NNPC, Swiss traders defrauding Nigeria –Report

 BY DAYO OKETOLA

NNPC logo

The Nigerian National Petroleum Corporation and some local and international traders have been accused of conniving in shady oil deals to defraud the country.

A Swiss-based non-governmental advocacy group, Berne Declaration, in a report entitled, ‘Swiss traders’ opaque deals in Nigeria’, accused the NNPC of robbing the country of several billions of dollars in connivance with major oil trading companies based in the European nation.

Specifically, the report indicted Vitol and Trafigura, two major oil traders in Switzerland, and seven Nigerian oil importers of creating offshore subsidiaries referred to as ‘letterbox companies’ to  defraud the country of over $6.8bn in subsidy payments between 2009 and 2011.

This, according to the report, is coupled with other activities such as ship-to-ship transfer to create untraceable paperwork, payment of subsidy money to non-existing importers, and partnering with politically exposed fraudsters.

The Berne Declaration said in a news release detailing its report, “Every year, the Nigerian state coffers lose billions of dollars as large volumes of oil are exported for well below the market price, and the subsidy scheme for imports of refined crude oil products is systematically defrauded.

“Ongoing investigations by the Nigerian authorities show that those Swiss traders dominant in oil exports have been making good business with dubious Nigerian import firms.”

The report, a copy of which was obtained by our correspondent on Wednesday, stated, “The all-powerful national company, the Nigerian National Petroleum Corporation, categorised as the most opaque national oil company on the planet, itself is evidence of Nigeria’s ‘resource curse’ at work.

“The extent of the problem is illustrated by the fact that the NNPC has not published detailed financial reports since 2005! But this company, with its dozen subsidiaries operating at all levels of the supply chain, from production to distribution, cannot be ignored by anyone wanting to produce, export or import crude oil or petroleum products in Nigeria. It is here that Swiss commodity traders occupy a position of choice.”

The report alleged that NNPC was involved in shady deals with two Geneva-based commodity trading firms registered in Bermuda.

It said Vitol and Trafigura had “exclusive and un-transparent partnerships” with the NNPC, which had given them over 26 per cent of the market share.

It stated, “Instances show that sales between the NNPC and its two Swiss partners were carried out at prices lower than the market rate. This type of operation appears incongruous: Why would the NNPC sell its crude oil at a discount?

“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 $6.8bn.”

The report further stated that more than 56 per cent of the oil put up for sale by the NNPC in 2011 valued at $14.004bn was sold to Swiss companies or Nigerian companies with “letterbox” subsidiaries in Switzerland.

The NNPC was also alleged to be taking advantage of the country’s failed refineries to feed its partnership with the oil dealers.

The refineries have been operating sub-optimally, but the report found that NNPC had been allocating crude to them as if they were operating at full capacity.

The excess allocations, according to the report, are sold to Swiss-based oil trading companies or local oil marketers through their fraudulent subsidiaries in Switzerland at lower prices or exchanged for refined petroleum products in shady swap contracts.

The report said, “Nigeria is the only major producing country that sells 100 per cent of its crude to private traders rather than market it itself and benefit 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.”

The Berne Declaration described the Nigerian oil scam as the greatest fraud Africa had ever known.

The Acting Group General Manager, Group Public Affairs Division, NNPC, Ms. Tumini Green, could not be reached to comment on the allegations made in the report.

Calls made to her mobile telephone line did not go through, while text messages sent to the same number were not replied as of the time of going to press.

Shell accused of misreporting oil spills

Company rejects as "unsubstantiated" claims by Amnesty that it improperly investigates size and cause of Nigeria spills. Last Modified: 07 Nov 2013 13:31

Shell says most of its oil pipeline spills are caused by sabotage and theft [AFP]

