Corruption Flourished In Abacha's Regime
By James Rupert
Abacha died today at age 54. While he ruled Nigeria from a fortified presidential villa in Nigeria's capital, the sources said, he and a circle of aides and business partners tapped virtually every stage of the oil business, Nigeria's most important industry and the source of 80 percent of its government revenue. They took kickbacks from foreign companies for licenses to search for oil in the basin and delta of the Niger River and offshore. They got bribes from construction firms that won contracts to build drilling rigs and pipelines.
In recent years, Abacha, his allies and top officials have added a new form of corruption that is killing the Nigerian economy -- the siphoning of money used by Nigeria's oil refineries to turn crude into gasoline. Finance and Oil Ministry officials argue openly in the Nigerian press over who is responsible for diverting more than $2 billion from the four state-owned refineries in recent years, but the refineries' ruin creates an artificial fuel shortage for this nation of more than 100 million people.
Nigeria is thus forced to import refined fuels, such as gasoline, and, traders say, Abacha and his cronies controlled that trade too, skimming off a percentage. The government subsidizes the sale price of gasoline and other fuels, but Abacha loyalists among the officer corps and civil service divert much of the available supply to sell on the black market or to neighboring countries. The fuel shortage has forced the economy into near depression, leaving millions of people poorer and sicker.
"In Nigeria, corruption isn't part of government, it's the object of government," said a Nigerian political scientist who asked not to be named. For 28 of the 38 years since Nigeria gained independence from Britain, the country has been ruled by the military, and Nigerians say corruption has grown steadily. For the past two years, Transparency International, a Berlin-based organization that monitors corruption, has conducted surveys of businessmen that have ranked Nigeria as the world's most corrupt place to do business.
Since the growth of Nigeria's oil industry in the 1970s, military rulers have controlled the trade. But whereas earlier rulers doled out the graft to key supporters, "Abacha has increasingly monopolized the trade himself," said John Bearman, a London-based oil industry analyst. "There is no deal that does not go through the presidential villa."
Under Abacha, corruption took Nigeria further into economic collapse than ever before. Besides the collapse of the fuel distribution system, the telephone network is decaying. The electrical grid is failing. Almost no part of Lagos -- the steaming, teeming financial and commercial capital -- gets electricity all day, and vast tracts of the city of 8 million never get power at all.
Business is mired by a thousand such failures, and analysts estimate the unemployment rate to be at least 25 percent. Millions of Nigerians survive on ingenuity and doggedness as street vendors, curbside fix-it men, prostitutes, subsistence farmers.
Abacha avoided broad publicity involving state corruption partly by keeping a low profile abroad. His face was ubiquitous on Nigerian television and in government publications but little known internationally.
"He is a recluse," a Western diplomat said in Lagos last month. "He seldom leaves Aso Rock [the presidential villa], and he says very little in public for a head of state."
Abacha and his entourage "live a pretty weird lifestyle," said one former trader who has dealt in oil with Abacha's family. He and others told of traders arriving in Abuja, the capital, and waiting at a luxury hotel for several days before being summoned -- often after midnight -- to the presidential villa to sign contracts with Abacha's aides. Abacha "works all night and sleeps all day," said the former trader, who asked not to be named. "If you didn't get your deal done by 6 a.m., you'd have to go back."
Nigerians and international economists say Abacha appears to have hidden his wealth well. Nigerian journalists who have investigated corruption say he appears to have particular business interests in the Persian Gulf region and the so-called "tiger" economies of Asia and Brazil.
Much of the oil that Nigeria pumps each day goes to the major international oil companies -- Shell, Mobil, Chevron and others -- that operate the oil fields. But the largest single share goes to Nigeria's state oil company, which, under the direction of Abacha's camp, sells its oil to independent traders.
According to official announcements of oil sales and reporting by the London-based oil newsletter Energy Compass, Nigeria's main trading partners in the Abacha era have been the London-based firms Arcadia and Addax, and the Swiss-based company Glencore, which was under the control of Marc Rich, an American commodities dealer.
Abacha's predecessor, Gen. Ibrahim Babangida, "doled out the contracts" to a wide circle of supporters, allowing them to take commissions from oil traders, said Patrick Smith, editor of the London-based newsletter Africa Confidential.
When the 1991 Persian Gulf War drove oil prices upward, Nigeria earned a windfall that never made it to government coffers. Soon after taking power as he wooed political support, Abacha named a commission headed by Nigerian economist Pius Okigbo to investigate. Okigbo reported that $12.2 billion in oil earnings had disappeared between 1990 and 1994, but no one was ever prosecuted.
