U.S. investigates oil firm for allegedly bribing Nigerians with $100 million

U.S. Securities and Exchange Commission
U.S. Securities and Exchange Commission

Indications emerged Wednesday that the China Petroleum and Chemical Corp., known as Sinopec, is being investigated by the United States’ authorities over allegations of bribe payments totalling $100 million to Nigerian officials to resolve a business dispute.

According to Bloomberg investigations, the U.S. Securities and Exchange Commission and Justice Department, are investigating claims that lawyers acting as middlemen for Sinopec allegedly funnelled illicit payments to the yet-to-be-named Nigerians from its Swiss unit through New York and California.

The report noted that the payments were allegedly meant to resolve a $4 billion dispute between Addax Petroleum unit in Geneva and the Nigerian government over capital costs like drilling, tax breaks and royalties between the company and Nigeria’s oil corporation, Nigerian National Petroleum Corporation, NNPC.

Sinopec bought Addax in 2009 for about $7.8 billion in order to build a corporate presence in Geneva and expand its oil production in Africa.

Earlier, beginning in 2001, Addax had been operating in Nigeria under a deal with the Nigerian government which saw it benefit from a Side Letter agreement that granted it tax breaks and reimbursement for capital costs.

But trouble started in 2014 when the Nigerian government decided that the Side Letter should no longer apply and demanded repayment of $3 billion of past benefits from Addax.

By the end of 2014, details of the investigations revealed that Addax had filed a lawsuit against the government to protest the decision as it also sought reimbursement of at least $1 billion from the Nigerian authorities, contending that the NNPC, in a practice known as “overlifting”, had taken more than its share of crude allotments.

Little was known about the case until allegations of bribery surfaced in January of this year after Deloitte, an auditing firm, resigned as Addax’s auditor because it couldn’t obtain “satisfactory explanations” for $80 million paid to an engineering company for Nigerian construction projects in 2015.

The auditing firm said that amount appeared excessive for the work performed “and their purpose and timing raise issues which have not been resolved.”

Investigations, however, revealed that on May 25, 2015, shortly after many of those payments were allegedly made, Addax and the Nigerian government reached a settlement that was approved by the Nigerian High Court.

Sahara Reporters, a Nigerian online platform, reported that former President Goodluck Jonathan, with just three days left in office, approved the settlement at the urging of the then Attorney General, Bello Adoke. Mr. Jonathan’s agreement validated the original terms of the Side Letter, effectively nullifying Nigeria’s demand that Addax repay $3 billion, a source told Bloomberg.

Meanwhile, the administration of President Muhammadu Buhari, left the original terms of the Side Letter intact but planned to revoke its terms effective Jan. 1, 2016, a decision that would deny Addax at least $1 billion in future benefits and end reimbursement claims.

It is, however, unclear if there’s any other litigation pending between Addax and Nigeria.

When contacted, officials of the Nigerian government and the NNPC declined comments.

Payments details

In its filing, Deloitte revealed additional payments made by Addax from 2015 exceeding $20 million, ostensibly to “legal advisers” in Nigeria and the U.S. from bank accounts in Nigeria and the Isle of Man, a British crown dependency.

“(Deloitte) received a number of whistle-blowing allegations from within and outside Addax, some of which allege that such payments have been made to bribe foreign government officials and that certain amounts have been embezzled by certain members of management within Addax Petroleum Group,” the firm said.

Trouble started in February when Geneva prosecutor Yves Bertossa began a probe into Deloitte’s allegations, prompting Swiss law enforcement officials to conduct a raid on the Geneva offices of Addax in March. Addax CEO Zhang Yi and Chief Legal Officer Guus Klusener were jailed under preventative detention, as allowed under Swiss law. They were, however, released three weeks later.

Barely four months later, Mr. Bertossa closed the probe but neither the company nor its executives were charged. Although he criticised the company for what he called sloppy accounting, he said that no criminal intent could be established, adding that Addax had taken steps to overhaul its staffing and anti-corruption processes.

But the U.S. authorities are looking into whether payments handled by an unidentified Nigerian lawyer who is a member of the California bar were used to pay some of the alleged bribes. A source told Bloomberg that the lawyer was hired to advise Addax executives on the terms of the settlement with the Nigerian government.

According to a Bloomberg’s source, the U.S. probes are in their early stages, and no action is imminent. The SEC is handling its inquiry through its Los Angeles office, and the Justice Department investigation is being led by the U.S. attorney’s office.

