FEATURE ARTICLE

Thursday, September 10, 2020
okerekeoc@gmail.com

INSTITUTIONALISED CORRUPTION PERPETUATES UNDERDEVELOPMENT

orruption in our nation has been institutionalised over the years. Institutionalised corruption perpetuates underdevelopment. Examples of how corruption has perpetuated underdevelopment in our nation are discussed with real-life examples in our national politico-economic development.

There is no intention here to trace the history, rather a few examples showing that in spite of all the publicity and trumpeted activities on anticorruption over some decades, the situation has not changed.

This paper is not fatalistic or suggesting that we throw up our hands in complete surrender and defeat. No, it contains suggestions of how the persisting malaise of corruption that permeates every aspect of our national life can be minimised. It is hoped, that for the sake of our national survival and development of our country for future generations, we shall stop wallowing in our corruption laden activities.

Some definitions of Corruption

Some relevant definitions, adapted from various sources, covering different forms of corruption in the country, include the following:

From the website of Transparency International

  • It is the misuse of public or entrusted power for private gain.

  • Grand corruption consists of acts committed at a high level of government that distort policies or the central functioning of the state, enabling leaders to benefit at the expense of the public good.

  • Political corruption is a manipulation of policies, institutions and rules of procedure in the allocation of resources and finances by political decision makers, who abuse their position to sustain their power, status and wealth.

  • Embezzlement of fund and money laundering: These forms of corruption mainly occur among politicians, officers in public and some private organisations. They represent different ways of stealing of money. It is not uncommon that officers who had occupied very high public offices, where they had immunity from prosecution, are charged to court when they leave office, for mismanagement of large sums of money while in office. As a result of these thefts, money required for services, projects, including payment of salaries, is lost.

From Merriam Webster Dictionary

Corruption is the:

  • impairment of integrity, virtue, or moral principle,

  • inducement to wrong by improper or unlawful means such as bribery,

  • a departure from what is pure or correct.

Definition from a Nigerian source

Corruption is any action or omission enacted by a member of an organization, which is against the rules, regulations, norms, and ethics of the organization, and the purpose is to meet the selfish end of the member at the detriment of the organization.

Acknowledgement to Azelama J. U. (2002). Public enterprises management in Nigeria. Benin-City, Nigeria: Ambik Press.

Old Examples and their effects

Some old examples and effects of our practice of corruption include the following:

The former World Bank President, Paul Wolfowitz, revealed in 2006 that Nigeria lost $300bn to corruption in the last four decades. He claimed that if such huge sum had been used in meaningful economic investments for public good in the country, it would have "yielded exemplary development in Africa."

https://nigeriaworld.com/feature/publication/alabi/062408.html

Ndibe, O. (2006). "A nation of big divine thieves," The Guardian Newspapers, Thursday, October 26, Lagos, Nigeria.

A similar statement was made by a former World Bank Vice-President for Africa, Dr. Oby Ezekwesili. She said, in 2012, that an estimated $400 billion of Nigeria's oil revenue had been stolen or misspent since the country's independence in 1960. She also declared that while oil accounted for about 90 per cent of the value of the country's exports, over 80 per cent of that money ended up in the hands of one percent of the population.

"Nigeria: U.S.$400 Billion of Oil Revenue Stolen, Says Ezekwesili," Tobi Soniyi, This Day (Lagos), 29 August 2012

A government commissioned audit revealed that 11,886 government projects failed in a period of 40 years up to 2011, this translates to about 300 failed projects each year.

Abimbola Ayobami. (2012). "About 12,000 federal projects abandoned across Nigeria". November 24, 2012 from: http://saharareporters.com

New Examples and their effects

Some new examples and their effects include the following:

19,000 projects abandoned in Nigeria, ex-BPP DG tells Senate

Henry Umoru & Joseph Erunke reported in the Vanguard that on May 27, 2016, the immediate past Director-General of Bureau of Public Procurement, BPP, Emeka Eze, told the Senate, that the number of government projects currently abandoned across the country stood at 19,000.

Reference: https://www.vanguardngr.com/2016/05/19000-projects-abandoned-nigeria-ex-bpp-dg-tells-senate/

N400 billion is spent on bribes each year

From the United Nations Office on Drugs and Crime (UNODC) has come a revelation that about N400 billion is spent on bribes each year in Nigeria. This was contained in a report presented to the public at the stakeholders meeting to mark the end of the agency's five-year project on corruption in the country. According to the report, which covers between June 2015 and May 2016, law enforcement agencies and the judiciary are the highest receivers of bribes.

