REVEALED: Nigeria’s biggest oil fraudsters; the worst subsidy scam ever

Published:25 Jul, 2012

Nigeria has never seen anything like it. This story explains how unscrupulous marketers fleeced the nation of N382 billion without supplying a drop of petrol

The scale is huge; the method daring and unprecedented. The plot seems like one in a James Bond movie as unscrupulous Nigerian businessmen scripted an unbelievable heist.

It was a grand deceit, never seen in Nigeria’s history. To benefit from the 2011 fuel subsidy largesse, the oil companies “manufactured” fictional oil ships (vessels)  they claimed traversed seas and oceans of the world carrying imaginary petrol, with Nigeria the final destination of the product, the Technical Committee set up by the Federal Government discovered.
For supplying this phantom product to Nigeria, the seven companies involved pocketed a princely N13 billion naira from the 2011 fuel subsidy payments, the committee’s report, secured by PREMIUM TIMES, stated.
Some other companies, not wanting to create fictional vessels, decided to space- travel existing ones; such that real vessels, which were definitely in countries like China and UAE, discharged petrol into storage depots in Nigeria at the exact time they were in those other countries.  The 11 companies involved in this category of fraud pocketed N21 billion from the 2011 subsidy payments, the report stated.
Sources in the oil industry reveal that these companies were able to perpetuate this crime with the help of field officers of the Petroleum Products Pricing and Regulatory agency (PPPRA) and the Department of Petroleum Resources (DPR), men of the Nigerian Navy, Nigeria Custom officers, banks and others involved in the various stages of fuel importation.
These and other fraudulent acts by beneficiaries of the fuel subsidy led the committee to conclude that “all the affected oil marketing and trading companies found to have violated various aspects of the PSF guidelines … should refund the subsidy payments for a total sum of N422, 542,937,668.59 (four hundred and twenty two billion, five hundred and forty two million, nine hundred and thirty seven thousand, six hundred and sixty eight naira, fifty-nine kobo).”
To get the details of fraudulent transactions involving ships, “a review team (set up by the committee) made up of experienced bank auditors,” used methods such as tracking “the location of mother vessels with the Lloyds List intelligence.”
The list is the internationally reliable method of determining the location of any vessel at any point in time.
The committee’s report has since been reviewed by another Presidential panel headed by the same person. However, most of the findings and recommendations remain, with the indicted firms now expected to refund N382 billion
The fictional ships
On Wednesday, October 19, 2011, a vessel, MT Zhen Star, purportedly arrived in Nigerian waters. The 58,000 metric tonnes of petrol contained in the vessel was owned by two companies: Masters Energy Oil and Gas Limited; and Caades Oil and Gas Limited.
In the presence of PPPRA officials, DPR officers, naval officers, customs, and so on, Masters discharged 28,000 metric tonnes from the vessel, while Caades discharged 10, 000 metric tonnes of petrol. While the former collected N2.9 billion as subsidy for this import, the latter got N1 billion.
The irony however is that the vessel, MT Zhen Star, does not exist and no fuel was imported. The two companies, with the complicity of the stated public officials, successfully duped Nigeria of N3.9 billion.
While commenting on this fraudulent transaction, the technical committee, headed by Aigboje Aig-Imoukhuede, stated that “the subsidy on this transaction must have been wrongly paid since MT Zhen which was supposedly used could neither be located on the Lloyds List intelligence nor anywhere on the West African Coast.”
Other companies that created such fictional ships to get their share of the subsidy largesse are Matrix Energy Limited, Top Oil and Gas, Ocean Energy Trading and Services Ltd, Down Stream Energy Source Limited, and Ceoti Limited ( partly owned by controversial businessman, Jide Omokore).
However, unlike the House of Representatives, which clearly called for the prosecution of fraudulent beneficiaries of the petrol subsidy, Mr. Aig-Imoukhuede’s committee was lenient, even in its choice of words. It only recommended that such illegal payments be recovered.
Unable to create fictional vessels, some companies space-travelled real ones.
The ship travel abracadabra
When Brilla Energy Limited submitted its subsidy claims for the last quarter of 2011, it claimed to have imported 13,000 metric tonnes of petrol. The oil was brought into Nigeria by the vessel, MT Delphina Ex MT Overseas Limar, which arrived at offshore Cotonou, Benin republic.
