Tinubu’s Chicago magicery combines with master money launderer as Budget Minister
By Emmanuel Ogebe
In a series of articles interrogating the 40% devaluation of the naira to the dollar under the new Nigerian administration, I compared the forex looting under Sani Abacha’s CBN with the looting under Muhammadu Buhari’s CBN. (See Part 2 https://www.facebook.com/100066841516904/posts/pfbid02v2T72Pg6D4iGn5wPaSdYq2j4hXRoy31tt9vdGtQ6rwSNw9TEZcmgZ5zQVsUKU3pRl/?d=w&mibextid=qC1gEa )
Months into the Bola Tinubu administration’s tenure, disturbing signs are emerging of a similar pattern of conduct.
Per media reports, “The CBN, on Thursday, reportedly commenced the payment of outstanding FX commitments with CitiBank, Stanbic IBTC and Standard Chartered Bank, the biggest players in FX business, said to have been credited. The overdue forward contracts were estimated at $6.7 billion.
“Sources privy to the new policy direction of the new CBN management told The Guardian at the weekend that the payment marked a series of ‘deliberate action plans’ that would shore up the value of naira in the coming months.” (Naira holds firm, trades below N1000/$ at parallel market” – The Guardian 06 November 2023).
On the surface, that sounds innocuous but then there’s this: “Well, the Tinubu administration has decided to securitize about $7 billion of the country’s dividends for five years from the Nigerian Liquefied Natural Gas (NLNG) ….
It means that the dividend payments, which will accrue to Nigeria from its 49% equity in NLNG over five years, would be sourced and handed to the country by a consortium of banks led by Standard Chartered [SCB]. The bank expects to be paid a fee for the transaction, and the government will also cover the interest payments for the entire period.
It’s a strange request because, according to the Budget Office, the FG is only due $2.2 billion over the next 4 years from its investment in the NLNG. How did they arrive at $7 billion?
In essence, while the government is telling the public that its securitization is for 5 years, unless a miracle happens in gas production, we are looking at a situation where a government is borrowing future revenue for up to 12 years. And that is without accounting for the interest on this loan” – Dollars And Dilemmas: Tinubu’s Fiscal Chess* by Tosin Adeoti.
Nigeria paying $6.7b to borrow $7b
So with the right hand, CBN is paying SCB et al $6.7 billion and with the left hand borrowing $7 billion from SCB and co? Am I missing something or does this sound shady like a master money launderer could do?
Well, listen to this narrative by a U.S. federal court on the Abacha loot money laundering case in Washington.
“Abacha, or those acting at his direction, [then] delivered more than $700 million of these funds to [Abacha’s son] Mohammed Abacha in bags or boxes full of cash.” Id. 32. Mohammed Abacha, in turn, gave that cash to Bagudu, who ‘arranged for the money to be transferred to accounts controlled by Bagudu and Mohammed Abacha in foreign countries.’ Id. 33.
‘“In order to move the money overseas,’” Bagudu deposited the money, which he referred to as his ‘cash swaps,’ in two local Nigerian banks, and then he ‘and/or Mohammed Abacha’ instructed those banks to transfer the funds to accounts overseas owned by Mohammed Abacha and Bagudu. Id.
“…And as discussed below, the funds were later pooled with funds from the second scheme and then laundered and transferred to defendant investment portfolios.” See id. 52–93.
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Related articles:
Tinubu should rescue Leah Sharibu, not allow release of military intelligence
Ogebe proffers solutions to Abacha loot gridlock, diaspora remittance hindrances
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Bagudu’s debt buy-back fraud
The second scheme, referred to as the “Debt Buy-Back Fraud,” began in 1996, when Bagudu and others arranged for the Nigerian government, with Abacha’s approval, to repurchase its own debt from Mecosta – a company owned by Bagudu and Mohammed Abacha – at a price significantly higher than what Nigeria would have paid on the open market. Id. 36–44.
The background of this scheme is as follows: Nigeria had agreed to pay a Russian company (TPE) in debt instruments in exchange for the construction of a steel plant. Id. 37. A dispute arose, however, and Nigeria suspended payment and defaulted on the outstanding debt. Id. 38.
Bagudu learned that another company (Parnar) “would be willing to sell the debt to one of Bagudu’s companies (in this case, Mecosta).” Id. 39. Bagudu approached Abacha’s other son Ibrahim Abacha and Nigerian Finance Minister Anthony Ani, who assured Bagudu that if Mecosta bought the debt, Nigeria would buy it from Mecosta. Id. 40.
“To guarantee that Nigeria would purchase the debt, Ani entered into an agreement on behalf of Nigeria to buy the debt from Mecosta on April 14, 1996, more than four months before either Parnar or Mecosta actually acquired the debt.” Id.
Bagudu then “orchestrated a series of transactions through which Mecosta received money in escrow from Nigeria, used that money to purchase the debt from Parnar, and sold the debt back to Nigeria at a significant markup.” Id. 41.
Specifically, Bagudu arranged for TPE to sell approximately 1.6 billion [German Deutschemarks (“DM”)] of its Nigerian debt instruments to Parnar on or about September 30, 1996, for 350 million DM.
That same day, Parnar resold the same debt to Mecosta, raising the price to 486 million DM. Mecosta immediately marked up the price again and sold it back to Nigeria for 972 million DM, which the Nigerian government paid in two installments of 486 million DM. Id. 42.
Abacha “personally approved” Nigeria’s purchase of the debt, “even though Nigeria would have saved hundreds of millions of dollars by buying the debt on the open market at the price TPE was willing to sell it, which was nearly two-thirds less than Nigeria ultimately paid for the debt.” Id. 44.
