Tomorrow, April 2, 2000, The Sunday Times of London will have a detailed story on this whole Nigerian affair and a second follow-up is to be printed on Monday, April 3rd in The Times, both by Nick Fielding. Should make for interesting reading.

You will notice that Scientology is mentioned in the Africa Confidential article. There are two very interesting items concerning Scientology and Nigeria that are not mentioned that are subject to further investigation:

1) The Secretary-General of OPEC, Rilwanu Lukman, a Nigerian Moslem AND a confirmed practicing Scientologists for about 2 years, was the conduit through which Scientology had access to Senior Nigerian Government officials in their attempt to destroy my former partner Jeff Schmidt in order to have me stop my attempts to tell the truth about Scientology. Lukman, a former Oil Minister in Nigeria and 2 term President of OPEC is the most influential Nigerian in the world. (See REPOST re Jeff Schmidt)

2) John Fashanu, mentioned below, has confirmed spending over US$ 1.0 million investigating the debt buy-back activities of Nigeria. Did he buy this information from the trio of Scientology detectives: Peter Franks, David Lee (Lebow) and Eugene Ingram? Is Fashanu being used to divert attention from the role that Scientology and Lukman are playing?

Time will tell.

Bob Minton

NIGERIA: Offshore, offside
by Patrick Smith

Africa Confidential, London, Volume 47 Number 1
March 31, 2000

In a private investigation, a soccer star says he's uncovered a multi-billion dollar debt trading fraud and calls on the government to act.

The determination of President Olusegun Obasanjo's government to probe the financial management of its military predecessors is to be tested by soccer star John Fashanu. He has launched a private investigation into a US$6 billion Nigerian debt buy-back scheme, claiming it was 'riddled with corruption'. The scheme was run from the Central Bank of Nigeria between 1988 and 1993, while General Ibrahim Babangida was President.

On the face of it the scheme was a shrewd way of covertly buying back Nigeria's commercial debt at deep discounts. Babangida had pledged to reduce the debt substantially and did so. In 1992, Nigeria had agreed the terms for a 'Brady bond' deal - basically, an approved way of reducing the nominal value of debts that were never likely to be paid in full - which took some $5.5bn. of commercial debt off the books. Fashanu, who is also the United Nations' Children's Fund special envoy in London, was found innocent in 1998, along with Zimbabwean goalkeeper Bruce Grobelaar, of charges that they fixed British soccer league matches. Fashanu told Africa Confidential that his investigators (whose report was sent this week to senior Nigerian officials) had established that the scheme was a smokescreen behind which hundreds of millions of dollars were diverted into Swiss and Austrian accounts. He claims that 'faceless men' had been trying to stop his anti-corruption investigations.

Blowing the Gulf windfall A report on the CBN's operations by Nigerian economist Pius Okigbo, submitted to the government in 1995, alleged that some $12.4 bn. of government payments through CBN in 1988-93 weren't audited or adequately accounted for. The sum was part of the windfall from higher oil prices following the 1990-91 Gulf War. Some $4.4 bn. had been earmarked for currency stabilisation and debt buy-backs but according to its operators, the 1988-93 scheme cost only $2.5 bn. and there are no records of other buy-back or currency stabilisation operations in that period.

Attempts to investigate and recover any funds misappropriated from the 1988-93 buy-back would be delicate, involving detailed enquiries into big transactions under Babangida. Answering demands that Babangida should be personally probed by the government, Obasanjo says he has yet to see any conclusive evidence implicating his predecessor in fraud. The President needs to keep Babangida on side; he is still influential at home and abroad and, as a northern Muslim who still holds court in his mansion in Minna, has kept studiously silent about the Sharia (Islamic law) controversy (AC Vol 41 No 5).

The $6 bn. buy-back operation was secret because Nigeria was breaking the rule that all types of debt must be treated equally. The scheme's kingpin, Abdulkadir Ahmed, Governor of the CBN, died of a brain tumour in the mid 1990s. The buy-back's complex structure involved a chain of front companies and offshore companies set up but not controlled by the government. The scheme was engineered by two American bankers, Jeffrey Schmidt and Robert Minton. Schmidt had worked for Shearson Lehman and got to know Babangida and Ahmed when he worked on a Nigerian-Romanian debt swap deal. He became particularly close to Babangida and converted to Islam; some regarded him as an unofficial presidential financial advisor.

