SENATE COMMITTEE SAYS NIGERIA SAVED $5 BILLION FROM 1988-93 DEBT BUYBACK SCHEME

July 3, 2000

A committee of Nigeria's upper legislative chamber has backed the strategy of debt buy back schemes in reducing the country's huge external debt. The Senate committee's stance is contained in a report on local and foreign debts that investigated Nigeria's debt buy back transactions from 1983, especially the controversial 1996 Ajaokuta debt buy back deal. In the report made available to Nigeria Today Online at the weekend, the committee, which was until recently led by Senator Idris Abubakar, said it was wrong to insinuate that all debt buy back schemes approved by past governments were fraudulent.

The committee stated that the debt buy back scheme undertaken between 1988 and 1993 was beneficial to Nigeria because the country was able to reduce its debt by $5 billion. The committee noted that the full benefits of the debt buyback scheme were yet to be fully achieved and urged President Olusegun Obasanjo to continue the ''scope of the debt conversion programme by all means at its disposal'' as a deliberate policy. The committee however cast aspersions on the conduct of the 1996 Ajaokuta debt buy back scheme.

The 1988-1993 debt buy back deals were handled by the Central Bank of Nigeria (CBN), through the former governor, the late Alhaji Abdulkadir Ahmed. The CBN used a subsidiary company, Greenland Holdings, while the Ajaokuta deal was handled by the Federal Ministry of Finance. London based former footballer, John Fashanu, two months ago alleged financial impropriety in the 1988-93 scheme. His accusing fingers were pointed at retired American investment banker Bob Minton, whose firm handled the 1988-93 scheme. Responding to Fashanu's allegations at a public forum which the United Kingdom resident, failed to attend, Minton said Fashanu was being used by the Scientology organisation in the United States with which he had a three-year battle over the group's alleged human rights violations and murder of certain persons which he was trying to expose.

''If people had plundered Nigeria, they should be brought to book, but such campaign would lose its focus if the main motivation is vendetta. The Fashanu Report was a document conceived out of vendetta. As far as I am concerned Fashanu is being economical with the truth. He should focus on those who stole Nigeria's money and not people like me who are being maligned for a completely different reason'' Minton told a public forum in Howard University, Washington D.C. last month. Privately, Fashanu has denied allegations that he had offered to sell his unsubstantiated findings to the federal government to the tune of 500 million naira. He has also failed to refute the allegations in public.

The senate committee, in its report, concurred that the debt buy back deals undertaken by Greenland Holdings were beneficial to the country. "There is no doubt that the London Club debt buyback done by government through the instrumentality of the offshore company, Greenland Holdings, was transparent and enjoyed input from all concerned at all levels within the CBN who were responsible for the debt and therefore handled the debt buy back.....It was covered by the CBN procedure for debt buy backs and attracted little or no controversy at least within the country. Possibly as a result of the openness with which it was done, it attracted the attention and ire of the government of US which advised in strong terms that the operation of the Nigerian government be closed down before it seriously embarrassed the nation."

The committee, stated that the debt conversion programme of the CBN, had a clearly defined procedure which included advertising the Nigerian debts available for purchase while open bids were conducted on regular basis. The committee pointed out that the Greenland debt buy back resulted in a reduction of Nigeria's debt by $5 billion..."

The committee did not give a clean bill of health for the Ajaokuta debt which was handled by the Federal Ministry of Finance. "The Ministry of Finance (MOF) stated in the memo submitted that no procedure existed for the purchase of the debts managed by the MOF. Mr. Ani who testified as a representative of the Minister of Finance re-emphasised this position in his oral submission. The submission of Chief Anthony Ani who was then the Minister of Finance also confirms this fact. Intense pressure from the committee could not produce any record of any completed debt buy back transaction in the MOF other than Ajaokuta Steel Complex Limited (ASCL). The committee did not therefore have the benefit of any other completed transaction for it to draw any inference as to the procedure that should have been followed in the ASCL debt buy back." The committee pointed out that debts managed by the finance ministry had no procedure for buying those debts back.