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

Revealed: How Dogara, Lasun, Others Stole Millions From House Budget – Jibrin

  The former chairman of committee on appropriation, Abdulmimin Jibrin, today continued his series of revelations on the fraud and corruption perpetuated by Yakubu Dogara. In a statement made available to the press, the lawmaker alleged that Dogara frequently solicits for inappropriate favours from agencies and multinational companies.   According to Jibrin, Speaker Dogara forced an agency to grant loans and...

NASS Should Expect 2017 Budget By October, Says Udo-Udoma

  The Minister of Budget and National Planning, Mr Udoma Udo-Udoma said the 2017-2019 Medium Term Expenditure Framework would be ready and submitted to the National Assembly for consideration by October Udo-Udoma said this in Abuja on Monday at a Stakeholders Consultative Forum with Civil Society Groups and organised private sector on the 2017-2019 Medium Term Expenditure Framework. He also said the Federal Government had expended N2.1...

Buhari Drops Shasore, Picks MIT Professor, Akinwande For NERC Chair.

  President Muhammadu Buhari has nominated , a professor in the electrical engineering and computer science department of the Massachusetts Institute of Technology (MIT), as the executive chairman of the Nigerian Electricity Regulatory Commission (NERC).   Akinwande (pictured) will succeed Sam Amadi whose tenure ended in 2015. Babatunde Fashola, minister of works, power and housing, had preferred Olasupo Shasore, who was once attorney-general under him as governor of Lagos. Shasore...

Turkey: 42 Journalists Under Probe Over Failed Coup

Dozens of journalists are under investigation for possible links to the attempted July 15 coup in Turkey report said on Monday. Among the 42 reporters is Nazli Ilicak, a prominent critic of the current regime. It is not clear if any of those being investigated have been detained. All the journalists being probed have links to media owned by Fethullah Gulen, a U.S.-based...

Olympics: FINA Bans Seven Russian Swimmers From Rio

Swimming’s world governing body on Monday banned seven Russians from competing at next month’s Rio Olympics in the fall-out from Russia’s state-run doping. FINA was the first sport to impose bans in light of Sunday’s IOC decision, which ruled against a blanket ban on all Russian competitors in Rio, instead leaving it up to each sports federation to decide whether to accept Russians. Vladimir Morozov and Nikita Lobintsev, both 4x100m freestyle bronze-medal winners with the...

Lawyer Urges Buhari To Grant Amnesty To Boko Haram Members

A Lagos-based human rights lawyer, Ebun-Olu Adegboruwa, has urged President Muhammadu Buhari to grant amnesty to Boko Haram members in the wake of the defeat being inflicted on the insurgents by the Nigerian military. In a statement issued Sunday, Mr. Adegboruwa said one year after Mr. Buhari declared war on the group, it had become clear that they may not be totally defeated immediately. “It would seem, from all indications, that it will require a...

British PM Rules Out Return Of Hard Border In North Ireland

British Prime Minister Theresa May on Monday promised a “practical solution” on the Irish border after Britain leaves the European Union in a bid to allay fears about a return to tough checks. She spoke on her first visit since taking office to Northern Ireland, which has what would become the United Kingdom’s only border with the EU after Brexit. “Nobody wants a return to the borders of the past,” May said in Belfast, where...

Update: Ansbach Bomber ‘Pledged Allegiance To ISIL’

A Syrian man who detonated explosives outside a music festival in the German city of Ansbach, killing only himself and wounding at least 15 people, had pledged allegiance to the Islamic State of Syria and the Levant group before the attack, according to a senior government official.   The 27-year-old suspect, who was a refugee, blew himself up late on Sunday after being denied entry to the event.   Joachim Herrmann, the...

Bear With Us, Saraki Pleads With Nigerians Over Recession

The President of the Senate, Dr Bukola Saraki has lamented the current economic hardship being experienced by Nigerians, assuring that the Senate will collaborate with the presidency to find a quick and lasting solution to the economic crisis even as he pleaded with Nigerians to bear with the government. Saraki also identified dialogue as a solution to the vandalization of oil and gas installations by Niger Delta militants. He emphasised the need for government to engage...

Military Court Sentences Former Top Chinese General Guo Boxiong to Life in Prison for Taking Bribes

A Chinese military court on Monday sentenced a former top general to life in prison for taking bribes, concluding China's highest-level prosecution of a military figure in decades. Guo Boxiong was also stripped of his rank and forced to hand over all his assets to the Chinese government, the official Xinhua News Agency reported. Guo, 74, is a former vice chairman of the Central Military Commission,...