The former trader, a European, said he participated in three oil purchases in recent years -- technically from Nigeria's state oil company but negotiated with Abacha aides at the presidential villa. Each contract specified a "commission" to be paid to a specific beneficiary, he said.
He declined to name the beneficiaries on the contracts he helped negotiate. He said other traders had noted that sometimes the beneficiary is a well-known Nigerian, and at other times "it's a completely unknown person" who traders believe is a front for someone else. He said the contracts he dealt with ordered the commissions paid to bank accounts in Singapore, Bermuda and Switzerland.
Kickbacks paid by traders are so high that they "can't make a profit selling the oil on the spot market," said Bearman, the London-based analyst. Instead, "they make their money by buying huge quantities of crude, using it to manipulate the futures market," he said.
The trade in refined products is even more corrupt, sources said. "The government is deliberately keeping our own refineries shut down and starving our economy for fuel," said a Nigerian oil industry analyst in Lagos who spoke on condition he not be named.
Nigerian journalists, who often are jailed for reporting on corruption, are careful about what they publish about the gasoline scam. A trade journal, Nigeria's Oil and Gas Monthly, noted that Nigeria has announced plans to spend $600 million to import refined fuels between January and September. "Paradoxically . . . less than half of that amount would have breathed life into two of the four" Nigerian refineries, it said. "The fear, as always, is that those who perennially benefit from the state of the . . . refineries will do and pay everything to ensure that the status quo remains," the journal said.
A key partner of Abacha has been the Chagoury family. Its patriarch, Rene Chagoury, immigrated to Nigeria from the north Lebanese village of Miziara and prospered as he and his family developed flour mills and a modest construction business.
Among Rene Chagoury's five sons, the oldest, Gilbert, had befriended Abacha as early as the 1970s, according to a Lebanese friend of the family. After Abacha took power in 1993, Gilbert Chagoury became a familiar figure at the presidential villa, and the family's businesses began mushrooming.
When Gilbert Chagoury "flies into Abuja for one of his numerous business visits . . . he is treated like a head of state," the News, a Nigerian weekly, reported in a cover story on the Chagourys last November. "He arrives . . . in private jets and is whisked off from the tarmac without all the customs, immigration and security hassles . . . to Aso Rock," the News said.
Soon after the article was published, its author, editor Babafemi Ojudu, was seized by Abacha security men and held without charge until being released last month. Ojudu, Nigerian business executives and Western diplomats said the Chagourys seized disparate new chunks of business after Abacha came to power, including contracts to buy Nigerian crude oil, build large government buildings -- and, in 1994, to supply all of Nigeria's fertilizer.
The family's flagship firm, Chagoury & Chagoury, has been one of the biggest beneficiaries of a push to develop Nigeria's half-constructed capital, Abuja. The firm has built such key installations as a secretariat to house numerous government ministries and the headquarters of the secret police force, the Special Security Service. But after the magazine cover story, formal plaques on those buildings that listed the company as builder were removed.
Nigerian journalists and business executives said the Chagourys have direct business partnerships with Abacha. In the immediate aftermath of Abacha's death today, the Chagoury family could not be reached for comment. But in one recent public acknowledgment, a prominent director of Chagoury & Chagoury announced that the company's office tower in a posh neighborhood of Lagos was built on land owned by Abacha. Neither Abacha nor the company ever denied it.
In recent years, Gilbert Chagoury tried to curry favor with the Clinton administration on Abacha's behalf. He contributed $460,000 to a Miami-based voter registration group to which he was steered by Democratic Party officials, and won meetings with National Security Council officials, including Susan E. Rice, now the assistant secretary of state for African affairs.
Unlike Zairian strongman Mobutu Sese Seko, who flaunted palaces and villas he owned throughout Europe and elsewhere before his death last August, Abacha has revealed no foreign assets. But in Abuja, Nigerian journalists and business sources said the Abacha family is known to own numerous businesses and properties.
Abacha's oldest son, Ibrahim, was the family's main business manager until he was killed in a plane crash in 1996, the sources said. They said an example of the privileges accorded Abacha and his business partners is the story of Delta Prospectors Ltd., a company that Ibrahim Abacha helped set up. Delta mines barite, a mineral that is a source of barium and an essential material for oil production.
This spring, shortly after Delta announced that its operations had reached full production, the government declared a ban on the import of barite, making the Abacha-owned company the monopoly provider for the huge Nigerian oil industry.
Nigerian journalists and business sources in Abuja and the northern city of Kano said the Abacha family keeps palatial private residences in both. The family's home in Kano is concealed behind fences and armed guards and "is truly opulent and spectacular," said a source who visited the home a few years ago.
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