Nigeria: The Hidden Cost of Corruption

Who are the biggest victims of widespread bribery?


APRIL 24, 2009

If any company knew how to get business done in Nigeria's Niger Delta, it was Willbros Group. The Texas contractor had been laying pipe through the Delta's mangrove forests since shortly after the discovery of oil there 50 years ago. And so it is telling that in February 2005, Jim Bob Brown, head of Willbros' Nigerian operations, showed up in the teeming tropical city of Lagos to hand off a suitcase filled with $1 million in cash.


So rampant is corruption in Nigeria that the list of those recently accused of engaging in bribery there includes a U.S. Congressman (indicted after $90,000 of marked money was found in tinfoil-wrapped bundles in his freezer) and a Fortune 500 energy company (then run by soon-to-be Vice President Dick Cheney). Indeed, the Berlin-based group Transparency International has consistently ranked Nigeria among the world's most corrupt countries.

Much of the shady business takes place in or is related to the Delta -- a part of Nigeria that has earned an unfortunate superlative of its own: one of the five most-polluted spots on Earth, according to a recent assessment by a team of international experts. Up to 50 times as much oil as that of the Exxon Valdez disaster has been spilled there over the past 50 years -- one Valdez a year. And flaring -- how oil companies get rid of unwanted gas, a byproduct of drilling -- is blamed for making rain so acidic that corrugated iron roofs quickly turn to rust.

Even so, pollution is not the top concern for the average Delta inhabitant. Hunger is. Nigeria supplies one-tenth of the United States' oil, more than Iraq and Kuwait combined, yielding billions of dollars in oil revenue every year. Yet in the Delta most people survive on less than a dollar a day, well below the World Bank's threshold for extreme poverty.

Jim Bob Brown probably didn't think of their desperation as he let go of that suitcase. Nor, it seems, did the government officials who pocketed its contents. But it is not mere coincidence that one of the word's most corrupt places is also one of its most polluted -- and one that, despite a wealth of oil and natural gas, can barely feed itself. If bribe money has bought anything in the Delta, it is a culture of pervasive, profound neglect.

Aerial view of Total's Amenam Kpono oil platform, 25 miles off the coast of Nigeria in the Atlantic Ocean.

A Rare Ecosystem Under Assault
In satellite images of Africa's western flank, the Niger River looks like a blue artery that, after arching across 2,600 miles of Sahel, blossoms into a tangled network of smaller veins. The veins, in turn, work their way though a greenish mass before meeting the Atlantic Ocean. This is the Niger Delta. "It is a land of heat and steam... muddy rivers and wastes of quaking swamps," wrote the British novelist Harold Blindloss after traveling by steamship through the Delta during the 1890s.

About the size of Connecticut and Rhode Island combined, it is a rare ecosystem of mangrove forests that has long protected the coast from erosion and supported what is, even by African standards, an unusual diversity of marine life and other plants and animals, as well as human beings. The Ijaw, Ogoni, and Ilaje are but a few of dozens of indigenous tribal groups.

Oil spills have poisoned creeks, killing off fish and fowl. The flares, meanwhile, tower over the mangroves like giant roman candles burning day and night.

Today, both the wildlife and the people are under siege. Oil spills have poisoned creeks, killing off fish and fowl. The flares tower over the mangroves like giant roman candles burning day and night. So numerous and intense are the flares that their light is believed to disrupt the nesting patterns of nocturnal sea turtles. The smoke and soot, meanwhile, not only cause acid rain, which can kill fish lucky enough to have escaped the oil spills, but also contain a stew of toxins, including mercury, lead and benzene. Little wonder life expectancy in the Delta -- 40 years -- is seven years less than that of Nigeria as a whole.

