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

EFCC rearraigns Dasuki, five others for diversion of funds.

The Economic and Financial Crimes Commission on Tuesday re-arraigned, retired Col. Sambo Dasuki, a former National Security Adviser (NSA) and five others, for alleged diversion, and criminal breach of trust at an FCT High Court. The others were Bashir Yuguda, Shuaibu Salisu, a former Director of Finance, Office of the NSA, Dalhatu Investment Ltd., Sagir Attahiru and Attahiru Bafarawa, a former governor of Sokoto State. They were re-arraigned on a 22-count charge before Justice Hussein Baba-Yusuf, and they pleaded not guilty...

FG to investigate why production of Big Brother Nigeria is in South Africa.

The federal government has directed the National Broadcasting Commission (NBC) to investigate the circumstances surrounding the reported shooting in South Africa of the ongoing Big Brother Nigeria reality show.   Minister of Information and Culture, Alhaji Lai Mohammed, has asked the NBC to determine whether Multi-Choice has breached the Nigerian Broadcasting Code in any way, by shooting the show in South Africa, as well as the issue of possible deceit, since the viewing public was never told that the event would...

Bill Gates could become the world’s first trillionaire

In our lifetimes, we could see the first trillionaire. And, most likely, that first trillionaire would be Microsoft (NASDAQ: MSFT) co-founder Bill Gates . That's according to research by Oxfam, an international network of organizations collectively working to alleviate global poverty. Its recently published report finds that eight billionaires from around the globe have as much money as the 3.6 billion people who make up the...

Yahya Jammeh will be ‘allowed to keep’ luxury car collection – Barrow

Gambian ex-president Yahya Jammeh will be allowed to keep his collection of 13 luxury cars and fly them out to his exiled home in Equatorial Guinea, a spokesman for new president Adama Barrow said Tuesday.Barrow’s spokesman confirmed to AFP an agreement had been struck to facilitate Jammeh’s exit on Saturday in order to end a weeks-long impasse caused by the ex-leader’s refusal to recognise Barrow’s election victory.   “What is very clear is that arrangements were made and the...

Death toll in Italy’s avalanche disaster climbs to 14

The death toll in Italy’s avalanche disaster rose to 14 Tuesday as rescuers extracted the bodies of two women from a devastated hotel and continued their search for 15 people still missing, local authorities said. Six other bodies were found between Monday afternoon and the early hours of Tuesday, the sixth day of what increasingly appears to be a forlorn search through the snow-covered wreckage of the Hotel Rigopiano. Eleven staff and guests survived the disaster, two men who were outside...

Lagos records 115 tanker accidents in 2016 – Official

The Lagos State Fire Service recorded 115 petroleum tanker accidents in 2016, Nwanovim George, the former Chief Fire Officer in the state has disclosed. Mr. George made the disclosure on Tuesday in Lagos at the ongoing national training for tanker drivers organised by Petroleum Tanker Drivers, PTD, branch of NUPENG. Mr. George, who is currently the Personal Assistant to the Director, Lagos State Fire Service on Training Matters, said the service has already recorded six tanker in January 2017. He urged tanker...

Premium Times: How SSS lied against EFCC boss, Magu.

On Thursday, the Nigerian Senate declined to confirm the appointment of Ibrahim Magu as substantive chair of the country’s premier anti-graft agency, the Economic and Financial Crimes Commission (EFCC). The upper legislative chamber claimed it could not approve the presidency’s request to confirm Mr. Magu based on a security report forwarded to it by the State Security Service. “The Senate wishes to inform the public that based on available security report, the Senate cannot proceed with the confirmation of Ibrahim Magu...

British PM must get parliament approval to trigger Brexit – Supreme Court

The UK Supreme Court on Tuesday ruled that Prime Minister Theresa May must get parliament’s approval before she begins Britain’s formal exit from the European Union, EU.   The UK’s highest judicial body dismissed the government’s argument that Ms. May could simply use executive powers known as “royal prerogative” to invoke Article 50 of the EU’s Lisbon Treaty and begin two years of divorce talks.   However, the court rejected arguments that the UK’s devolved assemblies in Northern Ireland, Scotland and Wales should...

NYSC orientation back in Adamawa after 3-year break

The National Youth Service Corps (NYSC) has resumed orientation of corp members in Adamawa state, after a three-year suspension caused by the Boko Haram insurgency.   The last orientation was held in Adamawa in March 2013.   Speaking to Tuesday in Yola, Mohammed Abubakar, state coordinator of NYSC, said 2, 500 corps members were deployed to the state.   “Registration of corp members started this Tuesday morning by 7 am and you can see they are trooping in; we are expecting 2, 500 corp members,”...

“Quit whining, no one owes you anything”, Fayemi tell Nigerian graduates.

Kayode Fayemi, minister of solid minerals development, has admonished Nigerian graduates to quit complaining and stop waiting for the government to solve their problems. He said this on Monday while delivering the 49th convocation lecture of the University of Lagos (UNILAG), Akoka. Fayemi urged the undergraduates to work hard to achieve their dreams and stop waiting for handouts. “Quit whining, no one owes you anything. The earlier we realise that no one owes us anything, the better for us and the more...