On October 1, a vessel, MT Dani, was used to transport the petrol, from the original vessel, into a storage depot in Nigeria, a delivery which was witnessed by the appropriate officials.
From this transaction alone, Brilla got a subsidy payment of N1 billion.
However, contrary to Brilla’s claim, the vessel, MT Delphina Ex MT Overseas Limar, was in China on October 1.
“There is no basis for the subsidy payment since the mother vessel (MT Delphina Ex MT Overseas Limar) was nowhere near the West African coast at the time of purported discharge of PMS,” the committee established.
Apart from Brilla, 10 other companies were involved in such deceit with Nigeria paying N21 billion for the phantom products. Some of the companies involved are Capital Oil Plc, Obat Oil and Gas, Matrix Energy, and A-Z Petroleum Limited.
Again, the committee failed to recommend any prosecution of culpable companies.  Failure to prove the location of the importing vessels, the companies “should refund all monies received in full,” while the role of PPPRA in the deals should be investigated.
Raising the Dead
On December 20, 2011, Nasaman Oil Services Limited claimed it discharged petrol from a vessel, MT Hellenic Blue. The vessel had berthed on the waters of the Republic of Benin, offshore Cotonou, the oil company claimed.
Contrary to the company’s claim, MT Hellenic blue had been dead and unused since February 17, 2010. Four years before its death, the ship had its name changed to MT Nireus.
It was this dead and defunct vessel that Nasaman claimed delivered its petrol.  Nasaman and five other companies, with similar ships miraculously raised from the dead, received N8 billion as subsidy from such transactions
Several months earlier, Nasaman made N750 million from the subsidy fund, when it claimed it received 7,500 metric tonnes of petrol from a vessel, MT Overseas Limar, off the Cotonou coast, on January 27, 2011. The ship was in the US Gulf on that day.
Bank disclaimer
Another method, discovered by the committee, used by oil companies to fleece the government include falsification of bank documents presented to the PPPRA.
PREMIUM TIMES had reported exclusively on how fake bank documents (Letters of credit, Form M, etc) were allegedly submitted to the PPPRA , by petrol importers in collaboration with bank officials, and how the agency wrote to the Central Bank of Nigeria for authentication of the documents.
The CBN refused to either verify the documents or respond to the PPPRA’s letter.
Banks disowned thirteen transactions involving eight companies. These transactions cost the Federal Government N21bn in subsidy payment.
“The disclaimer of these transactions by the banks shows that they did not exist in the first place and consequently, there was no basis for the payment of subsidy claims,” the committee stated.
Top of the companies involved in this falsification is A-Z Petroleum, which got N2.3 billion from four of such deals.   Oando Plc, which prides itself as ‘sub-Saharan Africa’s leading integrated energy group’ also had one transaction of N1.3bn, disclaimed by the alleged sponsoring bank, although the company has since refuted the finding.
Again, despite the criminality involved, all the committee recommended was a refund of the subsidy collected from such payment.
Ignore the banks
Despite the alleged role of banks and bank officials in the fuel subsidy scam, and as reported exclusively by PREMIUM TIMES, the committee did not investigate the culpability of banks in the scam.
Several of its findings indicate that the banks had knowledge of some of the fraudulent transactions going on.
In one of its findings, the committee stated that “112 transactions did not have evidence of sale proceeds based on banks’ available records at the date of the verification.” The subsidy paid for these transactions was N157 billion.
In other words, the banks received the N157 billion on behalf of the companies even when there was no evidence before it that the companies sold any fuel.  None of the 19 banks, which financed the 2011 fuel imports, as reported earlier by PREMIUM TIMES, complained to the CBN or the PPPRA about such transaction.
The committee had three senior bankers as members, with Mr. Aig-Imoukhuede, the Group Managing Director of Access bank, as head.
“It is like witnessing a crime. If you don’t report it appropriately, knowing that you will benefit from, then you are definitely an accomplice,” a banker involved in oil and gas banking stated.
We can’t recover everything
Although the Economic and Financial Crimes Commission has already commenced prosecution of some of the indicted companies, Mr. Aig-Imoukhuede has advised Nigerians not to expect all the N382 billion to be recovered.