Earlier in November 2012, Total of France agreed the $2.5 billion sale of a minority stake, put at about 20 per cent of its stake in a Nigerian oilfield, to Sinopec.

The OML 138 oil block includes the Usan oilfield, which began producing in February 2012, and is jointly owned with Chevron, Exxon and Canada’s Nexen.

In January 2017, the NNPC awarded its 2017 crude oil term contracts to 39 companies.

The contracts covering about 1.31 million barrels per day (bpd) of crude oil were awarded to 18 Nigerian companies, 11 international trading houses, five foreign refineries, three national oil companies and two “NNPC Group trading arms,” the firm said in a statement. Sinopec was among the winners.


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  • thusspokez

    The report noted that the payments were allegedly meant to resolve a $4 billion dispute between Addax Petroleum unit in Geneva and the Nigerian government over capital costs like drilling, tax breaks and royalties between the company and Nigeria’s oil corporation, Nigerian National Petroleum Corporation, NNPC.

    If the Magu-led EFCC does not have knowledge of this bribery, then it is unfit for purpose. It may well know about the case but because the Nigerians involved have the EFCC ‘Untouchable Status’, the Magu-led EFCC have chosen to bury the matter.

    Don’t blame Nigeria’s opportunistic thieving politicians — politicians are naturally, corrupt — but blame the law enforcement agencies like the Magu-EFCC for not bringing them to justice or even protecting them.

    • SamPsalm

      So having played the Professor of the Blame-Placement-Quotient, what else was your post about?

      • thusspokez

        This is a discussion forum — not a kindergarten for children to ask questions. People came here to read other people’s opinions, not to read questions!

        • duwdu

          Comments — including this one — on public forums, can take any form, so please stop playing with words and trying to be clever by half… the comment you responded to, is valid.

          ……..
          P34c3
          …..

      • Eluba Inas

        Pointing out exactly who should take the blame.

  • Rommel

    Goodluck “disaster” Jonathan stinks, that man remains the second worst thing to have happened to Nigeria after the civil war

    • pheliciti

      And the man still has the nerve to talk in society…

    • FreeNigeria

      I would say second worst after OBJ. GEJ is the product of bad foundation OBJ laid. OBJ actions has killed more people than the civil way

    • Frank Bassey

      Where is the report on suspended SGF, Babachir Lawal and NIA boss, Ayodele Oke. Under GEJ, corruption was wide; under PMB corruption is deep (operating in narrow sphere, but deeper and deeper everyday) and that is why Nemesis is dealing with them.

  • Shahokaya

    ” former President Goodluck Jonathan, with just three days left in office, approved the settlement .” If there is a medal for the most clueless president, the Otuake Dumbo will be the undisputed recipient of the award.

  • Konkolo

    Our acutely corrupt leaders have killed Nigeria for us all and our children yet unborn. It will take many many years to rebuild Nigeria.

    • forestgee

      …that’s why they don’t want to fund education so that ONLY their children will continue the corruption

  • Okokondem

    The problem started with NNPC making concessions to Addax Petroleum of Geneva over capital costs like drilling, tax breaks and royalties that totaled $4 billion. The question is who was president at the time, and who was in charge of the NNPC at the time of this ill-advised arrangement that cost Nigeria so much, and what did the Nigerian facilitators gain personally?

    Having read this tale of intricate Web of corruption and treachery aimed at one and one thing only…defrauding the country to benefit a few Nigerians, it behooves me why one’s first reaction was to blame the EFCC for being ignorant of the bribe or complicit to the crime, none of which is evident.

    It’s no mystery that our law inforcement agencies such as the EFCC may be inadequate, ill-equiped and even compromised in investigating and prosecuting corruption cases that is in every facet of Nigerian society, but when a report such as this appears, blaming them even before mentioning the perpetrators is not only misguided but troubling.

  • Dr Pat Kolawole Awosan

    But, who are the culprits that collected S100m dollars bribes from the American oil company?Such bribes collectors must be fished out and prosecuted in Nigeria, by the EFCC if the USA can provide the details of the beneficiaries of such bribes from the USA.

    • Konkolo

      I don’t think your suggestion will ever be considered in Nigeria. Remember the Halliburton and Siemens bribery cases that the USA government provided the Nigerian government with list of beneficiaries of such bribes? The last time I checked, one of OBJ’s aide was arrested instead of the oga himself. Good point you made though, but unfortunately, the CROOKS,we all call our leaders (past/present) are chasing shadows.