And if all that weren't enough, there's also the dredging -- which is what oil companies do to make creeks accommodate their barges and rigs. In a federal trial in San Francisco last fall, a Chevron vice president was called to testify about the controversial practice. "In the process of dredging, yes, the mangroves would be cleared," he testified, shifting in his chair. The vice president described "a barge... with a big suction device on it, " adding, "You would suck mud out and then it would pile the mud behind it on the sides of the canal." An Ilaje elder then testified to the environmental impact. Seawater, he said, seeped into freshwater creeks, killing the plants and animals that had long sustained his people. "It led to starvation in some areas," he said.

Indeed, much of the vitality that Blindloss described a century ago -- those "quaking swamps" -- has simply disappeared. Blow up those satellite images of Africa and you'll see entire chunks of Delta mangrove forest either underwater or dried-up. A recent survey, led by the geosciences department at the University of Missouri-Kansas City, found a three percent loss of prime wilderness habitat between the mid-1980s and the beginning of this decade. At this rate, a fifth of the mangroves' historical range could be gone by 2050.

Gas flaring can been seen in the distance at the Nembe Creek flow station operated by Agip Oil.

Two Ways Corruption Hurts Society
Who or what is to blame for the degradation and impoverishment of the Delta? Certainly many factors are at play, including population growth and ethnic tensions. Nigeria's ruling class, mostly Muslim, has a long history of heavy-handed rule over the predominately Christian oil-producing region, fueling on-again, off-again armed resistance.

But talk to just about anyone who knows anything about Nigeria, and one of the first words you'll hear is "corruption." To get a sense of its impact on governance, consider a basic public service such as education. The schools are "absolutely non-functional" throughout most of the Delta, says Michael Watts, a University of California-Berkeley geography professor who has studied Nigeria for three decades. "There are no teachers, no desks."

A million dollars could employ a lot of teachers, buy a lot of desks. But though it may seem like a significant sum when put in such terms, Jim Bob Brown's bribe money was really just a small part of a much larger pot, intended to curry favor with a wide range of officials. In 2006, after an investigation by the FBI, Brown, who was 45 and had worked for Willbros for nearly his entire career, pleaded guilty to violating the U.S. Foreign Corrupt Practices Act.

The most obvious way corruption hurts society is its neutralizing effect on public servants, be they police or politicians, or anyone in between.

The details of his activities emerged in legal documents for the Justice Department's criminal case, and for a related lawsuit by the U.S. Securities and Exchange Commission. Much of the money, it turned out, went to officials at the Nigerian National Petroleum Corp. to win a $388 million contract to build a natural gas pipeline. But Brown also admitted he and his co-conspirators at Willbros spread money around lower levels of government too, including tax agencies and the courts.

The most obvious way corruption hurts society is its neutralizing effect on public servants, be they police or politicians, or anyone in between. Nigerians have their own word for when that happens; those on the take are said to be "settled." Not much is known about whom Willbros was paying off -- or settling -- in the Nigerian judicial system, or why. The law under which Brown was brought to justice in this country forbids only the giving of bribes; if foreign recipients are to be punished, it must be by their own governments.

We can only imagine what Willbros was up to, then, based on the little that has been made public -- which is that the company, working on a massive construction project in an environmentally sensitive area, gave money, as the SEC put it, "in exchange for favorable treatment in pending cases."

But the other and perhaps more significant way corruption hurts is its impact on the government's bottom line -- and those teacher-less, desk-less schools only hint at the extent of the problem in Nigeria. An estimated $400 billion of the country's oil revenue has been stolen or misspent since the country's independence in 1960. That's a sum approaching all the aid the West has pumped into the whole of Sub-Saharan Africa during the same period. And while oil accounts for about 90 percent of the value of Nigeria's exports, 80 percent of that money ends up in the hands of one percent of the population, according to the World Bank.


Olusegun Obasanjo was elected president of Nigeria in 1999 on an anti-corruption platform.