“It will be naïve that we can recover the whole amount,” he said. “The most important thing is that the State diligently pursues recovery to its logical conclusion.

 

** Download the Full technical committee report on subsidy part1

** Download the Full technical committee report on subsidy part2

 PremiumTimesNG
  • Aduke

    Hmnn. Pure evil. How can a group of people just decide to rob a nation. Later they will be the same set of people to sit at the front rows in church.

Related Posts

Recent Posts

Nigerians Are Suffering, Fayose Tells Buhari

Governor Ayodele Fayose of Ekiti State has called on President Muhammadu Buhari to listen to the cries of Nigerians and stop seeing those with different opinion from his as threats to his government. The governor said that, “there is hunger in the land, Nigerians are hungry, they are suffering and the president should rather listen to those who are more knowledgeable than him in terms of management of the country’s economy instead of seeing them as...

Shiites Warn Of Dire Consequences Of Continuous Detention Of El-Zakzaky

The Islamic Movement in Nigeria ( IMN), also known as Shiites, has warned of the consequences of the continued detention of their leader, Sheikh Ibraheem El-Zakzaky. El-Zakzaky and his wife have been in detention since December last year following a clash between the Shiites and the Nigerian army in Zaria, Kaduna state. The judicial commission of inquiry set...

PDP Demands Buhari’s Resignation

The Peoples Democratic Party on Wednesday railed against President Muhammadu Buhari, accusing his administration of incompetence, and saying he should step down after the nation slipped into economic recession. “We join all well meaning Nigerians to call on Mr. Buhari to resign if he is unable to reverse the disastrous economic decline he has brought on Nigerians,” the party said hours after figures released by the National Bureau of Statistics confirmed that Nigeria had slipped into...

Why Brazil’s Rousseff Was Impeached

Brazil’s Dilma Rousseff was stripped of the country’s presidency Wednesday in a Senate impeachment vote ending 13 years of leftist rule in Latin America’s biggest economy. Rousseff, 68, was convicted by 61 of the 81 senators of illegally manipulating the national budget. The vote, passing the needed two-thirds majority, meant she was immediately removed from office. Cheers — and cries of disappointment — erupted in the blue-carpeted, circular Senate chamber as the verdict flashed up...

August Allocation: Kwara LGs Receive N180m Augmentation

The 16 local government councils in Kwara State are to receive an augmentation of N180, 554, 384 from the Joint Allocation Accounts Committee (JAAC) to enable them meet salary and pension obligations for the month of August. The Commissioner for Finance, Alhaji Demola Banu, who disclosed this after the JAAC meeting on Tuesday, said that LG pensioners got N59.4million in addition to the N109, 255, 995 that was appropriated. He added that the LG workers will share the remaining N121, 154,...

FG To Create 758,500 Jobs For Youths Through Agriculture

The Federal Government says it will create jobs for over 758,500 youths across the country under the Youth Employment in Agriculture Programme (YEAP) to boost agricultural productivity.   Karima Babangida, the National Programme Coordinator, said this on Tuesday in Katsina during the inauguration of Katsina State YEAP Steering Committee.   Represented by Suleiman Aliyu, Babangida said that the three-year programme was supported by the Food and Agriculture Organisation of the United Nations (FAO).   Babangida said that 740,000 jobs would be “market-oriented” for young agricultural...

Trump Calls Democrats ‘Party Of Slavery’ In Minority Outreach Effort

Republican Donald Trump on Tuesday night called Democrats the “party of slavery” and praised what he called the millions of African Americans with career success, as he tries to revamp his outreach to minority voters.   Trump has made much-maligned efforts to appeal to black and Hispanic voters, groups that generally support Democrats and are expected to vote heavily for Hillary Clinton in the Nov. 8 election.   “The Republican Party is the party of Abraham Lincoln,” Trump said at a rally in...

Mariah Carey’s HIV-Positive Sister Arrested On Prostitution Charges

The sister of pop star Mariah Carey was arrested on prostitution charges in upstate New York. The Daily Freeman of Kingston reported that 55-year-old Alison Carey was arrested in Saugerties on Friday as a result of an ongoing undercover investigation at a hotel there. Local police said Carey solicited money in exchange for sex from an undercover police officer posing as a possible client.   Saugerties Police Chief Joseph Sinagra told the newspaper that Alison Carey identified herself as the sister...

Malaysia’s Bilateral Trade With Nigeria Hits $766.8m In 2015 — Envoy

Malaysian High Commissioner to Nigeria, Datuk Lim Juay Jin, said his country’s bilateral trade with Nigeria in 2015 stood at 766.8 million dollars. Datuk Lim, who made the disclosure in an interview with the News Agency of Nigeria (NAN) in Abuja on Wednesday said that trade value was a 14.6 per cent increase from 2014. “The total trade between the two countries was valued at 766.8 million U.S. dollars in the year of 2015 and...

CBN Re-instates Banks Banned From Foreign Exchange Market

The Central Bank of Nigeria (CBN) has re-instated all the banks that were banned from the foreign exchange market, the Director, Banking Supervision, Mrs Tokunbo Martins, has said. She said this on Wednesday in Abuja at a media briefing, stating that the decision was reached after a series of meetings with the body of bank Chief Executive Officers (CEOs) and the Chartered Institute of Bankers of Nigeria (CIBN). “Well, we have had engagements with the...

FEC Approves 3 Year External Borrowing Plan

The Federal Executive Council (FEC) on Wednesday approved a three-year external borrowing plan. Finance Minister Kemi Adeosun told State House reporters after the FEC meeting chaired by President Muhammadu Buhari that the borrowing plan would run from 2016 to 2019. The minister said the plan would be transmitted to the National Assembly for approval. She listed the benefiting sectors as power, solid minerals and agriculture. She said $150 million would go into power sector...

