Nigerian oil theft: the international dimension
Entitled Nigeria’s Criminal Crude: International Options to Combat the Export of Stolen Oil, it has many interesting things to say on subjects close to our hearts. It notes, by way of introduction:
"At present oil theft is a species of organized crime that is almost totally off the international community’s radar. Officials outside Nigeria are aware that the problem exists, and occasionally show some interest at high policy levels. But Nigeria’s trade and diplomatic partners have taken no real action, and no stakeholder group inside the country has a record of sustained and serious engagement with the issue.And four recommendations emerge:
. . .
Outside governments probably would have to join forces to curb the export of stolen Nigerian oil significantly. Nigeria could not stop the trade single-handed, and there is limited value in other countries going it alone. However, an intelligent multi-state campaign could, in theory, close off markets and financial centres, and raise the costs of stealing."
- Nigeria and its prospective partners should prioritize the gathering, analysis and sharing of intelligence.
- Nigeria should consider taking other steps to build the confidence of partners.
- Other states should begin cleaning up parts of the trade they know are being conducted within their borders.
- Nigeria should articulate its own multi-point, multi-partner strategy for addressing oil theft.
"The big Nigerian oil theft networks use foreign banks and other channels to store and launder their earnings. Thieves have many ways to disguise the funds they move around the world. These include bulk cash smuggling, delayed deposits, heavy use of middlemen, shell companies and tax havens, bribery of bank officials, cycling cash through legitimate businesses and cash purchases of luxury goods. Interviewees named various East, West, and Southern African countries, Dubai, Indonesia, India, Singapore, the United States, the United Kingdom and Switzerland as possible money-laundering hotspots."The report then asks what can be done. It examines options for controlling and monitoring physical movement of oil, such as genetic 'fingerprinting,' or sanctions, but finds these of fairly limited use. It seems a little more optimistic about the possible use of supply-chain measures such as litigating against buyers and sellers of stolen oil and supply-chain due diligence activities - but then again, it finds big limitations to these approaches too. Finally, it considers the option that it closest to our own hearts: "Follow the money." This, it says, is more pregnant with possibilities, and "a key step towards controlling oil theft."
"Convicting oil thieves of laundering money and seizing their assets should be a part of almost any cross-border strategy. Building strong cases would not be easy, and ideally Nigerian anti- corruption police would help other governments trace the money. But Nigerian paralysis should not excuse other jurisdictions from acting in cases where they have good financial intelligence."Quite so. It is not so optimistic about Nigeria's involvement in the Extractive Industries Transparency Initiative (NEITI, a subject on which today's TJN blogger wrote an earlier Chatham House report) but then it adds:
"New financial-sector regulations – for example, to force disclosure of beneficial ownership, or place limits on use of shell companies – could have more value."Again, nobody says these 'follow the money' approaches would be easy, but the broad global movement, in which TJN has participated, to start attempting to rein in financial secrecy will, we hope, reap dividends in places around the world such as the Niger Delta.
Update: for more on The Mechanics of Secrecy, see here.