The survey titled, "Corruption in Nigeria - Bribery: Public Experience and Response" was presented in partnership with the National Bureau of Statistics (NBS). It was conducted in the 36 states and the Federal Capital Territory (FCT). "Nigeria police, judges highest bribe-takers, says UN agency"

The Guardian: Thursday, August 17, 2017

Ex-minister: Contracts in Nigeria are awarded before advertisement, Johnbosco Agbakwuru - Abuja

A former Minister of Sports, Engr Bala Ka'Oje, alleged that some government agencies and parastatals awarded contracts before they were advertised. He reportedly said that many Nigerians spent huge sums of money to get pre-qualification papers not knowing that the contracts had been awarded.

He said: "This government came under the mantra of change and fight against corruption as among the cardinal focus, should we be talking about corruption by now?"

Saturday, December 28, 2019, Nigeriaworld

"How did you spend N100bn?" - Reps probe NEDC

The House of Representatives ordered an investigation into allegations of a missing N100 billion from the coffers of the North-East Development Commission (NEDC). This happened a few days after the Niger Delta Development Commission (NDDC) was alleged to have mismanaged N81.5 billion. Ndudi Elumelu, the minority leader of the house moved the motion, alleging that the sum of N100 billion, a federal government allocation, to the commission had "vanished".

Nigeriaworld Posted: Friday, July 24, 2020

Political Corruption

As stated earlier, political corruption may be defined as the manipulation of policies, institutions and rules of procedure in the allocation of resource, appointments, and finances by political decision makers, who abuse their position to sustain their power, status and wealth.

Tribalism and Sectionalism

Corruption also manifests as tribalism and sectionalism. These ills have been deliberately grouped together in this write-up because it is often difficult to specify which of the ills is at play in some cases. An example is when persons are appointed to government top positions mainly because they originate from the tribe or social or religious affiliation of the person making the appointment. The appointed persons are not better than others not appointed; in some cases, they could be worse. These appointments impact adversely on national unity and sense of belonging because when some Nigerians are being denied government appointments which their colleagues are being given, they are being made to feel that they do not have the same right and privileges as the favoured persons. Their spirit of patriotism is being eroded.

Failed Governance

A lot of the failed major projects in the nation belong to the public sector and are owned by the various national governments. Multinationals such as Shell, Chevron, Total, Agip, etc., plan and implement projects but do not experience the failures that occur in government-owned projects, at least not at a comparable rate.

Governance defines processes undertaken by a government or a board of directors to direct management to conduct actions or policies for the achievement of the desired objectives of the nation or organisation.

The board in commercial organisations, or national executive council in governments, authorises and delegates the respective executive management of relevant federal government parastatals, organisations, or companies the power to carry out programmes, projects and operations. Members of the executive or top management of the government organisations are appointed by the government. They are responsible to the government and can be sacked or redeployed as the relevant government minister decides.

Examples of corruption in governance

  • Interference in operations: Interference by government officials in the production operations of a steel company in Nigeria. An ex-general manager disclosed in a press interview how government officials terminated a contract of a supplier who was supplying raw materials at N600 per ton and replaced him with another who supplied the same quality of material at N1000 (about $7.00) per ton.

    Reference: https://guardian.ng/features/how-nigerian-government-indians-wreck-multi-billion-dollar-delta-steel-company-rip-off-host-communities-and-tax-payers/

  • Lack of accountability: The structure of corporate governance is such that accountability is centred on the boards, managers, and the shareholders. Sadly, the performances of the various large government public organisations reveal lack of transparency and accountability. For example, there was the allegation of fraud perpetuated by some past Managing Directors of the Nigerian National Petroleum Corporation. It was reported that some of them were involved in the Halliburton and Willbros bribery scandals. A case in point was that one of them was reportedly caught red handed with $2 million cash which he was unable to account for. Another was said to have appropriated the sum of $17 million meant for the turn-around maintenance of the Kaduna Refinery. In addition, the Managing Directors were said to have formed the habit of not remitting proceeds realized from the sale of Nigeria crude oil to the federation account.

    Reference: I. Ibrahim, the Plundering of N.N.P.C. Lagos, Newswatch Magazine, April 19th, 2010.

  • Failed governance majorly responsible for failed projects

As long as there has been failed governance, so long also, have there been project failures and abandonment. The surprise is that we have failed to relate failure of major public projects to the failure of governance, which derives from the failures, ineptitude and corruption of our national governments.

