Political corruption

Government corruption, particularly at the State government level is a major cause of the lack of economic development, and a driver of conflict in the Delta. There are the beginnings of efforts in Nigeria to end the culture of impunity that allows crooked officials to grow rich while the people who "elected" them are consigned to lives of abject poverty. [16] Nigeria's anti-corruption drive threatens many powerful people and a backlash is possible. [17]

It would be logical to assume that the Niger Delta - being the oil centre of Nigeria - is where the corruption is at its worst. However it is important to note that the flow of oil revenues is highly centralised, creating opportunities at every level of government for diversion of funds. It should also be borne in mind that there are corrupt officials in Nigeria outside of politics. Criminal networks with international links operate alongside many institutions of the State, and are equally culpable as crooked politicians for driving conflict in the Niger Delta.

One example is given by the conviction and dismissal of two naval officers - Rear Admiral Francis Agbiti, chief of training and operations, Nigerian navy, and Rear Admiral Samuel Kolawole, Flag Officer Commanding (FOC) Western Naval Command - for their role in the disappearance of the MT African Pride in January 2005. [18] The Russian-registered tanker - laden with 11,300 tonnes of stolen crude - was intercepted by the Nigerian Navy in the Gulf of Guinea. Its crew of eighteen Russians, two Romanians and two Georgians were remanded in prison custody awaiting a court hearing. [19] The M.T. African Pride was later stolen from navy custody at a berth off Lagos in September 2004, and vanished. [20] The African Pride is one of at least fifteen vessels that have been seized, part of a fleet of rusting - mostly former-Russian - single-hulled ships which transports an estimated 200,000 barrels a day from the Delta's swamps and creeks.

The extent of criminal activity in the navy, army, police and State Security Service is vast and widely pervasive throughout Nigeria, but again it can be reasonably assumed it's concentrated in the oil-producing Delta. This again is systematic of the Nigerian State failing to live up to its responsibilities. This has resulted in most villages within the Niger Delta compiling at least a small selection of arms. [21] This is a short-sighted attempt to protect themselves, and if left unchecked will be a devastating contributing factor to any escalation in the current violence.

Governments like the UK and the US must do more to support the anti-corruption drive in Nigeria, and to meet their international commitments to repatriate money stolen by Nigerian government officials over the decades. [22]

Lack of transparency and business corruption

Some positive progress has been made - for example through the Extractives Industry Transparency Initiative, [23] promoted by the UK government - to work out how much oil Nigeria legitimately produces and how much money it gets for it. The opacity of Nigeria's oil accounts is at the heart of a culture of corruption that affects international businesses operating in Nigeria - and their investors - as much as it affects Nigeria's politics.

This has been most graphically demonstrated by Shell's reserves booking crisis, which centred on Nigeria. [24] The oil-company admitted it had "lost" much of its assets world-wide, amounting to more than a third of its proved oil and gas reserves by the final write-down at the end of 2004. The debacle led to the resignation of the Chair Sir Philip Watts and other senior executives, investor lawsuits, more than $150 million in fines and inquiries by Euronext Amsterdam and the California Department of Corporations. [25] 2004 was an annus horribilis for Shell rivalled only by its embroilment in the Brent Spa and Ogoni crises of the mid-90s [26] which - in particular - hit the morale within the company and confidence in its leadership. [27]

Shell mounted a major campaign to win back investors' trust, by appointing more scientists to find and "prove" reserves, [28] introducing a new set of management guidelines centered on exploration and production [29] and - answering institutional investors demands - creating one company with a unified board structure based in the Netherlands. [30] Nigeria - which accounts for the bulk of the 17 per cent of Shell's global reserves found in Africa, and for about a third of the company's assets written-off in the 2004 reserves scandal - remains central to plans to make up missing reserves. Shell says much of the increase in Nigeria will come from the first of many new offshore, deepwater projects like the 225,000 barrels per day Bonga field. [31]

The causes of Nigeria's contributions to the booking "error" remain unclear but are probably due to a combination of factors. The key ones are likely to be: exaggerated bookings made to obtain tax breaks granted by previous Nigerian regimes (historically, useful to the government to boost Nigeria's position and leverage within OPEC) and Shell executives over-interpreting geophysics and other scientific data in order to get bonuses.

Added to this is a general confusion about what is and isn't a "proven" reserve. It has become clear that the usually grey area of proving reserves is an especially opaque issue in Nigeria. However, in fairness the standards used to prove reserves - the highest standard arguably being the US SEC's - are being hotly debated within the oil industry globally. [32]

Shell is not the only company in the Niger Delta, and certainly not the only one suffering because it has corrupt - and possibly criminal - people working from the inside. As just one example, there are ongoing SEC and US Department of Justice investigation into a Halliburton subsidiary for allegedly offering bribes amounting to at least $180 million to secure contracts in the Bonny Island LNG project in 2001. [33] In September 2004, Halliburton was banned from bidding on future government contracts in Nigeria because it violated safety regulations for handling nuclear material. [34]

Corruption has always occurred, and will continue to occur, in all societies. However, what is important is that this corruption is not allowed to dominate the State. If the political will exists, and resources are available, to tackle corruption then it can increasingly be brought under control, and away from the derogating effects visible throughout Nigeria but arguably at their most acute in the Niger Delta.