Reps uncover fresh, massive subsidy fraud

House in session


Hundreds of oil and gas companies, many of them hurriedly assembled, may have terribly bent federal rules to claim illicit trillions of naira of fuel subsidy money that nearly forced the Nigerian economy on its knees.

As the ongoing House of Representatives investigation of the subsidy management regime has shown, many of the companies got paid round tripping, importing less-than-agreed volumes of petroleum product and in some cases, falsifying documents to secure payment clearance.

But as grim as the accusations are, which the Farouk Lawan-committee has vowed to make public in full details, there seems more: many of the ills were “aided and abetted by a certain major oil shipping company, Vitol. And also the Central Bank of Nigeria.

On its website, the company prides itself as a very “physical trader” with 5,291 ship voyages in 2010 and over 200 ships at sea at any given time.

“We take pride in our ability to take on difficult, complex projects and deliver effective solutions quickly and transparently,” the company says.

“Because our partnership model is based on collective responsibility, we are careful to assess risk exposure on the ground in local markets – where we can see the real relationship between cause and effect. We don’t make decisions based on theoretical modeling or mathematical abstractions.”

But as the hearings draws to a close on Thursday, there are strong signals the company may be seriously indicted in the lawmakers’ report and some members hint at recommending its ban.

As a large multi-tasking company doing shipping, oil exploration and storage across the world, many of the now so-called brief case companies took full advantage of Vitol’s dexterity at evading levies, circumventing rules, lawmakers said Wednesday.

As such, the companies that did round tripping, or received subsidy on products that were actually scooped from nearby ports, say Lome, while claiming Europe, did so with full collaboration of Vitol, who at many times ferried the products from Europe.

Members of the ad-hoc committee alleged that Vitol aided many Nigerian importers to circumvent the regulations of the Central Bank of Nigeria (CBN), and the lawmakers believed the bank too cannot feign ignorance of what transpired.

Ali Ahmed, member of the committee during the review of documents submitted by the Nigeria Ports Authority (NPA) and various importers on Wednesday alleged that Vitol evaded payment of levies on mother vessels and failed to adhere to international best practices on exportation of petroleum products.

“Even if you are not dealing with exportation of oil, you saw importers circumventing the CBN regulations that are not qualify for foreign exchange,” Mr. Ahmed told the company’s managing director, Rodney Gavshon.

“You go offshore Cotonou but you didn’t ask yourself why? When you are selling to NNPC directly you berth in Lagos but when you are selling to private individuals you go offshore Cotonou and offshore Lome. You are asisting some importers to circumvent the rules and regulations of the country. Certain companies have been involved in daylight robbery. You can’t claim ignorance of double dealing even CBN can’t claim ignorance of this. With your good name, Vitol, didn’t this prick your conscience?” he asked.

At an earlier appearance, Mr. Gavshon had earned the legislators’ rebuke for grumbling when asked to provide details of the company’s transactions with all the indigenous importers.

The details, the lawmaker said, were to help corroborate claims submitted by the importers.

Presenting the documents on Wednesday, Mr. Gavshon denied the allegation that the company evaded levies. He said Vitol paid three levies, including security, inspection but that the company was not aware of any other duties.

He however acknowledged that there had been illegal loading activities in offshore that breached regulations.


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