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

Mamman Ali and Mahmud Tukur
Mahmud Tukur middle, and Mamman Ali right were indicted for fuel subsidy fraud

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.

By Idris Akinbajo

CORRECTION: This post has been updated to reflect the correct ownership of CEOTI Ltd. The error is regretted, and we sincerely apologise to those our lawyer mistakenly listed as directors of the company.

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.

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.

All rights reserved. This material and any other material on this platform may not be reproduced, published, broadcast, written or distributed in full or in part, without written permission from PREMIUM TIMES.

  • Pingback: Nigeria: Adenuga, Dantata, Fola Adeola, Others Behind Subsidy Scam And Fuel Scarcity – FG | NewsRescue()

  • Proud Yoruba

    Who is going to clean up all this mess? Where is the Minister of finance and coordinating minister of embezzlement? Where is the President that cares so much about oil from his region? Where is the Petroleum Minister who claims she has done no crime, but was in charge when her underlings did, where is God of Revenge for Nigeria?

    • BankyMons

      Shame on you if this is what you can come up with! And you are blood-asking who is going to clean up the mess? You got broom there haven’t you? Fine, start cleaning the mess. Una go see wetin una do unaselves. Early days yet!

      • Proud Yoruba

        I don’t understand what you are talking about, ENGLISH Please!

        • BankyMons

          Lol. You must be punished, now read and understand it, Mr English! Again shame on you! Dimwit!

          • Proud Yoruba

            You must be ibo, since you people are always abusing everyone for no good reason. Why am I the one punished and not the ones who manufacture ship locations just to defraud their own country?

            Why an I dim, when I see the criminality of their actions, and how ibos are trying to cover it up!

          • randolph

            proud yoruba or what do you call your self? you are being tribalism. what has got to do with igbo’s in this discussion? or is your father or any one related to you one of the bad eggs in Nigeria every one is against? Pls be care full and emphasise on on the way forward and stop being sentimental.

          • Bello George Eveshoyan

            Proud yoruba I ve previous voiced my voice on sentiment of people .. From. Ur name I know u r yoruba.. Is good to be proud of ur heritage.. Am also yoruba. But I will ask u from ibb days ve Dere been a single yoruba man or woman who has resigned his or her permanent secretary, directorship or political appointment on the argument that her yoruba tribe does not tolerate graft…. Non from my last check meaning this problem we are facing corruption and graft knows no tribe or race.. U may continue to hate to love the ibo man.. Lessons ve tot me that judge people by the contents of their character not their tribe cus if u do u will see on both side of the tribal divide lies both good bad and ugly.. If u ask the politicians day know no tribe or religion when they want to share our common wealth.. If u are 30 and above I make bold to tell u that does same politicians ve gambled with our future and dey are messing now with the future of our children…good leadership knows no tribe after all look at States where salaries ve not been paid taking osun for example regardless of most fact that osun is predominantly a yoruba speaking state but look at what has happened in that state… No matter what arigbesola and his likes want to claim is responsible for their non payment of salaries.. There no other reason other than bad leadership… Even our yoruba people is been dealt with . hope u ve a change of heart of not targeting ibos or any other tribe as the ones responsible for our woes.. We all ve played negative roles

      • transparent

        BankyMons, who are the one who needs to be ashamed of yourself. There should be no room for violent crime, or corporate crime.

    • Mega Marineltd

      Yorubagas mugument association wrote to buhari saying. MR- president is it a crime to have massively voted you in as president of our dear country Nigeria.remember that relationship is sweet when right hand wash left and left wash right.I vividly remembered that agreement of this qoute was made with you by Asiweju Ahemd bola tinubu and Oba and other prominent political men in Yorubagas land.why have you chosen to use same broom planned to use in sweeping corruption out off our country against us why.you shall see us in return.Yorubagas mugument association are all fools including all the people.ayalanya.I so much love my dear state KADUNA

      • Proud Yoruba

        What are you talking about, you have no education, why don’t you go and learn to read and write properly and stop being a parasite?

  • musa olaiwon

    I am crying internally for my country. These criminal acts and omission were carried out under GEJ and nothing was done?
    I thank God that i was not recruited into the Nigerian’s army when i went for recruitment. I would have died and be forgotten by now.
    These people that were involved in these crime were enemies of the masses. They should be lined up and shot. You can call me any names you want, it does not matter to me.
    Do you know millions of jobs this money will create?
    Nigeria is really in a mess. Let the heads of these enemies of the masses roll and let then serve as deterrent to others.
    Chinese killed fraudulent people no matter their position in the society. Nigeria needs to be cleaned as soon as possible. Enough is enough. No kid glove punishment will solve these mess. Drastic problem needs drastic action.
    May God safe Nigeria from the treasury looters who are ruling us. Amen and amen.

    • Scalywag

      That is precisely why they appear to have compromised a certain chamber of the NASS

    • Peter

      Gej in 2011 wanted to cancel the so called subsidy you guys refused. Take note this fraud was not done in Gej regime, it was from obj, yaradua and Gej

  • transparent

    The perpetrators, and those who aided and abetted those crimes, should be severely punished. Such punishment will serve as a deterrent to other people.

  • transparent

    I fully endorse Musa olaiwon’s stance. Country’s who progress are those who do not tolerate graft or sharp practices. Those criminals steal Nigeria’s money to purchase eighty thousand dollar purses, and luxury vehicles for women in foreign countries. Heads need to roll.

  • adkogi4u

    So long as they are none, they should be reported to EFCC, we hope the president will baptised the EFCC it handle these worst devilish act Nigeria ever experioenced

  • igboham

    The funny thing is that those that accuse Ndigbo of looting Nigeria rae the ones doing the looting – I guess ndigbo are unable to speak out or at least stop this phony narrative of Ndigbo and money which annoys me. For all I care Nigeria is a dead place.

  • Scalywag

    Little wonder Ifeanyi Uba cried at Aso villa when Jonathan lost the elections. Nigerians await justice for the people who violated their nation.