It has been sadly the case that any and every failure is blamed on the general and technical management of government companies, especially the engineers. They are accused of poor technical skills, poor knowledge of project management, etc. These accusations still continue even in cases when world-class technical management and engineers from developed nations are involved. A case in point was at the ultra-modern direct-reduction steel complex that was the Delta Steel Company Aladja. As a one-time chief engineer in the company, this writer worked with technical assistants and consultants from a consortium of German and Austrian firms. Yet, it also failed as the operations could not be sustained. This was mostly because there was no arrangement for its independent financial operations to enable it to earn adequate income on its own. The interference of ministry officials in the operation of contractors has been reported earlier. Again, it was one of many such cases.

With the best intention in the world; the engineers, including the Germans and Austrians, could not have gone to the ministry to advise on how to solve the problems in the plants caused by their corrupt practices and poor governance.

What has changed?

From the old and new examples, it is obvious that the misuse of public funds continues. Corruption has grown in every aspect of our national life, whether civilian and military. The list so far shown is infinitesimal and is just a tip of the corruption iceberg in our nation. This observation underscores the point that we have been unable to address decades of corruption.

Suggested solutions

Some solutions are suggested in the following paragraphs:

  • Learning from the private sector

    From the reports, it is obvious that it is the corruption in the government that is carried over to the boards of parastatals leading to failure in governance. It is unrealistic waiting for the day when corruption will be eradicated in our nation or controlled to the point that it does not interfere with our national operations and projects. What is more realistic is to learn from the private sector companies who operate successfully in our nations.

  • Independent of Government Control: It should be helpful if public organisations could be made independent of government control. One of the differences between successful private companies and the public companies is independence and freedom from government control. Their boards are appointed by shareholders who are stakeholders and interested in the success of their companies. This as distinct from politicians who have no personal stake in the public companies; whether the companies fail or survive, politicians will still draw their salaries. An example of such a successful arrangement of a government organisation being completely free from government control is the Temasek Holdings Limited (THL) of Singapore.

This therefore is a suggestion to international donors and aid companies who operate in Africa. They should seek to ensure that the local companies which they intend to use are free from control of politicians and the government. This should help guarantee that there will be discipline, honesty and integrity in their governance which will majorly determine the success or failure of the projects and investments.

Reference: Achieving Successful and Sustainable Project Delivery in Africa, Dr. O. C. Okereke, Publishers: Routledge, New York, pp. 106, 108

Corruption occurs in projects and procurements.

The Director-General of Bureau of Public Enterprise (BPE) from 1999 to 2003, explained that from 1970 to 1999, the Federal Government invested over $100 billion in establishing public enterprises, but earned only 0.5% return on investment. He said that the companies were costing the government about $2.65 billion annually to maintain. According to him "the late 1970s was a period that public enterprises were not working instead they were not only a drain on the economy, they were not providing services and not solving the problem they were meant to solve but were captured by the elites for their own benefits".

Suggested solution: Corruption is a problem that has to be resolved and plans made for its elimination whenever projects are being undertaken in our country. It constitutes over 60 percent of the causes of failures of the projects based on the information collated from research. It is encountered at every stage of the project lifecycle. Actually, in some cases, it may even predate the project because the practice of bribery and corruption starts even before the contract is awarded. It occurs during planning and requirements preparation and management, as bribes are paid to redefine the scope of the project. It occurs during execution, monitoring and closing. Payments and sign-off for job completion are also influenced by corruption as contractors may be paid for uncompleted work and also paid more than the agreed sum as government officials arrange to receive their shares of the fraudulent payments from the contractors.

People, and not methodologies and processes, deliver projects

It appears difficult to suggest a solution because whatever is recommended will be implemented by persons. If they are not won over in the fight against corruption, the solution may not be successful because those implementing it will look for loopholes in the solution to exploit.

In spite of this discouraging and negative assessment, corruption should be seen as an enterprise risk and its solution should be considered in the preparation and installation of an enterprise risk management system for the organisation.

It is important that there should be people who are committed to the eradication of corruption. For any system to deliver the desired result, it has been observed that "Methodologies and processes don't deliver [programmes and] projects; people do." (PwC) And, "if an organization is to undertake all the [programmes and] projects necessary to implement the chosen organizational strategy, there must be sufficient people with the right competences, skills, attitudes, and know-how to deliver the full portfolio". This writer has a first-hand experience of the truth of this statement. In 2007, he was making a presentation on the benefits of a project management product from Primavera Systems Incorporated to a company in Lagos. To his shock, he discovered that three persons in his audience were busy trying to discover loopholes in the management of projects which could be exploited to falsify project data. He could not but stop to advise them that basic honesty is required in data collection and for systems to work correctly.