These are statistics that do not go unnoticed by Nigerians. In 1999, Olusegun Obasanjo was elected president on an anti-corruption platform. "Corruption is a cancer ," says Obasanjo, who after two terms left office in 2007. "It hinders development in any country." Such talk helped get Obasanjo re-elected -- and to his credit, the president's reforms included the creation of a powerful new government agency called the Economic and Financial Crimes Commission, which soon put hundreds of people, including prominent businessmen and politicians, behind bars. But corruption was so deeply rooted, so widespread, that it was in effect a way of life, one that could not be quickly overturned. And, in fact, a bribery scheme dwarfing that of Willbros took place in part during the Obasanjo administration.

At the center of this international scandal -- for that is exactly what it would become -- was Jack Stanley, the hard-charging, heavy drinking head of KBR, to which he was appointed in 1999 by Dick Cheney when Cheney was still the chief executive of KBR's parent, Halliburton. When Nigeria needed a contractor to build a $6 billion natural gas plant on the Delta's Bonny Island, Stanley cemented his reputation as someone with an uncanny ability to win big contracts in the Third World.

Stanley, who in a Houston courtroom in September pleaded guilty to violating the Foreign Corrupt Practice Act... faces up to seven years in prison.

The intricacies and cast of characters of the deal he orchestrated are worthy of a John Le Carre novel. Yet in its essence the story, as it has been laid out in court documents, is surprisingly simple: A consortium of four companies, of which KBR was one, paid out $180 million in bribes to win the Bonny Island contract.

Stanley, who in a Houston courtroom in September pleaded guilty to violating the Foreign Corrupt Practice Act, is to be sentenced later this year. Now in his mid-60s, he faces up to seven years in prison, though this offers little solace to Nigeria.

Obasanjo, who claims he had no knowledge of what Stanley was up to until after the fact, speculates that because bribery so thoroughly compromised bidding on the Bonny Island contract, the project may have ended up costing Nigeria an extra billion dollars or so. "You can see the loss," he says, "a direct loss... to the country."

Nuhu Ribadu

Nuhu Ribadu was a crusading prosecutor in Nigeria before an attempt on his life forced him to leave the country.

Corruption Fighter Becomes Casualty
The crowning achievement of Obasanjo's reforms was the appointment of career prosecutor Nuhu Ribadu as chair of the newly created Economic and Financial Crimes Commission. Much to the surprise of many Nigerians, not to mention the outside world, the soft-spoken Ribadu, who assisted American investigators in both the Willbros and Halliburton cases, proved to be dogged in his pursuit of those involved in bribery, embezzlement and self-dealing.

A Delta governor once tried to bribe Ribadu, giving him two bags loaded down with $15 million in cash. Ribadu promptly turned the money over to the authorities and had the governor thrown in jail. And, although critics accused him of going after Obasanjo's political adversaries, among his targets was Obasanjo's own vice president, who allegedly was the intended recipient of the money found in the freezer of former Louisiana Congressman William Jefferson.

More than once, when Ribadu boarded an airplane in Nigeria, his fellow passengers rose to their feet to applaud him. He was named man-of-the-year by the Nigerian press. Unfortunately, the hope he inspired proved fleeting.

Shortly after Obasanjo left office, Ribadu was stripped of his authority; the inspector-general of police under newly elected President Umaru Yar'Adua ordered him to attend a one-year training at the National Institute for Policy and Strategic Studies. In a show of support for Ribadu, the World Bank honored him with its Outstanding Public Service award. But the gesture was of little help. After completing his training in November, the police refused to let him participate in the graduation ceremony.

Last fall, Ribadu says, he was at a gas station when a gunman in passing traffic opened fire, missing him but leaving bullet holes in his car. He has since moved to London. "When you fight corruption, it fights you back," he says matter-of-factly. Still, despite the obvious risks, he talks of returning to Nigeria and picking up where he left off. The Niger Delta -- its pollution, its poverty -- suggests just what's at stake, and why Ribadu believes he must go back. "Unless we address the problem of corruption," he says, "there is no hope, there is no future."