President Buhari rejects senate’s recommendation for SGF’s sacking

President Muhammadu Buhari has rejected the recommendation of the senate for the sack of Babachir Lawal as secretary to the government of the federation (SGF).   Buhari said his decision was informed by the failure of the senate ad hoc committee on humanitarian crisis in the northeast to give Lawal a fair hearing. ? He conveyed his decision in a letter read by Senate President Bukola Saraki on Tuesday.   In December 2016, the senate recommended the sack of Lawal for alleged corruption.   In its report,...

JUST IN: Again, CBN MPC retains interest rate at record high.

For the second time in four months, the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) decided on Tuesday to hold benchmark interest rates at record high of 14 percent.   Godwin Emefiele, governor of the bank, announced that the committee also decided to keep cash reserve ratio (CRR) and liquidity ratio at 22.5 percent and 30 percent respectively.   He said the 10 members present at the meeting decided unanimously to keep the asymmetric corridor at +200 and +500 basis points.   The...

SON confisticates 1,000 bags of underweighed rice in Osogbo

The Standards Organisation of Nigeria (SON) in Osun says it confiscated more than 1,000 underweighed bags of rice in Osogbo markets on Monday. Mr Sunday Badewole, the SON State Coordinator, disclosed this in an interview with the News Agency of Nigeria (NAN) in Osogbo on Tuesday. Badewole said the agency made the confiscation during the enforcement operation where more than 1,000 bags of 5kg, 10kg and 25kg of bags of rice were confiscated. He said many of the rice sellers had...

Sambisa, The Forest of Learning – By Buki Ponle

By now, it is crystal clear to the Bring Back Our Girls (BBOG), or any other groups and individuals with similar perception, that government is not toying with the safety, lives and property of Nigerians. This is clearly evident in the latest search conducted for the missing Chibok school girls in the notorious forest called Sambisa. Few days ago, the Federal Government, represented by the Minister of Information and Culture and that of Defence, arranged to join the Nigerian troops...

No Parliamentary Approval, No Brexit- Supreme Court Rules

It was a massive victory for Gina Miller as the Supreme Court has given a ruling giving the Parliament the right to approve the start of Brexit. Addressing journalists outside court after the judgment, Gina Miller thanked her supporters for the steadfastness. “In Britain, we are lucky – we are fortunate to have the ability to voice legitimate concerns and views as part of a shared society” she said. “I have therefore been shocked at the levels of personal abuse that I...

Court Orders Release of Ex-NSA Dasuki Again

An Abuja High Court has again reaffirmed the bail granted former National Security Adviser, Sambo Dasuki, and five others in the arm deal trial involving $2.1 billion. Justice Baba Yusuf reaffirmed the bail on Mr. Dasuki on the ground that he was entitled to it and having been admitted to same since 2015 when the federal government brought criminal charges against him. Mr. Dasuki and five others were re-arraigned before Justice Baba Yusuf on the criminal charges that were transferred...

China urged to strengthen its nuclear arsenal to “force the US to respect it”

China must strengthen its nuclear arsenal to “force the US to respect it” in response to the stance of new US President Donald Trump, a leading newspaper said Tuesday. The comments in the Global Times, a popular paper known for its inflammatory rhetoric and hawkish views, came just days after President Xi Jinping called for the eventual global elimination of atomic weapons. In recent days, Chinese social media has carried pictures purporting to show an advanced intercontinental ballistic missile system deployed...

Yaya Toure explains why he’s not keen on playing in China

Yaya Toure says he wants to remain at Manchester City and is not interested in moving to China, amid reports of a big-money offer from the Chinese Super League.   Reports last week said Toure, 33, had rejected an approach from a Chinese club that would have seen him paid around £430,000 ($536,000, 499,000 euros) a week.   With his contract up at the end of the season, the former Ivory Coast midfielder faces an uncertain future, but he says he has no...

Kenya Conducts Mass Killings Of Dogs

Yesterday, January 23, 2017, Kenya Veterinary officers killed 82 dogs, 2 cats and a honey badger after rabies had been detected among some animals in Yatta, Machakos, LIB reports. According to the authorities, the animals were killed following the threat of rabies which is a deadly viral disease that could affect the local community.    

RCCG sends message to all senior pastors over MMM, other schemes

The Redeemed Christian Church of GOD (RCCG) has said that the doctrine of the mission does not support get rich quick schemes. This was made known in a memo addressed to pastors in charge of regions and provinces, by the General Secretary of the church, Pastor Johnson Odesola, on Wednesday, January 18, 2017. Pastor Odesola stated in the memo that some pastors and staff of the mission are getting themselves involved in all manner of money-making schemes, to the extent...

How Auchi Poly student duped white woman of $267,000 via dating

The Economic and Financial Crimes Commission, EFCC, Monday arraigned one Akintunde Vincent Abiodun begore at a Lagos State High court sitting in Ikeja for alleged love scam. The accused, a student of the Federal Polytechnic Auchi, Edo state was said to have defrauded his victim, D. Bonnici of $267,000 online by claiming to be Christopher Williams from the United Kingdom. According to the complainant, she met the 37-year-old man on a dating site on the internet and allegedly fell in love...