTRIDST_0_OZABS-NIGERIA-OIL-20060112.XML&archived=False Nigeria unveils oil accounts to combat corruption Thu Jan 12, 2006 7:15 PM GMT By Estelle Shirbon ABUJA (Reuters) - Nigeria published a long-awaited and unprecedented financial audit of its oil industry on Thursday in an effort to lift secrecy and expose weak government accounting that breeds corruption. The audit of payments between major oil companies and the government during 2003 and 2004 was conducted by independent British-based auditors the Hart Group, whose managing director Chris Nurse described it as a "worldwide first". "Our work indicates that there are potentially important weaknesses in government accounting systems," the report said. It found some discrepancies -- worth hundreds of millions of dollars -- between what firms said they had paid and what government said it had received, and listed failings by key institutions including the Central Bank. "This weak system of accounting controls creates an environment for corruption," said Bright Okogu, a senior Finance Ministry official, at a public session to present the audit. Nurse said no other oil-producing country had submitted itself to such deep scrutiny and then published the results. The audit included tables of figures detailing transactions between the government and the five oil majors operating in Nigeria -- Royal Dutch Shell, Chevron, Exxon Mobil, Total and Agip. Oil and gas revenue accounts for more than 80 percent of Nigeria's annual budget, but critics of the secretive industry blame it for fuelling systemic corruption in Africa's most populous country. "ARROGANT" SECTOR "The operators of that sector (oil and gas) are an arrogant bunch of people," said Obi Ezekwesili, head of the state-backed Nigerian Extractive Industries Transparency Initiative (NEITI) which ordered the audit. "They live in a cocoon ... and forget that wider society demands accountability. This exercise is to demystify the arrogant," said Ezekwesili, a government minister. She said the audit would form the basis for wide-ranging reforms to government accounting systems. Nigeria is the world's sixth most corrupt country according to independent watchdog Transparency International, and the oil industry audit is one of the flagship measures in President Olusegun Obasanjo's strategy to tackle the problem. The audit was originally promised for 2004, but difficulties in obtaining data slowed work. The financial report is just part one, with audits of the actual volumes of oil and gas produced and of the processes involved due to follow in February. David Ugolor of campaign group Publish What You Pay said the reports were a step in the right direction but the process of attributing Nigerian oil and gas assets remained too secretive. He gave the example of a $2.3 billion purchase announced earlier this week by a Chinese state-owned oil company of a stake in a Nigerian oil and gas field. Government and oil industry officials have given conflicting accounts of who actually owns the oil field and who will be getting the $2.3 billion. Asked about this case at the audit presentation, Ezekwesili did not offer any clarification. Minister of State for Petroleum Edmund Daukoru has said the audit should aim to improve standards but should not be used as a basis for a witch-hunt. "People who are not industry people just smell things everywhere. The oil industry is as clean as oil itself, which is not very clean worldwide. It is not for the uninitiated," Daukoru told Reuters in an interview last month. © Reuters 2006. All Rights Reserved.

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