“Mohammed Abacha and Bagudu, as the owners of Mecosta, yielded a profit of approximately 481 million DM or $282,506,664.” Id. 43.
Proceeds from the Debt Buy-Back scheme were wired from Nigeria, through New York, to corporate accounts at Goldman Sachs in Zurich, Switzerland controlled by Mohammed Abacha and Bagudu. Id. 45.
Shortly thereafter, “officials at Goldman Sachs informed Bagudu and Mohammed Abacha that the bank was ending their relationship over concerns about the source of the money.” Id. 46.
As a result, Bagudu and Mohammed Abacha moved the funds from the account at Goldman Sachs to an account for Mecosta at Banque Baring Brothers in Geneva, Switzerland. Id…
“Once the funds from the Security Votes scheme and the Debt Buy-Back scheme were transferred out of Nigeria, they were laundered through the purchase of money instruments – referred to as Nigerian Par Bonds – backed by the United States that were later liquidated. Id. 52–93” – US District Judge John Bates https://cases.justia.com/federal/district-courts/district-of-columbia/dcdce/1:2013cv01832/163245/79/0.pdf?ts=1426843689
There’s a lot to unpack here but I’ll keep it simple. In the ‘90s, Bagudu used Nigeria’s money to buy a foreign debt that Nigeria owed and resold it more expensively to Nigeria making a 100% profit of over a quarter of a billion dollars!
Now again, $6.7 Billion is being given by Nigeria to Standard Chartered Bank and co who will now lend $7 billion back to Nigeria at interest over five years.
However, Nigeria’s expected gas revenue to repay the loan is less than 1/3 of the loan and will take at least a dozen years to payoff – holding the nation captive long after the tenure of this regime!
It gets worse. The Punch newspaper reported that “Data from the quarterly statistical bulletin of the Central Bank of Nigeria showed that … Nigeria has earned nothing from the sales of crude oil for about seven months from September 2022 to March 2023 ….”
The PUNCH also observed that “Nigeria had no record for the sales of gas from November 2021 to March 2023” – (Seven-month zero earnings on crude oil sales worsen Nigeria’s forex crisis, The PUNCH)
Thus Nigeria has gone from a “mono-economy” to a “no-no-economy” – no oil and no gas income!
In dire times such as these, the CBN is taking odd positions that will only impoverish the nation further.
Despite whatever secret back-room sweetheart deals that Nigeria’s banking sector is notorious for, this shell game also uses the CBN to indirectly lend money to the FGN using the SCB bank consortium as a conduit.
CBN has overextended its legal lending threshold to the FGN. (See Part 3 https://www.facebook.com/100066841516904/posts/pfbid02h8NBAU8uGwNhQDyWL1c6nR7rsespD7ok8fmZ43kpSmScmo5Y4BgyF6G3YPWdGZbnl/?d=w&mibextid=qC1gEa )
Diaspora remittance
But while doing itself economic damage at home, the government seeks to attract Diaspora forex inflows.
It is instructive that Diaspora remittance was strategically targeted as a forex earner by the Abacha regime. In its first year, it generated $4.5 billion. Abacha reportedly looted an estimated $5 billion.
Nigeria’s Diaspora has come of age not to allow itself be used to subsidize misgovernance and kleptocracy. This is why I have called for forex remittance boycott by Nigerians in Diaspora.
This is all the more crucial as Tinubu appointed Nigeria’s money laundering mastermind [Bagudu] as his budget minister.
As opined in an Amicus brief I filed in US District in Washington DC where Bagudu is currently facing money laundering asset forfeiture proceedings, “That Nigeria’s Tinubu appointed a fellow US money laundering forfeiter as Budget Minister, having forfeited at least 1000 times more money than him in the US alone – $458,000,000 to $460,000 – one could reasonably infer that this is to facilitate a grander scale national larceny from within government than he did from outside government decades ago.” https://lawandsocietymagazine.com/nigerian-states-should-be-compensated-from-latest-abacha-loot-rights-advocate-tells-us-court/
In the ‘90s, Bagudu used a quarter of a billion dollars belonging to Nigeria to buy a quarter billion dollars worth of Nigeria’s debt abroad. He then resold the quarter billion dollar debt back to Nigeria for half a billion dollars, making a quarter of a billion dollar profit from nothing!
Today, he’s using $6.7 billion belonging to Nigeria to fund a bank that will then lend $7 billion back to Nigeria. Nigeria will thereafter use its future earnings, which his Budget Office said is not up to the loan, for debt-servicing with interest over many years.
This sounds just like the Bagudu Debt-buyback fraud scheme mentioned by Judge Bates in Bagudu’s US forfeiture case!
For a country that just escaped the $11 billion ($1 million daily interest) in the UK P&ID case, Nigeria seems hell bent on setting more traps for itself and future generations.
Tinubu also just borrowed N150 billion through bonds at an interest rate of 21% but it was over subscribed by N325 billion. That means over N120 billion in interest payments only!
“The Lagos State Government remains the only sub-national entity to raise capital on the exchange as its debt issuances hit N157.15 billion” – https://m.facebook.com/story.php?story_fbid=pfbid0cE8kQHNEoPNa36LhHeY5fiugjWxfeaM3LkxFfLmfqFao4wHDERVU4Po1mBDvTieQl&id=100044323184888&mibextid=ncKXMA
He has started borrowing for FGN the same way he did in Lagos that his successors continued and other states copied.
Between the twin US money laundering forfeiters, Nigeria’s financial bondage and future mortgaged is assured.
– Emmanuel Ogebe is a US-based lawyer and Nigeria international affairs expert with the U.S. Nigeria Law Group, Washington.