Schmidt and Minton initially used a London-based company, Growth Management Limited (GML) to buy back Nigerian debt on the secondary market. The Nigerian government would pay funds into the Österreichische Landesbank, which would pass on the credits to GML. They worked closely with traders of 'exotic debt', such as Bob Smith of Turan Corporation in Boston, USA, an old partner of Minton's from a project in Turkey.

The Nigerian authorities feared that the close links with the London offices of the Österreichische Landesbank might help creditors uncover the secret buy-back deal and insisted that the companies running the buy-back be based in the USA. There, Minton and Schmidt established one company to buy the debt (Shamrock Financial) and another to warehouse it on Nigeria's behalf (Triolet). To finance the buy-back, funds would be sent from either the CBN or the Nigerian National Petroleum Corporation to three banks: the Federal Reserve Bank of New York, Morgan Guaranty in New York or the Bank of International Settlements in Basle, Switzerland. In turn, they would route the funds through an offshore company, Greenland Holdings, incorporated in Panama.

Creditor banks at the time suspected Nigeria was buying back its own debt but did not know how. A member of the steering committee of Nigeria's creditors said: 'Some of us were happy to get rid of our Nigerian liabilities, partly because we were unsure about Nigeria's political future and partly because the Bank of England's new provisioning rules made it more expensive to hang on to it.' So fraught were Nigeria's debt-rescheduling negotiations at the time - involving tortuous dealings with the International Monetary Fund and the World Bank - that many commercial creditors didn't want to muddy the waters by demanding an investigation.

Minton, then Chairman of Shamrock Financial, says many of the banks were aware of the buy-back in 'general terms' and took full advantage of it. For example, Britain's Barclays Bank sold some $300 mn. of Nigerian debt to the Österreichische Landesbank in late 1991. Minton strenuously denies there was any financial wrongdoing or that any funds were secretly channelled to Swiss or Austrian accounts. He said the late CBN Governor, Ahmed, was 'transparently honest' and there was almost no possibility of fraud. 'We kept the Nigerian authorities fully informed, with detailed reports submitted on a monthly basis accounting for all the funds received and disbursed... these reports are still with the Central Bank today, I believe.' He added that he and his partner, Schmidt, had notified the IMF and World Bank about the debt buy-back scheme and that they had given it tacit approval. 'It was a good deal for Nigeria... they bought their debt back at a heavy discount and avoided paying millions of dollars in interest.'

The only foul play arose, Minton said, when security men abducted Schmidt from his Lagos hotel at midnight and accused him of funnelling all the country's foreign exchange abroad. They then demanded a cut and Schmidt told them to contact Governor Ahmed. Minton denies he and Schmidt made super-profits out of the buy-back. 'We did well, we made tens of millions of dollars... not hundreds of millions and certainly not billions.' Other bankers less closely involved insisted the scheme was legitimate. Stefan Pinter, Managing Director of GML, said: 'It was one of the most effective buy-backs I've seen and of great benefit to Nigeria'.

Minton says the investigations into the buy-back are being used as an opportunity by the Church of Scientology to discredit him. He says he has spent some $4 mn. in the last five years defending the right of former scientologists to criticise the church and has been the target of a campaign of abuse. 'No one from the US or the Nigerian authorities has raised questions with me about the probity of the buy-back deal since it wound up in 1993,' Minton said.

If Nigeria acts on the Fashanu investigation, it will be the second Nigerian debt buy-back to come under public scrutiny by the Obasanjo government. The first was a $1.5 bn. deal in 1995 to buy back part of Nigeria's debt to Russia for the still non-functioning Ajaokuta steel mill (AC Vol 41 No 3). Negotiations between Obasanjo's National Security Advisor, Aliyu Mohammed Gusau, and Gen. Sani Abacha's son Mohammed and business ally Atiku Abubacar Bagudu, broke down late last year over how much of the profit should be returned to the government, which is now suing them in London for reneging on an out-of-court settlement. Last August, the Swiss government froze accounts containing some $700 mn. held in the name of the Abacha family.