Five Day Old Twins Among 6,500 Migrants Rescued From Mediterranean Sea

Five-day-old twins were among 6,500 refugees and migrants rescued yesterday off the Libyan coast while attempting to reach Italy via the Mediterranean Sea. The twins were traveling with their mother before they were rescued by Italian coastguard and airlifted to an Italian hospital, according to Médecins Sans Frontières’ (MSF) also known as Doctors without borders, which took part in the operations. MSF ship Dignity 1 and the Spanish humanitarian group Proactiva Open Arms rescued the refugees and migrants believed...

Boko Haram Ready To Announce Chibok Girls’ Whereabouts In 24hours– Aisha Wakil

One of the individuals who is alleged to have strong connection and vital information on Boko Haram insurgency, Aisha Alkali Wakil, has on Wednesday, revealed that the Boko Haram terrorist group has accepted the peace move and now ready to make announcement on the whereabouts of the abducted chikbok girls in the next 24 hours. Wakil was one of the individuals earlier declared wanted by the Nigerian Army for concealing information on the whereabouts of the...

Buhari Signs N241.5b FCT Budget

President Muhammadu Buhari has signed the 2016 Federal Capital Territory (FCT) Abuja Appropriation Act, the Senior Special Assistant to the President on National Assembly Matters, Senator Ita Enang, has said. Enang said President Buhari assented to N241.5 billion 2016 FCT budget as passed by the National Assembly. A statement issued by the presidential aide did not however say when the fiscal document was signed. Enang said “The legal implantation of the budget, therefore comes...

Presidency List Gains Of Buhari’s Participation At TICAD

The presidency has listed the gains of President Muhammadu Buhari’s participation in the just concluded Tokyo International Conference on African Development (TICAD VI) to include the billions of dollar to be injected into African economies by Japan. A statement issued in Abuja yesterday by the Senior Special Assistant on Media and Publicity to the president, Garba Shehu, said the Japanese Government had pledged to expend 40 billion dollars to boost the African economies in the next four years. He gave the...

Rivers: Wike’s Deputy Defends Amnesty For Criminals

The Rivers Government says it has no regrets initiating the ongoing amnesty programme for repentant cultists and criminals in the state. The Deputy Governor, Dr Ipalibo Banigo, told newsmen in Port Harcourt on Wednesday that the programme was in line with the peace initiative of the state government. The News Agency of Nigeria (NAN) reports that the amnesty programme came under attack recently when some analysts described it as a measure to shield supporters of the state government. The analysts asked the...

Economy Will Be Better In Remaining Part Of 2016- FG

The Presidency has said that the nation’s economic ?outlook remains bright notwithstanding the drop in Nigeria’s Gross Domestic Product (GDP). In a statement issued in Abuja on Tuesday by the Senior Special Assistant to the Vice President on Media and Publicity, Mr Laolu Akande, the Federal Government said the remaining part of the year would be better. The National Bureau of Statistics on Wednesday released...

Man Abducts Teenage Girl, Turns Her To Sex Slave In Lagos

A 55-year-old man, Yekini Ogunjobi, who allegedly abducted a teenage girl for several days and assaulted her sexually, was on Wednesday in Lagos released on a N100, 000 bail. Police have pressed abduction and sexual assault charges at an Ikeja Chief Magistrates’ Court against the security man, who lives at 12, Esuola St., Oko-Oba, Agege, a suburb of Lagos.Prosecutor Rafael Donny told the court that the offences were committed between July 25 and July 28 at...

EU Split One Year After Merkel Migrant Offer

One year since Germany controversially opened its arms to Syrians fleeing war, the EU has tightened the borders of “Fortress Europe” but remains deeply divided over how to share the refugee burden. Angela Merkel justified her decision at the time by saying that the biggest migrant crisis since World War II “did not reflect well on Europe”, yet other countries furiously accused her of opening the floodgates. Since last year when one million migrants entered...

Facebook To Embrace More Nigerian Languages- Zuckerberg

The founder of Facebook, Mark Zuckerberg, has pledged to use more Nigerian languages in offering services on Facebook. Zuckerberg, who is currently on a business visit to Nigeria, made the promise at a meeting with software developers and ICT entrepreneurs on Wednesday in Lagos. He said the social media platform currently allows the use of Hausa language on Facebook. “I am glad we support Hausa and we are planning on supporting a lot more...

Nigeria Officially In Recession, GDP Growth Drops To -2.06%

The National Bureau of Statistics on Wednesday released the much-awaited Gross Domestic Product figures for the second quarter of 2016 with the GDP growth rate sliding further from -0.36 per cent in the first quarter to -2.06 per cent year-on-year. The negative growth rate recorded in the second quarter of this year is a confirmation of the predictions by the Federal Government and economists that the country was heading into recession. A recession is defined...