Debt Relief or Treasonable Scam?
By Chinweizu
Copyright © Chinweizu 2005
GOING by press reports,there are quite a few curious aspects to this alleged debt reliefthat has brought forth triumphant noises from Presidential circles in Nigeria. Let me highlight a few for the benefit of the public.
The virtual debt: Some press reports say that Nigeria borrowed $17bn; has already paidback $22bn, and is said to still owe $36bn. If these are the actualfigures, may I observe that, as the real debt has been paid off withsome interest, this alleged debt of $36bn is book-keeping debt, i.e.virtual debt, very much like the book-keeping subsidy or virtual subsidy which the IMF & Co insisted had to be abolished. By the example of that doctrine, this virtual debt should be simply extinguished, shouldn’t it? Should Nigeria not simply repudiate this alleged debt of $36bn, and be done with it? What’s good for virtual subsidy should be good also for virtual debt.
The virtual discount or relief:We hear that the Paris Club is prepared to discount this virtual debtby some 60 per cent or so, by writing off $18bn as debt relief, but only under certain conditions. Since the size of this virtual debt is based on the Paris Club’s say so (press reports have not, as far as I know, indicated that the veracity of the Paris Club’s figures hasbeen ascertained) this alleged discount is much like the discount offered by a vendor whose advert screams at you: “Sales! Sales! Price slashed from $999 to $99!” Yet you have no way of telling whether the price was ever indeed $999. Is there, therefore, not a need for an independent Nigerian public verification of the size ofthis alleged discount or relief or write off or whatever it is called?
The advance fee fraud: Suppose some conman said to you: “You see that bank over there? I have $36bn in its vaults, and out of my generosity or pity for your plight or admiration for your village headman’s super-obedience and life-long, continent-wide services to me, I want to make you a gift of half of it, $18bn. But first you have to give me $12bn upfront.”That would be classic advance fee fraud, a.k.a. 419, would it not? A crime requiring the attention of the Economic and Financial Crimes Commission (EFCC), and other crime fighting agencies of the government. But that is precisely what the Paris Club has told the President. And he is celebrating and actively sourcing for the $12bn to hand over to the Paris Club gangsters.
For avoidance of doubt, please allow me to spell it out: The Paris Club is holding a Nigerian debt stock allegedly worth $36bn; and it wants to charitably give back $18bn of it to Nigeria, on condition that Nigeria handsover $12bn upfront. When that advance fee is paid, they promise togive to Nigeria $18bn worth of that debt stock, and to then arrange for Nigeria to buy back the remainder, at terms yet to be discussed. Now isn’t that 419? In fact, it is more than 419; some might callit Four-one-ten!!
The other criminal aspect: Now, 419 is a crime, not only in Nigeria, but in most countries,including the Paris Club countries. And it is, presumably, a crime ininternational law since Interpol is interested in such cases. That isone criminal aspect of this “debt relief” deal. But there is atleast one other. If the chief executive officer (CEO) of acorporation were to be set up for a scam by some gangster syndicate which strips his corporation of its assets, wouldn’t that CEO befingered as an accessary to a felony? Yet, the President, the CEO ofthe Federal Government of Nigeria (FGN), is party to setting up this scam whereby the Paris Club syndicate of shylock gangsters is set toasset-strip $12bn or more from Nigeria’s reserves. Doesn’t hedeserve a quizzing by the EFCC?
Economic treason:It is pertinent to recall here how Nigeria was taken into the debt trap in the first place: Back in the late 1970s, against the wisdom of public opinion, the then military head of state, Gen. Obasanjo, was conned by foreign lenders into taking a $1bn jumbo loan that Nigeria, with its then buoyant oil revenues, did not need. The excuse was that Nigeria was “under-borrowed.” They claimed that Nigeria needed the jumbo loan to build investor confidence, so that foreign investments would flow in and develop the economy. He fell for that trap. But did the expected investments flow in? Now, nearly 30 yearslater, as President Obasanjo, he is falling for another scam by hiswhite controllers. In the hope of extricating Nigeria from the debt trap into which he himself led Nigeria, he is eager to hand over Nigeria’s reserves, to the tune of $12bn or more, to the same creditor gangsters. As the Chinese say: Fool me once, shame on you;fool me twice, shame on me!
