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In Nigeria, defense corruption replaces waning oil rents

Nigeria may be Africa’s top oil producer, but oil revenues have also driven many of Nigeria’s biggest problems including conflict and state corruption.

Successive Nigerian leaders, both civilian and military, have built governmental power structures around the country’s main income stream.

Over the past five years, however, Nigeria’s oil rents declined dramatically as the price of crude dropped 60 percent between 2014 and 2016. In the same period, the rise of the Boko Haram insurgency in north-eastern Nigeria has led to a notable increase in counterterrorism spending. The defence budgets now makes up close to 20 percent of state spending.

The result? Corrupt Nigerian officials have turned their sights on a new sector, siphoning an estimated $15bn of the defence budget for private purposes, including for political campaigns prior to the 2015 elections.  

Defence, it would seem, is the new oil.

In a new report, Weaponising Transparency, Transparency International argues the secret nature of security budgets and spending has made them the easiest and most lucrative to exploit.

Despite Nigeria’s 1999 return to democratic rule, weak accountability across the defence sector has enabled those in power along the entire defence spending chain to misappropriate state funds, from the highest levels down to unit commanders.   

President Muhammadu Buhari, who has led a significant anti-corruption drive since he won the 2015 elections, still has a budget that includes more than 30 “security votes”. These are opaque slush funds for the executive and state governors worth an estimated £540m ($700m) with no real oversight mechanism.

Transparency International identifies five major patterns of defence fraud in Nigeria and their impact on Nigeria’s internal security. This prolific defence corruption has resulted in frontline troops without training – or functioning weapons – to combat a persistent insurgency.

Soldiers report that they have no choice but to desert for lack of equipment. Military sources indicate that  83 soldiers died in an October 2016 ambush by Boko Haram because they only had two light armoured tanks.  

Boko Haram, meanwhile, has capitalised on disintegrating Nigerian units to procure valuable army vehicles. Photographs and video footage suggest these have been key to Boko Haram’s operational success.

Prolific use of inflated, or phantom, contracts by corrupt former officials has also resulted in exorbitantly priced non-functioning or unnecessary weapons.

In 2014, for example, former National Security Advisor Sambo Dasuki awarded a $500m contract for refurbished helicopters to Triax Company Limited. The CEO at that time, Arthur Eze, was a financier of the People’s Democratic Party (PDP) and a family friend of former president Goodluck Jonathan.

The helicopters, however, had limited to no combat utility and have never been deployed. Military sources report that seven top grade, new military helicopters could have purchased for the same cost. Mr Dasuki has since been charged with $68m in illegal transfers.

To its credit, the Buhari government has appointed new service chiefs and taken significant steps to identify and prosecute individuals involved in security sector corruption.

Using evidence uncovered by the two ad hoc audit committees established by President Buhari, Nigeria’s main anti-corruption agency has indicted more than 300 individuals and companies for defence sector procurement theft and misappropriation. These include Mr Dasuki, the former chief of defence staff Alex Badeh, and former air chief marshal Adesola Amosu.

Furthermore, in May an estimated 20,000 ghost soldiers were removed from the Defence Ministry’s payroll.

However, Mr Buhari’s efforts are unlikely to stop defence corruption over the longer-term without holistic reform of the sector and a real international push for transparency.

At the moment, the Nigerian defence budget and spending lacks sufficient detail for anyone – including the Ministry of Finance or the National Assembly’s defence-related committees – to oversee and account for defence funds.

The bulk of military hardware procurement is not described in the annual budget of the Ministry of Defense. It is paid for using opaque funding and accounting mechanisms.

By failing to integrate effective anti-corruption measures into their security engagement policies, international partners are inadvertently diminishing the impact of their military assistance to combat Boko Haram.

There are potential avenues to bring about reform. In the same way that many countries joined forces to support global governance standards for the extractive industry through the Extractive Industries Transparency Initiative (EITI), a consensus around responsible defence governance would shed light on Nigeria’s defence budgets.

After all, Nigeria was the first country in the global EITI to support the standard’s implementation with legislation. A defence compact on a similar model has the potential to spur similar legislation.  

In the meantime, international partners – including the US, Germany, China and the UK – should make major equipment transfers and the repatriation of recovered illicit funds contingent on tangible security spending reform.

Without norms of transparency and accountability, the fight against Boko Haram will be harder won.

Eva Anderson is a barrister and senior legal analyst with Transparency International’s Global Defence and Security Programme. Hilary Hurd leads Transparency International’s defence work in the US

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