Nigeria’s upstream petroleum industry anti-corruption legal framework: the necessity for overhauling and enrichment
| DOI | https://doi.org/10.1108/JMLC-10-2020-0119 |
| Published date | 10 May 2021 |
| Date | 10 May 2021 |
| Pages | 1-27 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Olusola Joshua Olujobi |
Nigeria’s upstream petroleum
industry anti-corruption legal
framework: the necessity for
overhauling and enrichment
Olusola Joshua Olujobi
Department of Public and International Law, Faculty of Law,
Elizade University, Ilara-Mokin, Ondo State, Nigeria
Abstract
Purpose –This study aims to investigate why anti-corruption statutes are not efficient in Nigeria’s
upstreampetroleum industry.
Design/methodology/approach –This study is a doctrinal legal research that embraces a point-by-
point comparativemethodology with a library research technique.
Findings –This study reveals that corruption strives on feeble implementation of anti-corruption legal
regime and the absence of political will in offering efficientregulatory intervention. Finally, this study finds
that anti-corruption organisations in Nigeria are not efficient due to non-existence of the Federal
Government’s politicalwill to fight corruption, insufficient funds and absence of stringentimplementation of
the anti-corruptionlegal regime in the country.
Research limitations/implications –Investigations reveal during this study that Nigerian National
Petroleum Corporation(NNPC) operations are characterised with poor record-keeping,lack of accountability
as well as secrecy in the award of oil contracts, oil licence,leases and other financial transactions due to non-
disclosureor confidentiality clauses contained in most of these contracts.Also, an arbitration proceeding limit
access to their records andsome of these agreements under contentions. This has also limitedthe success of
this researchwork and generalising its findings.
Practical implications –This study recommends,among other reforms, soft law technique and stringent
execution of anti-corruption statutes. This study also recommends increment in financial appropriation to
Nigeria’s anti-corruption institutions, taking into consideration the finding that a meagre budget is a
drawback.
Social implications –This study reveals that corruption strives on feeble implementation of anti-
corruption legal regime and the absence of political will in offering efficient regulatory intervention.
Corruption flourishes due to poor enforcement of anti-corruption laws and the absence of political will in
offeringefficient regulatory intervention by the government.
Originality/value –The study advocates the needfor enhancement of anti-corruptionagencies' budgets
taking into considerationthe finding that meagres budgetsare challenge of the agencies.
Keywords Corruption, Transparency, Soft law approach, Upstream petroleum industry
Paper type Research paper
© Olusola Joshua Olujobi. Published by Emerald Publishing Limited. This article is published under
the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate
and create derivative works of this article (for both commercial and non-commercial purposes),
subject to full attribution to the original publication and authors. The full terms of this licence may be
seen at http://creativecommons.org/licences/by/4.0/legalcode
The financial contribution of Covenant University, Nigeria, is greatly appreciated.
Nigeria’s
upstream
petroleum
industry
1
Journalof Money Laundering
Control
Vol.26 No. 7, 2023
pp. 1-27
EmeraldPublishing Limited
1368-5201
DOI 10.1108/JMLC-10-2020-0119
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
1. Introduction
Crude oil is the central fount of Nigeria’s economy is beset with an inherent and pervasive
problem of corruption.This has hampered the economic development of Nigeria. Despite the
current global development concerning the usage of alternate energy and the need to
downplay on crude oil, the government delve into numerousalternatives to efficiently solve
this challenge through anti-corruption laws. It is anticipated that the Federal Government
makes the best use of her oil revenues, while it lasts for significant growth in Nigeria by
combating corruptionfrom the oil industry.
Corruption is not particular to Nigeria;it is an international phenomenon. Corruption has
significantly decreased the revenues of the Federal Government of Nigeria from oil. As a
result, most Nigeriansare living in penury, with the least human development index (World
Bank, 2017). Nigeria is the eighth leading producer of crude oil globally and is the fifth-
largest in the Organization of Petroleum Exporting Member States (Omorogbe, 1996).
Corruption and misappropriation of crude oil revenues have been made worst by the
international deterioration of crude oil prices. The declining effect the request for Nigeria’s
crude oil on the global market is causingtotal operational expenditures owing to archaic and
derelict petroleumsubstructure or assets in the industry.
Besides, corruption in Nigeria’s upstream petroleum industry is also beset with several
other challenges: pipelinedamage and crude oil theft by insurgents in the Niger Delta areas,
triggering the petroleum production to drop from 2.3million barrels per day to one million
barrels per day (bpd)at the inception of 2016 (Olujobi and Olujobi, 2020).
This drop-in crude oil production has occasioned the incorporation of force majeure [1];
the section in petroleum contracts by energy firms in Nigeria. Corruption is predominant,
notwithstanding the plethora of anti-corruption statutes and regulations in the country.
Though, these are general anti-corruption statute not explicitly enacted for the upstream
industry. Corruption continues to be the greatest challenge in the upstream petroleum
industry.
Consequently, mosteminent researchers from different fields havedone several scholarly
works on corruption, its indicators and how to fight (Abdullahi and Madu,2015). However,
it seems none of these workers has offered lasting panaceas to the problem occasioned by
corruption in Nigeria’s upstream industry. This existing study offers preferences for
fighting corruption efficiently in the industry through the soft law method. This approach
embraces, among other things matters,for instance, anti-corruption self-reporting tool, strict
implementationand incentivisation of obedience to anti-corruption statutes.
Fighting corruption in the upstream petroleum industry is essential for the country’s
socio-economic growth and poverty obliteration. To be successful, the execution of these
anti-corruption statutesmust be done with genuine dedication supported by sturdy political
will. The government is offering efficient statutory intervention by offering the required
support to anti-corruptionagencies. It will also necessitate the sensitisationof citizens on the
harmful effects of corruptionin the industry.
Corruption in the oil industry is not a new conception. Several such instances have been
recorded. For instance, the sum of $12.2bn suspected to have been misappropriated during
the oil windfalls in 1991. This was revealed by the Pius Okigbo Panel during General
Ibrahim Babangida’s regime. The alleged sum is yet to be reclaimed (Okojie and Momoh,
2005). The amount couldhave been used on infrastructural improvement in Nigeria.Also, in
1998 and 1999, Chevron Nigeria Limited was indicted for tax circumvention and deception
(Otusanya,2011a, 2011b). The firm was suspected of having eluded approximately US
$2.7bn tax in additionto the accrued fines of $8,100,000 (Anele, 2015). In collusion withsome
tax officials, the purpose was to reprocess the sum of tax owed to the Federal Government
JMLC
26,7
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