FRSC Creates Data Bank For Road Traffic Accident– Report

The Federal Road Safety Corps (FRSC) says the need to have a unified road accident data in the country informed the creation of the “National Crash Report Information System (NACRIS)’’. According to the corps 2015 annual report, the NACRIS is a committee responsible for the collation and harmonisation of road traffic accident data from all agencies generating data on accident. The report said the FRSC and Ministry of Health serve as Secretariat of the NACRIS...

FG Scraps Plan To Build N3bn Film Village In Kano Following Public Outcry

  The federal government has cancelled its plan to build a massive film village in Kano state.   According to BBC, the government shelved the plan as a result of social media outcry and opposition from Muslim clerics. More than N3bn was reportedly budgeted for the project as part of the government’s efforts to improve the Hausa language film industry known as Kannywood.   The government argued the village would create thousands of...

Syrian Migrant Killed By Own Bomb In Germany

A Syrian migrant set off an explosive device near an open-air music festival in southern Germany that killed himself and wounded a dozen others, authorities said Monday, the third attack to hit the region in a week. The 27-year-old had spent time in a psychiatric facility, but the authorities said an Islamist motive for the attack on Sunday night in the city of Ansbach appeared “likely”. Germany is reeling after nine people died in a...

Brexit A Risk To Global Growth – World Leaders

Britain’s vote to leave the European Union heightens risks for the world economy, finance chiefs from the G20 group of leading countries said on Sunday, vowing to use “all policy tools” to boost growth. The outcome of June’s referendum “adds to the uncertainty in the global economy”, they said in a communique after a meeting of central bankers and ministers in the Chinese city of Chengdu.

Buhari, Obasanjo Meet Behind Closed Doors Again

President Muhammadu Buhari is currently meeting behind closed doors with former President Olusegun Obasanjo. Obasanjo, decked in a blue agbada and cap to match, arrived the Presidential Villa, Abuja for the meeting at about 12.54pm. He was driven to the forecourt of the President’s office in a black Sports Utility Vehicle marked ABJ425 PY. The former President was accompanied by one of his daughters. Details later.

Jigawa LGC Targets 13,104 Children For Polio Immunisation

The Dutse Local Government Council of Jigawa is targeting no fewer than 13,104 children to be immunised against polio virus in the ongoing polio immunisation in the area. The Health Educator of the council, Alhaji Sani Yusif, disclosed this in an interview with the News Agency of Nigeria (NAN) in Dutse on Sunday. Yusif said the council had received enough doses of Oral Polio Vaccines (OPVs) to conduct the exercise. He explained that the...

MEND Confirms Talks With FG

The Movement for the Emancipation of the Niger Delta (MEND) has confirmed there are on-going peace talks between its representatives and the Federal Government. MEND had set up a team of negotiators it called Aaron team 2 led by former minister Odein Ajumogbobia and other prominent Niger Delta leaders to discuss with the Federal Government to find a lasting solution to the Niger Delta crisis. President Muhammadu Buhari had first disclosed the Federal Government participation...

Police Arrest Father Who Chained Son For Weeks

Pastor Francis Taiwo, who chained his nine-year-old boy for several weeks to a wood in the premises of a church he heads, has been arrested by the police. The news had earlier broken of the rescue of the nine-year-old by an official of the Nigeria Security and Civil Defence Corps (NSCDC from the Ajibawo area of Ado-Odo/Ota church where he was locked down. The father had reportedly chained him inside the premises of the...

Wizkid Shares New Pics Of His Lover, Justine Skye

Photos show Wizkid and his bae Justine Skye having a swell time at the One Africa Music Fest. All shared by Wizkid on his IG page.             Wizkid with Alicia...

At Least Two Dead In Florida Nightclub Shooting

At least two people were killed and 14 others wounded in a shooting early Monday at a Florida nightclub, US broadcaster NBC reported. Police confirmed that the incident occurred at Club Blu in Fort Myers, which US media said was holding a party for teenagers. A “person of interest” has been detained at another location, the station said. The Fort Myers Police Department reported that while two individuals were fatally shot, “at least 14-16”...

Breaking: Turkish Airlines Fire 250 Personnel Over Failed Coup

  Turkey's state-run Turkish Airlines fired more than 100 employees, including management and cabin crew, as part of a purge at state institutions to root out supporters of an abortive coup, Turkish media reported on Monday.   The dismissals at the national carrier occurred late on Sunday after it was determined the employees were linked to a religious movement President Tayyip Erdogan has said attempted to overthrow the government on...