References: All the research work referred to in this writeup can be found in the book: Achieving Successful and Sustainable Project Delivery in Africa, Dr. O. C. Okereke, Publishers: Routledge, New York.

Use of Project Management Office (PMO)

From research, it has been discovered that corruption has been institutionalised in a number of large public offices. As a result, allowing organisations to continue their operations without any external checks is unhelpful as the practice of corruption is already endemic in their culture. Therefore, interventions by a project management office (PMO) is essential in the fight to eradicate corruption. Adaptive monitoring and project auditing could be conducted by the PMO to check the activities of project teams and even maintenance office. Such checks could help to show how resources and funds are being utilised. The checks could be planned or interventionist to provide information on the use of resources. Based on the findings, corrective actions should follow to rectify the ills discovered. All these suggested actions should be components of an Enterprise Risk Management (ERM) framework.

However, as has often been the case, interference by government ministries contributes a lot to the corruption. It is a problem of governance which the PMO cannot eliminate. It is the government that has to impose discipline in the operations of the ministries and anti-corruption measures to stop the unacceptable interference.

The figure below shows circles of corruption in project management indicating the various sources of corruption in project management.

National Project Management Office (NPMO)

There is a necessity to establish a unit, a National Project Management Office (NPMO) charged with the responsibility of end-to-end project management. It should be empowered to participate with government departments and ministries in the procurement and implementation of major projects. No ministry should procure projects for the country independently.

The responsibilities of the NPMO could include the following:

  • Empowered to analyse, participate in negotiation of all new national projects.

  • Work for the sustainability of appropriate projects

  • Authorised to monitor, eliminate unviable projects.

  • Recommend and implement effective project management methodologies and best practices in project management.

  • Supervise and organise the training of Nigerian project managers and team members.

Practice in the UK Government

The UK Government established the Major Projects Authority (MPA) which works with the Treasury and other government departments to provide independent assurance on major projects. It also supports colleagues across departments to build skills and improve the way to manage and deliver projects. The MPA is part of the Efficiency and Reform Group in the Cabinet Office. The MPA has a clear and enforceable mandate to do the following:

  • draw up the Government Major Projects Portfolio

  • request, review and approve integrated assurance and approval plans for each major project or programme

  • carry out assurance reviews where there is cause for concern

  • intervene directly, where appropriate, in the delivery of major projects that are failing by providing commercial and operational support

  • work with departments to build skills and expertise in projects and programme management

  • publish an annual report on major projects

On 1 January 2016, the MPA merged with Infrastructure UK to form a new organisation called the Infrastructure and Projects Authority

Conclusion

Corruption is endemic and institutionalized in our country, actions that need to be undertaken to eliminate it have to be comprehensive and thorough. For example, since procurement and project activities are major sources of corruption, a suggestion made here is the establishment of a National Project Management Office (NPMO) charged with the responsibility for end-to-end project management, this includes procurement, planning, design, and implementation. If and when it is established, for it to be effective and make a difference, the National Assemblies should legislate that no federal or state ministry should carry out any project procurement independently.

The appointments of board members of public companies and parastatals have been based on political patronage, tribal sentiment, religious bigotry, ethnic balancing, party strongman, and political rewards for their active participation in political campaigns. These are inevitably strongly entrenched sources of corruption. If we wish to eliminate them, public organisations should be made independent of government control.

It has been observed that one of the differences between successful private companies and the public companies is independence and freedom from government control. Their boards are appointed by shareholders who are stakeholders and not by politicians who have no personal stake in the companies. An example of such a successful arrangement of a government organisation being completely free from government control is the Temasek Holdings Limited (THL) of Singapore.

It is only when we are prepared as a nation to take bold corrective actions to eradicate corruption and stop tinkering with it for political gains that corruption will be eliminated. It is such an action that will usher in our economic development because money voted to procure modern facilities and equipment to engender our technological advancement will be used for their stated objectives.

Acknowledgement: Most of the material for this writeup has been taken from the book: Achieving Successful and Sustainable Project Delivery in Africa, Dr. O. C. Okereke, Publishers: Routledge, New York.

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