26 July 2012

Nigeria: Subsidy Fraud - Adoke's Absence Stalls Trial

Photo: The Vanguard
Fuel Subsidy

Subsidy to gulp N863 billion in 2012, says IMF Kunle Aderinokun and Akinwale Akintunde

The trial of oil-marketing firms and their directors before the Lagos High Court in Ikeja for their alleged complicity in the fuel subsidy scam was stalled yesterday due to the absence of the Attorney General of the Federation (AGF) and Minister of Justice, Mr. Mohammed Bello Adoke (SAN).

This is just as the International Monetary Fund (IMF) has predicted that the partial retention of fuel subsidy by the Federal Government will cost the country some N862.7 billion this year, translating to two per cent of the Gross Domestic Product (GDP).

As the chief law officer of the federation, Adoke was expected to lead the prosecution to commence the trial of oil marketers suspected to have defrauded the Federal Government through the fuel subsidy scheme.

The marketers were expected to be arraigned by the Economic and Financial Crimes Commission (EFCC) before Justices Adeniyi Onigbanjo and Habeeb Abiru on charges bordering on conspiracy, obtaining money by false pretence, forgery and use of false documents.

The defendants, Adaoha Ugo-Ngadi, Fakuade Babafemi and Ezekiel Ejidele, who appeared before Justice Abiru, were brought into the court at about 10.30 am.

Walter Wagbatsoma, who was charged along with them, was absent but was represented by his counsel, Mr. Olawale Akanni (SAN), who informed the court that his client was yet to be served with the information.

When the matter came up for their arraignment, EFCC prosecutor, Mr. Rotimi Jacobs, asked the court to adjourn the arraignment till today to enable Adoke to personally lead the prosecution team.

According to Jacobs, "The Attorney-General of the Federation just returned to the country yesterday and he intends to personally come before my Lord tomorrow to lead the prosecution team."

Consequently, Justice Abiru was compelled to adjourn the matter till today.

But Justice Onigbanjo did not sit on the matter involving Mahmud Tukur, Alex Ochonogor, Abdullahi Alao and Eternal Oil and Gas. The judge, after meeting with counsel in his chamber, also decided to adjourn the matter before him till today for the same reason.

The defendants before Justice Abiru are facing a nine-count charge for fraudulently obtaining over N1.9 billion from the Federal Government under the Petroleum Support Fund (PSF) from July to December 2010.

While those before Justice Onigbanjo are facing a nine-count charge for allegedly obtaining N1.8 billion from the PSF for the purported importation of 80.3million litres of petrol.

All the accused persons were also alleged to have forged bills of lading and other vital documents which they allegedly used in perpetrating the fraud.

The EFCC said their alleged offences contravened Sections 1(3) of the Advance Fee Fraud and Other Fraud Related Offences Act of 2006 and Sections 467 and 468 of the Criminal Code Laws of Lagos State 2003.

But as the country grapples with finding means to recover monies fraudulently obtained through the subsidy scheme, the IMF has predicted that the partial retention of subsidies on fuel will cost the economy N862.7 billion in 2012, which translates to two per cent of GDP.

The Federal Government had projected a GDP of N43.135 trillion for the 2012 fiscal year and as at the end of the first quarter of this year, the GDP was N9.142 trillion, which translated to a growth rate of 6.17 per cent.

In its recently released staff report for 2011 Article IV Consultation, the IMF advised the Federal Government to find ways to counterbalance at least half of the cost so as not to further deplete the reserves.

"Staff recommends that the authorities come up with additional measures to offset at least half of this cost in order not to jeopardise the build-up of reserves in the Sovereign Wealth Fund (the likely source of funding for the subsidy)," said the Bretton Woods institution.

Nigerians had woken up on New Year's Day to see the pump price of fuel adjusted to N143 per litre by the government, signifying the full removal of subsidy. The new pump price represented a 120-per-cent increase over the N65 per litre at which fuel sold till December 31, 2011.

But the subsidy removal was vehemently resisted by organised labour and the civil society, forcing the government to reduce the price to N97 per litre.

Recalling that the Federal Government had while announcing the partial reinstatement of subsidies, said that it remained committed to the full removal of the subsidy, the IMF however noted that the Nigerian authorities did not specify any timeline.

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