$6.8 Billion Fraud: Reps To Probe NNPC, Swiss Oil Deals
The House of Representatives has mandated a joint committee to investigate the alleged involvement of the Nigerian National Petroleum Corporation (NNPC) with Swiss oil dealers in deals that cost the federal government billions of dollars.
This resolution followed a motion by Abiodun Abudu-Balogun, who drew attention to a Berne Declaration report, a Swiss non-governmental advocacy organisation, released last week, detailing how the NNPC and the Swiss oil trading companies allegedly duped the country of over $6.8 billion.
Abudu-Balogun expressed worry that “In spite of all these actions of the National Assembly, there are still allegations of corruption in the Nigerian oil industry. The new report by Swiss non-governmental advocacy organisation, the Berne Declaration, detailing how the NNPC, in connivance with major Swiss oil trading companies, is draining Nigeria of billions of dollars of revenue through the sale of crude oil below the market value.
“The Berne Declaration has described the Nigerian oil scam as the greatest fraud Africa has ever known, and the report specifically listed Vitol and Transfigura Commodity Trading Firms (NNPC partners) in the shady deals, saying Nigeria loses billions of dollars as large volumes of oil are exported far below the market prices.
“Exclusive and (non transparent) partnerships of Vitol and Transfigura with NNPC gave them over 36 percent of the market share, with NNPC selling its crude at discounts. Why is Nigeria the only major oil producing nation that sells 100 per cent of its crude to private traders rather than market, it benefits from the resulting added value with the greatest number of beneficiaries of export allocations.
“(We are) worried by the sharp practices and deals in NNPC crude oil allocations to local refineries, which are not utilised, but sold fraudulently at knock down prices to Geneva-based companies through letter box companies by SWAP arrangements,” he said.
Titled “Swiss Traders Opaque Deals in Nigeria”, the report catalogued the “letter box companies” modus operandi employed by the alleged partners to defraud the country of over $6.8 billion, noting that such a fraud is the greatest in Africa.
The report said: “No less than 6.8 billion dollars of unjustifiable subsidies were paid out in 2009 and 2011 – that is the equivalent of nearly four times the Nigerian health budget for 2013.”
It said, “the all-powerful national company, the NNPC, categorised as the most opaque national oil company on the planet, itself is evidence of Nigeria’s ‘resource curse’ at work.”
The first and third largest Swiss enterprise in terms of turnover in 2012, Vitol and Trafigura, outclassed their competitors through opaque partnerships with the NNPC to defraud Nigeria, it said.
It notes that more than half of Nigerian crude oil exports pass through Switzerland and that Nigeria is the only major producing company that sells 100 per cent of its crude oil to private traders, rather than marketing it itself and benefiting from the resulting added value.
It further gave instances to show how oil sales between the NNPC and the Swiss partners were carried out at prices lower than the market rates, adding that seven of the Nigerian ‘importers’ involved in this fraud have a subsidiary in Switzerland.
The report indicts the NNPC thus: “Swiss traders do not acquire this crude oil based on public and transparent calls for tender… each year the NNPC grants the allocations of exports under obscure conditions and on the basis of criteria that are unknown outside the restricted circle of the decision makers.”
The Berne Declaration said the profit generated by NNPC and its Swiss partners escape state coffers, adding that any profits that are collected in Nigeria for the state don’t get through.
The lawmaker said in view of the damaging allegations contained there-in, the House needs to investigate the report.
The committee is expected to report back to the house within four weeks.
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