Amnesty International has accused Nigeria's biggest petroleum producer, Shell, of inaccurately documenting oil spills in an effort to avoid paying compensation and damaging its reputation. "Shell is being disingenuous about the devastation caused by its Niger Delta operations. This new evidence shows that Shell's claims about the oil spills cannot be trusted," said Audrey Gaughran, Amnesty's director of global issues, on Thursday. Shell Nigeria said it "firmly rejects unsubstantiated assertions" by Amnesty, adding the group "exaggerated the impact of crude oil theft and sabotage to distract attention from operational performance". Hundreds of leaks are reported every year in the creeks and swamplands of the Niger Delta. These spills damage the environment and cut profits for oil companies, including Shell and Italy's Eni. Sabotage and theft Shell says most of its oil spills are caused by sabotage and theft and that it cleans up, whatever the cause. Amnesty, however, said it saw reports about spills that stated the reason as sabotage, but lacked further explanation. Other examples showed that Shell had calculated the size of a spill behind closed doors. Amnesty also worked with US pipeline specialist Accufacts, which found some pictures on Shell's website showing that spills categorised as being caused by sabotage were more likely due to corrosion of ageing pipelines. Accufacts also questioned Shell's methodology in calculating the cause and size of spills. Shell said that since 2011 it has published spill investigations with photographs on its website, and is the only oil major operating in Nigeria to do so. "We seek to bring greater transparency and independent oversight to the issue of oil spills, and will continue to find ways to enhance this," the company statement said. Amnesty acknowledged that Shell had improved its transparency over oil spills since 2011. Shady oil transactions in Nigeria. News Date: 7th November 2013 A new report has detailed how the Nigerian National Petroleum Corporation (NNPC), in connivance with major Swiss oil trading companies, is depriving Nigeria of billions of dollars of revenue through the sale of crude oil below market value. The report, titled, "Swiss Traders' Opaque Deals in Nigeria", was released last Monday by a Swiss non-governmental advocacy organisation, the Berne Declaration. It described the schemes employed by Nigerian and foreign fuel importers, such as the creation of offshore subsidiaries referred to as "letterbox companies,", ship-to-ship transfer to create untraceable paperwork, payment of subsidy money to phantom and non-existent importers, and partnering with "Politically Exposed Persons" (PEPs) to defraud the country of over $6.8 billion between 2009 and 2011. According to the report, it was clear that Swiss traders were contributing to the perpetuation of a corrupt system which was characterised by'letterbox' companies drawing crude oil export allocations solely as a result of the owners' proximity to politically exposed persons (PEPs); - opaque calls for tender whose criteria were unknown to the public. The system also included suspicions of crude oil sales at knock-down prices, or prices that were unfavourable to the Nigerian state, in particular in the framework of the partnerships concluded between the NNPC and Vitol and Trafigura respectively. The report added that, "In imports, Switzerland’s role in hosting trading companies proves to be equally problematic, in several respects ...": It described the Nigerian oil scam as the greatest fraud Africa had ever known, and described a network by which transactions were made through Shell companies in Switzerland and notorious offshore tax havens in Bermuda, to deny Nigeria billions of naira in tax earnings. The report identified seven major oil marketers and fuel importers as most complacent in these shady activities. They are: MRS Group, which owns a subsidiary called Petrowest Services SA; Ontario Oil and Gas limited, which has a Swiss Subsidiary named Ontario Trading and located at the premises of Nimex Petroleum in Geneva; Rahamaniyya Group, which owns a subsidiary called Rahamaniyya Oil and Gas SA in Geneva since October 2010; and Nimex Petroleum which the report suggested may be acting as an incubator for shady companies. The rest are Tridax Energy Limited and Mezcor Limited, with Swiss subsidiaries, Tridax SA, Mezcor SA in Geneva; Sahara Energy with a Swiss subsidiary Sahara International Pte Limited; and Aiteo Energy Resources Limited, with a subsidiary in Geneva called Aiteo Suisse AG. According to the report, these companies had been traced to close associates and the younger brother of Nigeria's Minister of Petroleum, Diezani Alison-Madueke, and had been indicted by committees investigating massive fraud in Nigeria's subsidy scandal. The NNPC had also been indicted by several reports for its inefficient management of the funds from the country's huge oil resources, it stated.  Shell 'manipulates Nigeria oil spills probes': Amnesty LAGOS : Amnesty International alleged that Shell has repeatedly misrepresented the cause of oil spills in Nigeria, blaming criminal sabotage to avoid liability, in a charge the Anglo-Dutch energy giant dismissed as “unsubstantiated”. The number of spills in the southern Niger Delta region, home to Africa’s  largest oil industry, was “staggering”, the London-based rights group said in a  new report, “Bad Information. Oil Spill Investigations in the Niger Delta”.       Shell, the largest onshore operator in the delta, has reported 348 spills  since the start of 2012, while the Nigerian Agip Oil Company, the Nigerian  subsidiary of Italy’s ENI, has reported nearly 1,000 over the same period, it  added.      Oil companies, and particularly Shell, have manipulated the results of  spill investigations, the report stated, blaming oil thieving gangs when the  firm’s neglected, decaying infrastructure may be the cause.      “Shell’s claims about oil spills cannot be trusted,” said the head of  global issues at Amnesty, Audrey Gaughran.     The spill investigation process was inherently flawed, according to Amnesty  and the Centre for Environment, Human Rights and Development (CEHRD), a local  group which co-authored the report.      Probes to determine the extent of Shell’s liability for a spill are funded  and largely controlled by the company itself, the organisations said.      “Shell looks to blame others based on investigation reports that, in some  cases, amount to nothing more than dodgy dossiers,” said Styvn Obodoekwe,  director of programmes at CEHRD.     The federal body charged with carrying out independent technical analysis  of spills lacks the resources and expertise to credibly do its work, the rights  groups charged.         Officials from this body, the National Oil Spill Detection and Response  Agency (NOSDRA), did not answer calls seeking comment.      Pipeline sabotage is a massive problem in the delta and plays a central  role in the continuing environmental devastation in the region, independent  analysts have said.      Gangs break into the pipelines and syphon off crude for sale on the  lucrative black market, a key element in the oil theft trade which costs  Nigeria at least $6 billion (4.4 billion euros) in lost revenue each year,  according to official estimates.      This sabotage inevitably causes spills which remain “the main cause of oil  pollution in the delta today”, said Precious Okolobo, spokesman for Shell’s  Nigeria subsidiary, the Shell Petroleum Development Company of Nigeria (SPDC).      “SPDC regrets that some NGOs continue to take a campaigning approach rather  than focusing on on-the-ground solutions,” he added, rejecting Amnesty’s “unsubstantiated assertions”.       Relying on analysis from the US pipeline specialist Accufacts, secretly  filmed video of an oil spill investigation and other material, Amnesty and  CEHRD said official conclusions about the cause of spills can be “very  subjective, misleading and downright false”.       “Corrosion, poor maintenance of oil infrastructure and equipment failure,”  are a main source of the problem, along with criminal acts, the report said.      Both Shell and Agip “should be held legally liable failure to... protect  their systems”, the groups argued.      Aside from suffering from decades of oil pollution, Niger Delta residents  have largely not benefitted from more than six decades of crude production,  with much of the energy revenue stolen through wide-scale corruption. --AFP Read more: Shell 'manipulates Nigeria oil spills probes': Amnesty - Latest - New Straits Times http://www.nst.com.my/latest/shell-manipulates-nigeria-oil-spills-probes-amnesty