Nigeria's president, Olusegun Obasanjo, is at the center of a potentially damaging revelation that he owns substantial shares in a company that has benefited from the government's privatization of state-owned enterprises.  The House of Representatives has commenced a formal investigation.

Nigerian President Olusegun Obasanjo has acknowledged that Obasanjo Holdings Limited, his private company, owns about two million shares of Transcorp, an investment company.

Since it began operations 15 months ago, Transcorp has acquired four oil production blocks, taken over the government's interest in the prestigious Abuja Hilton Hotel, and bought the state-owned telecommunications giant NITEL.

Representatives of Obasanjo Holdings insist there is no conflict of interest because the president's Transcorp shares are held in a blind trust.

But Lagos lawyer Gani Fawahenmi says the president has abused his office and acted in gross violation of the constitution, which precludes public officials from acts that confer personal benefits.

Nigeria's largest trades union, the Nigeria Labor Congress, has also criticized the sale of NITEL to Transcorp for $750 million, which critics say represents a fraction of its real worth.

Several opposition groups have called for the cancellation of the sale and nine other state companies because the transactions were not approved by the now dissolved National Council on Privatization.

The House of Representatives has begun an investigation into the NITEL deal.

A lawmaker from Kano, Farouk Lawan, says the lower chamber of parliament is responding to public pressure.

"The concern was, given the public outcry and the general impression, that the deal is not exactly transparent," he said. "This is what informed the decision of the house to investigate and determine whether the deal was done in the best interest of the country and whether the whole process meets standards of fair business practice."

Privatization of inefficient and corrupt state-owned companies has been a key aspect of President Obasanjo's reform program. But questions have been raised about the level of fairness and transparency applied.

Critics say cronies of the president have been the main beneficiary, an allegation rejected by Joe Anichebe, spokesman for the Bureau of Public Enterprises, the government agency which handles all privatization deals.

"We believe the transaction was very transparent. People may not like who got it, but that is not the issue," said Anichebe. "The issue is the process and we believe the process was very transparent. We follow international best practices, which the World Bank has, not once or twice, but on many occasions commended the way we carried out our transactions. On each major transaction, we hire transaction advisers in the world. In the case of NITEL, it was BNP Paribas that advised us on the transaction."

The NITEL controversy is the latest in a string involving the presidency, following a huge public face-off between the president and his deputy.