The deep-rooted corruption in the downstream
sector of Nigeria’s oil and gas industry has
been the subject of an international probe, as
a Swiss non-governmental organisation, the
Berne Declaration, has released a report that
has indicted Nigerian oil marketing companies
for widespread subsidy fraud, involving several
billion of dollars.
The latest report titled “Swiss Traders’ Opaque
Deals in Nigeria,” also accused the Nigerian
National Petroleum Corporation (NNPC) of
colluding with international oil traders to
defraud the country.
The report further revealed that Nigeria’s
Sahara Energy, Rahamaniyya Group, Aiteo
Energy Resources Limited, Ontario Oil and Gas
Limited, Tridax Energy, Mezcor Limited and
MRS Group had established subsidiaries,
called letter-box companies, in Geneva,
Switzerland, with no real business activities.
The report noted that these companies
established the subsidiaries, primarily for tax
advantages and also for easy access to
international capital.
Ironically, four of the companies – Sahara
Energy, Rahamaniyya, Aiteo Energy and MRS
– were investigated by the House of
Representatives Ad Hoc Committee that
probed the subsidy scheme and the two
committees headed by the Managing Director/
Chief Executive Officer of Access Bank Plc, Mr.
Aigboje Aig-Imoukhuede, but they were
absolved of complicity in the subsidy fraud.
The directors of Ontario Oil and Gas, led by the
company’s chairman Walter Wagbatsoma,
were, however, prosecuted for subsidy fraud,
with their case still pending in a Lagos High
Court.
Investigations further showed that Tridex
Energy, a company with no track record in the
oil and gas sector, was only registered less
than three years ago. It is owned by a US-
based lawyer, Donald Chidi Amamegbo, who
attended the same university – Howard
University – in Washington DC, with the
Minister of Petroleum Resources, Mrs. Diezani
Alison-Madueke.
Citing Geneva as a “haven for Nigerian
fraudsters”, the report said beyond the role
played by Swiss traders in the subsidy scam in
Nigeria, there was a link between these seven
Nigerian companies, which were suspected of
having participated in the subsidy fraud and
their subsidiaries in Geneva.
“Although most serve only as letter-box
companies, they have listed, without any
inspection, in the trade register,” said the
report.
Several of these companies, according to the
report, have no real activities in Switzerland
and have contented themselves with an
address in a fiduciary or lawyer’s office.
The report also detailed the connections
between the Geneva subsidiaries and the fact
that they are being criticised in Nigeria within
the context of the fraud concerning the
subsidies for the import of petroleum products.
“A first fraud plan consists in receiving subsidy
on a cargo, while physically importing only a
part of it; the balance is thus exported on the
international markets or sold locally on the
black market, and constitutes an illegal profit.
“Sometimes, the subsidies have been received,
while not a single drop of petrol has been
imported. Another technique consists in
falsifying the maritime documents, in particular
the date, to choose a day when the price is
higher than the price actually paid.
“The balance goes back into the pocket of the
importer,” the report said.
Citing the two subsidy probe reports of both
the House of Representatives and
Imoukhuede’s committees, the Swiss report
said around 70 marketers were suspected of
having taken part in the massive subsidy
fraud.
The Berne Declaration affirmed that of the
seven of these marketers, with subsidiaries in
Geneva, only one marketer was the object of
proceedings in Nigeria.
Referring to the report of the Imoukhuede
Presidential Committee on Verification of
Subsidy Payments, which was the third
subsidy probe report that exonerated most of
the firms, the Swiss report said: “Perhaps this
is because a third report, also instituted by the
presidency, exonerated majority of the major
firms of all misappropriation, judging as
‘legitimate’ all the questionable transactions
cited in the two previous reports.
“Curiously, the auditors, who worked in a hurry,
do not explain in what way the transactions
were ‘legitimate’.”
The Swiss report pointedly said Rahamaniyya
Group has had a subsidiary in Geneva,
Rahamaniyya Oil and Gas SA, since October
2010, also domiciled C/O Nimex Petroleum,
which seems to be acting as an incubator for
fraudsters.
Ontario Oil and Gas Limited is also said to
have a subsidiary called, Ontario Trading,
domiciled C/O Nimex Petroleum, but the
subsidiary is currently under liquidation.
Sahara Energy also has a subsidiary, Sahara
Energy International Pte Limited, with the
primary objective of supplying services to
Sahara Group.
Aiteo Energy Resources Limited also had a
subsidiary, Aiteo Suisse AG, in Switzerland.
The report further accused NNPC of colluding
with Swiss international traders to siphon
billions of dollars, stressing that Nigeria is the
only major producing country that sells 100
per cent of its crude oil to private traders,
rather than marketing it itself and benefitting
from the resulting added value.
Vitol, Trafigura, Mercuria and Gunvor are some
of the Swiss commodity traders cited as
NNPC’s accomplices. Others include Arcadia
Energy or Nimex Petroleum, though smaller
companies and less visible than bigger trading
giants.
According to the report, the opaque
partnership between NNPC and the Swiss oil
traders ensures that the profit generated by
these entities escapes state coffers, first,
because no taxation in Bermuda, where
Trafigura and Vitol, two of the largest traders,
are registered, is paid.
The report goes on to say that these sums are
by no means trivial, adding, "By way of
example, in 2011 the amount withheld from
state coffers came to $8.739 billion. The
public coffers were directly penalised: the
same year, the revenues from oil fell by 39 per
cent against the amount budgeted. And this is
despite a rise in the price of oil."
The report attributed this to the unilateral
retention of revenues which should have
accrued to the federal government from the
export of crude oil allocated to refineries.
The report alleged that a number of
beneficiaries of export allocations letter-box
companies “whose sole merit is that they are
linked to high-ranking political officials or their
entourage.”
The second problem identified by the Swiss
report is that Swiss traders do not acquire
Nigeria’s crude oil based on public and
transparent calls for tender, “which would
guarantee to the Nigerian population that its
oil is sold at the best price.”
On the contrary, the report said each year, the
NNPC grants the allocation of exports under
obscure conditions and on the basis of criteria
that are unknown outside the restricted circle
of decision makers.
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