British MPs sound alarm over UK public cash links with Nigerian projects

British MPs have accused ministers of allowing public money to be spent on development projects in Nigeria associated with fraudsters in the country, reports the Financial Times.

 

In a report released on Thursday, the Commons public accounts committee said it had been told that a UK government-backed fund had indirect links to former Governor James Ibori of Delta State, convicted of laundering millions of pounds in public money.

The allegations form part of a highly critical report into the workings of the Private Infrastructure Development Group, an organisation set up by the government in 2002 to invest in infrastructure projects in developing countries.

The report says: “We are concerned that [the Department for International Development or DfID] has insufficient assurance over the integrity of PIDG’s investments and the companies with which it works.”

The concerns stem from one particular fund run by PIDG, the Emerging Africa Infrastructure Fund.

The committee also said it had been contacted by a source alleging that the fund was previously part-owned by Emerging Capital Partners, a US-based fund.

ECP bought shares in companies that anti-corruption campaigners say were used by allies of Ibori to help launder money gained through fraud, but has previously denied any wrongdoing.

Both ECP and the government deny it owned or managed the government-backed fund, but the committee said it had not been provided with “all the documentary evidence necessary” to back up those denials.

The claims come two years after the Financial Times reported that ECP had links with a separate DfID-backed fund, known as CDC, which has also previously denied wrongdoing.

Separately, the report said the fund had also spent up to £30 million on a gas project in Nigeria run by a company previously named in connection with an investigation into the looting of oil revenues.

In September 2014, according to the committee, it allegedly gave the money to Seven Energy Finance, a Nigerian company, to help pay for a gas processing plant run by Seven Energy.

Financial Times reports that Seven Energy was one of the companies named by Sanusi Lamido Sanusi, the former governor of the Central Bank of Nigeria (CBN), in an investigation he conducted into looting of Nigerian oil revenues. His report included a reference to Seven’s “strategic alliance agreement” with the Nigerian Petroleum Development Corporation. It did not accuse the company of any involvement in looting.

On Wednesday, Philip Iheanacho, chief executive of Seven Energy, said: “This was a means of funding joint ventures where one partner, the national oil company, had insufficient funds of its own to finance the project. There are many similar financing arrangements in Nigeria including with the supermajors.”

He added: “We have nothing to hide. We are proud of what we are doing in Nigeria.”

DfID said: “This report suggests UK funds are at risk of ending up in the wrong hands, citing alleged links between a convicted fraudster and a PIDG-backed company. These have been investigated thoroughly by the National Audit Office, as well as DfID and PIDG, and absolutely no evidence has been found to substantiate them.”

The committee also accused PIDG of wasting taxpayers’ money by allowing its officials to travel on expensive air tickets around the world. MPs found that by allowing staff to travel on “fully flexible” business-class tickets, the group spent more than £75,000 on flights between January 2011 and July 2014.

DfID said it had “clamped down on excessive travel rates”.

PIDG also comes under fire for investing money in Mauritius, where the effective tax rate is below 5 percent. The department said those investments were made at a time when Mauritius was the most stable place in Africa in which to base public funds.

The report also criticises the group’s cash management, with £27 million of government money having been left in a bank account for more than two years, earning just 0.016 percent interest a year.

MPs recommended that SG Hambros, the bank in which the money was deposited, should pay a donation to a charity dealing with Ebola in West Africa, in return for any money it made. SG Hambros, the private banking arm of Société Générale, declined to comment.