These are just a few of theaspects of this so-called debt relief that I find curious and troubling. Perhaps the press reports on which I have based my observations are inaccurate, but who is to say that they are? The ordinary citizens and even the press cannot uncover the facts much beyond what has already been done. They do not have the administrative instruments or constitutional powers to inspect thedocuments in the files of the Presidency. Since it is apparent thatthe EFCC seemed to have been turned into a private instrument forharassing handpicked adversaries of the President, the public cannottrust it to look, let alone impartially, into this debt relief affair. Thus, only the National Assembly (NASS), which has the constitutional power to inspect the documents of the Executive branch, can further illuminate this debt deal. Perhaps this is thetime for the NASS (whose own campaign was, wisely, for 100% debt cancellation and not this murky “debt relief” scam) to step in and clarify matters and act in the interest, and to the satisfaction,of the Nigerian people.
Some other aspects that need to belooked into are these:
(a)What could happen to a country addicted to imports if it lost its reserves? Wouldn’t it be forced to go a-borrowing once again to finance urgent imports, and promptly find itself back in the debt trap from which it tried, rather incompetently, to escape? If you gave your entire month’s paycheck to pay off your debt to some shylock, wouldn’t you have to rush outand borrow again to feed and pay health and other bills for the restof the month - and in your desperation probably accept even worseterms than before? Zimbabwe’s current distress should be a warning to Nigerians against giving away their reserves. If the President goes ahead with this non-transparent debt deal, and exhausts the reserves, wouldn’t the already distressed Nigerian economy simply collapse?
(b) But how likely is it that, on losing itsreserves, Nigeria would quickly exit the debt trap? Not bloodylikely! It should be noted that the proffered exit treatment requiresa PSI with the IMF, plus IMF tracking of performance under that PSI.And therein lies the catch. This requirement allows prolongation ofthe exit process, through repeatedly moving the proverbial goal post,thereby denying the tantalizing exit. So, exit from the debt trap isnot even assured, not being automatic upon paying the $12bn upfront.Like any victim of 419, Nigeria, after losing the $12bn advance fee, could be waiting forever for the promised bonanza to arrive!
(c)The overall result of (a) and (b) would be that Nigeria, upon losingits reserves, would have to go desperately borrowing anew to stayalive, without even getting rid of its present virtual debt burden of $36bn.
(d) An international transaction of this magnitude,which is fraught with dire consequences for the people - one capable, by wiping out Nigeria’s reserves, of devastating the economy, of perpetuating our debt peonage and jeopardizing the society andpopulace for the indefinite future - does it not require prior legislative approval? Shouldn’t it?
Let me end by exploring, however briefly, this issue and some preventive measures. Preventive measures:If implementation of this scam is to be prevented, what is to be done? Even if it is deemed legal to proceed without legislative backing, would that be prudent? Would it be prudent of the NASS toturn a blind eye and not investigate what looks, prima facie, like a monumental and devastating scam? The NASS, it seems to me, has two duties to discharge: (a) Uncover the facts and make them public so as to educate the people about this dubious “debt relief”; and (b)Act promptly to prevent any possible looting of Nigeria under coverof “debt relief.” If the NASS feels itself unequal to the task,it could, at least, do two things: Create a special prosecutor, such as Gani Fawehinmi, the people’s tested lawyer, to investigate this “debt relief” deal, and to prosecute those responsible for any impropriety or fraud found in this whole debt business. The special prosecutor’s office should be independent, and thoroughly insulated from the influence, of the executive branch, and should be mandated to investigate the procurement of each and every loan in the original $17bn debt stock, as well as the execution of the projects for which it was ostensibly borrowed. It should also investigate and prosecuteany impropriety or illegality associated with the debt repayment process thus far. Urgently pass a law forbidding the FGN to pay evenone cent to the Paris Club or any other foreign creditors, before thespecial prosecutor’s work is satisfactorily completed.
