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NNPC, Swiss traders defrauding Nigeria – Report

By BusinessNews Staff on November 8, 2013

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.

[Punch]

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