$6.8bn fraud: House probes collusion between NNPC, Swiss and Nigerian traders


Andrew Yakubu, NNPC GMD

13 November 2013, Abuja – The House of Representatives Tuesday mandated its Committees on Petroleum (Upstream and Downstream) and Justice to investigate the alleged swindling of the country of $6.8 billions by the Nigerian National Petroleum Company (NNPC) in collusion with Swiss-based oil traders and their Nigerian counterparts.

This followed the report of the Berne Declaration, a Swiss non-governmental advocacy organisation, released last week, detailing how NNPC, Swiss oil trading companies and Nigerian traders have been pilfering oil revenue through the sale of crude oil below the market value.

Titled “Swiss Traders Opaque Deals in Nigeria”, the 19-page report catalogued the letterbox companies’ modus operandi employed by the alleged partners to defraud the country of over $6.8 billion, noting that such a fraud was the greatest in Africa.

Other schemes employed by the alleged perpetrators, the report showed, included ship-to-ship transfers to create untraceable paperwork, payment of subsidy money to phantom and non-existing importers, and partnering with politically exposed fraudsters.

According to the report, the shady deals were “exclusive and untransparent, giving Vitol and Transfigura, among others, unfettered access to over 36 per cent of the market share as the NNPC sold its crude at discounts far below the market prices.

With the NNPC selling 100 per cent of its crude to private traders rather than market it herself; and make profit therefrom, it was submitted that the NNPC simply allocates crude oil to its refineries who then parcel off same to Geneva-based companies through letter box companies by swap arrangements at knock down prices.

The House, which expressed worry about the damaging allegations contained in the report against NNPC and its subsidiaries for not publishing detailed financial reports since 2005, referred the matter for investigation to the three committees within four weeks.

The oil companies named in the report are: MRS Group, which owns a Swiss-registered subsidiary called Petrowest Services SA; Ontario Oil and Gas limited, which owns Ontario Trading, domiciled C/O Nimex Petroleum, but the subsidiary is currently under liquidation; and Rahamaniyya Group, which owns a subsidiary called Rahamaniyya Oil and Gas SA in Geneva, also domiciled C/O Nimex Petroleum.

Others are Tridax Energy Limited and Mezcor Limited with Swiss subsidiaries named Tridax SA and Mezcor SA in Geneva; Sahara Energy, whose Swiss subsidiary, Sahara Energy International Pte Limited, which has the primary objective of supplying services to Sahara Group; and Aiteo Energy Resources Limited, which owns a subsidiary, Aiteo Suisse AG, in Switzerland.

All these companies were created for the purpose of “benefiting from the tax that the cantons offer for companies working primarily abroad – which is undoubtedly relevant for a Nigerian importer, in other cases, the primary motivation is to get closer to banks specialising in financing trading.”

The report also fingered Vitol, Trafigura, Mercuria and Gunvor as some of the Swiss commodity traders that are NNPC’s accomplices. Others include Arcadia Energy or Nimex Petroleum, though smaller companies and less visible than bigger trading giants.
According to the report: “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.”

“Vitol and Trafigura alone took respectively 13.44 per cent and 13.49 per cent of Nigerian crude oil exports in 2011 for a cumulative value of $6.7 billion,” it stated, emphasising that “Nigeria is the only major producing country that sells 100 per cent of its crude to private traders rather than market it itself and benefiting from the resulting added value.

“A number of beneficiaries of export allocations are nothing but letterbox companies whose sole merit is that they are linked to high-ranking political officials or their entourage.”

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