$7bn NNPC, Swiss Oil Scam Is “Greatest Fraud Africa Has Ever Known”

The NNPC has denied the allegation, but lawmakers say a panel will unravel the truth in a month

The House of Representatives has ordered an immediate investigation into a multibillion dollar scheme used by the Nigerian National Petroleum Corporation NNPC, in connivance with Swiss oil dealers, to rip Nigeria of nearly $7 billion.

As earlier reported by PREMIUM TIMES, the schemes, documented in a report titled Swiss Traders’ Opaque Deals in Nigerian, released last week Monday by Swiss non-governmental advocacy organisation, the Berne Declaration, involved the NNPC teaming with major Swiss oil trading companies to drain Nigeria of revenue through the sale of crude oil below the market value.

The report details the various methods employed by Nigerian and foreign fuel importers, such as creating offshore subsidiaries referred to as “letterbox companies”, ship-to-ship transfer to create untraceable paperwork, payment of subsidy money to phantom and non-existing importers, and partnering with politically exposed fraudsters to defraud the country over $6.8 billion from 2009 and 2011.

Berne Declaration describes the Nigerian oil scam as the greatest fraud Africa has ever known.

Prominent among the shady deals are the partnership between the NNPC and two Geneva-based commodity trading firms, Vitol and Trafigura, registered in Bermuda.

Through NNPC partnership with Vitol (the largest oil trader in Switzerland) and Trafigura (the third largest) described as ‘operational and financial black boxes’ billions of naira that should have accrued to the government are wired to Bermuda where the joint venture is established.

“In reality, the profit generated by these entities escapes State coffers, first, because no taxation in Bermuda is paid, since the tax on profits is zero,” the report stated.

“Vitol and Trafigura alone took respectively 13.44 % and 13.49 % of Nigerian crude oil exports in 2011 for a cumulative value of 6.7 billion dollars.”

The Nigerian House of Representatives said Tuesday it was “alarmed” by the report, first published in Nigeria by PREMIUM TIMES, and would expect an investigation to be concluded within four weeks.

Kola Aluko who lives in Geneva is believed to be a front runner for oil minister Diezani Madukwe

The House committees on petroleum (upstream), petroleum (downstream), and justice, are to carry out the probe and report to the House within the stated period.

“The House is further worried about the numerous damaging allegations contained in the report against Nigerian National Petroleum Corporation (NNPC) and its subsidiaries accused of not publishing detailed financial reports since 2005,” a motion before the House, sponsored by Abiodun Abudu-Balogun, read.

The House of Representatives has carried out repeated investigations into the activities of the NNPC in the past, with nearly all of the outcome either left unimplemented by the president, or enmeshed in allegation of inducement of some lawmakers.

The most outstanding of the House inquiries was the investigation of how the NNPC and other organs of the ministry of petroleum allowed a multibillion fuel subsidy scam to fester for years, draining Nigeria of more than N2 trillion.

In the House report in 2012, the minister of petroleum, Diezani Alison-Madueke, was indicted alongside top officials of the NNPC.

The House recommended their removal and prosecution.

The officials have remained untouched at their posts, even after a follow-up investigation ordered by President Goodluck Jonathan, failed to exonerate them of complicity in the extensive fraud.

The NNPC issued a denial on Sunday of the new report’s findings, calling it “bogus, and containing inaccurate and poorly researched data, which defied common sense and verifiable evidence on the ground in Nigeria”.

“For instance, how can close observers of the Nigerian oil and gas industry say that the process leading to the award of Term Contract for lifting of Nigeria’s crude is shrouded in mystery?” Tumini Green, the acting group general manager (public affairs) of NNPC said at a news conference on Sunday, according to the News Agency of Nigeria,

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“It is common knowledge that the call for tender for this contract is periodically published by almost all the newspapers in Nigeria via paid advert placements by the NNPC.’’

During debates on the matter on Tuesday, lawmakers rebuffed an attempt by minority leader, Femi Gbajabiamila (APC, Lagos), to include the committee on public accounts in the probe.

Another amendment motion made by Abubakar Momoh (APC, Edo) to delete the inclusion of the Justice Committee and replace it with that of Finance Committee was rejected by the lawmakers led by Deputy House Leader, Leo Ogor (Delta, PDP.)

The probe panel is also expected to establish whether the alleged scam is one of the reasons NNPC and its subsidiaries have refused to publish their detailed financial reports since 2005.

via newsrescue