FUEL SUBSIDY FRAUD: Diezani Lied Again?

Diezani Allison-Madueke

Nigeria’s Petroleum Minister Diezani Allison-Madueke recently spiritedly denied that she offered fuel importation contracts to companies indicted for fraudulent fuel subsidy claims. However, an investigation by Saharareporters has revealed that Ms. Allison-Madueke lied to Nigerians. As part of that investigation, we obtained the list of companies to which the minister, Petroleum Products Pricing Regulatory Agency (PPRA) and the Petroleum Ministry have granted juicy petroleum import contracts in the third quarter.

The roster of fuel importers reveals that several rogue businesses that had defrauded Nigerians by making hugely inflated subsidy claims benefited from current import contracts. “I can tell you that the minister personally authorized each and every beneficiary,” a source in the Petroleum Ministry told our correspondent. He added: “Madam [Ms. Diezani Allison-Madueke] has tight control of every contract given out within the ministry, the NNPC, and other agencies in the oil industry.”

Included in the third quarter allocations awarded by the ministry is also a company owned and run by a relative of Reginald Stanley, the Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPRA).

One of the beneficiary companies, NEPAL Oil, was referred to the Special Fraud Unit of the Nigerian Police for investigations relating to extensive fraud.

The company was accused as one of the participants in a massive fuel subsidy scam that cost Nigerians $6.5 billion. The fuel subsidy scam came to light early in 2012 shortly after Nigerians rose in massive protests against the decision by President Goodluck Jonathan to remove fuel subsidies in January 2012. NEPAL Oil was later charged along with Anonsyke Group by the Economic and Financial Crimes Commission (EFCC).

In 2012, the EFCC charged both companies with forgery and obtaining money under false pretense. Even though the trial is ongoing, Ms. Allison-Madueke personally approved the allocation of an import volume of 30,000 metric tons to NEPAL Oil in the second and third quarters. Mr. Stanley of PPPRA attended the official launching of a small tank farm established in Oghara last May.

Another indicted company, IMAD Oil, which was referred to the police for investigations, received fuel import allocations at Ms. Allison-Madueke’s instance.

Two other companies, Matrix Energy and Masters Limited, were originally investigated, but the police later issued letters clearing both companies of involvement in fuel subsidy scams.

SaharaReporters discovered that a company, Rahamaniyya Oil and Gas Company, received ministerial allocation to import fuel despite the fact that the EFCC is still investigating the company for subsidy scam. Owner of Rahamaniyya, Abdulrahaman Musa–Bashir, a Sokoto-born oil dealer, was one known as the future bridegroom of Aisha Yar’Adua, a daughter of the late President Umaru Yar’Adua. However, he abandoned the would-be bride as soon as her father died. Last year, the oil businessman caused a stir within the Yar’Adua family when he wrote a letter to Mr. Yar’Adua’s widow, Turai Yar’Adua, demanding that she refund $3 million he reportedly gave her in preparation for the aborted wedding.

Also on the list of fuel import beneficiaries is Blacklight Limited, an oil company owned by Lucky Igbinedion, a former governor of Edo State. Mr. Igbinedion is a convicted felon, found guilty of fraud during his tenure as governor. In 2008, the EFCC struck a controversial plea deal with the ex-governor, clearing the way for a judge of the Federal High Court in Enugu to give Mr. Igbinedion a paltry fine of N3 million that was widely condemned as a slap on the wrist.

“So why is the government rewarding a man like Lucky Igbinedion whose track record is one of corruption, fraud and scam?” asked a labor leader based in Abuja. He added: “This administration promised to address the irregularities in fuel importation. That has not been done. They promised to pursue the building of new refineries and to revamp existing ones. That, too, has not been done.”

Two sources in the Petroleum Ministry told SaharaReporters that the award of allocations to companies indicted for fraud was not the only problem. “If you look at the recent allocations, you will notice something skewed in the manner certain marketers are favored with huge allocations which runs at variance with their ability to store the imported products,” said one of them. He stated, “That’s a major reason why so many of them were able to scam the Nigerian government of billions of dollars over three years.”

For instance, Conoil, owned by Mike Adenuga, reportedly owns huge storage tanks in Lagos and Port Harcourt. In the latest round of allocations, Conoil was awarded 60,000 metric tons. By contrast, companies like A-Z, run by Chika Okafor, Shorelink, which is run by Obiamarije Stanley, a cousin to the PPPRA’s Reginald Stanley, and Nkechi Peter Obi's Techo Oil, got huger allocations of 80, 000, 75,000 and 60,000 metric tons respectively. A-Z does not have any known storage tank farms.

Another source at the Petroleum Ministry pointed to the fact that the beneficiaries topping the list of ministerial allocations are the same players who were offered massive bribes to several legislative committees and security agencies to shield them from indictment. These big-time players include Mr. Adenuga, Femi Otedola, Sayyu Dantata of MRS Oil and Gas, and Mr. Rahamaniyya.

A different aspect of the scam is that all the big players named above, and a few others, were in 2009 named by the Central Bank of Nigeria (CBN) as huge debtors to commercial banks. SaharaReporters found out that none of the businessmen ever paid the hundreds of billions of naira they borrowed from banks. Instead, the Federal Government and CBN struck a shady deal with the debtors under which a bogus agency called Assets Management Corporation of Nigeria (AMCON), run by Mr. Mustafa Chike-Obi, took over some assets owned by the debtors in lieu of payment.

But AMCON’s management of the debts was so bad that the International Monetary Fund earlier this year called for the scrapping of AMCON. “The AMCON deals were simply meant to free the billionaire debtors from their debt obligations,” a Lagos-based financial analyst told SaharaReporters. He explained: “Under the deal, each of the debtors handed one or two assets of their assets to AMCON. The shady part of it, then, was that AMCON officials overvalued each asset, making it possible for possible for the debtors to wriggle free of their debt obligations, leaving the creditor-banks out in the cold.”

The analyst disclosed that most of the debtors had originally obtained the bank loans ostensibly to finance fuel imports. “This is one of the worst scams in Nigerian history,” he said. “The fuel was often not imported, but these businessmen claimed fuel subsidies – and they failed to pay back the loans they took.”

S/N	COMPANY	VOLUME (KT)
1	Acorn	15,000
2	Aiteo	120,000
3	Ascon	45,000
4	Avidor	15,000
5	A - Z	60,000
6	BlackLight Ltd	30,000
7	Bovas	45,000
8	Capital
9	Conoil	60,000
10	Cybernetics	15,000
11	Dee-Jones	45,000
12	Dozzy	30,000
13	Fatgbems	*
14	First Deepwater	*
15	Fresh Synergy	15,000
16	Folawiyo	90,000
17	Forte	75,000
18	Gulf Treasures	30,000
19	Heyden	*
20	Honeywell	0
21	Hudson	15,000
22	Hyde Energy	30,000
23	Ibafon	15,00
24	Imad Oil and Gas	30,000
25	Index
26	Integrated	60,000
27	Linc Nigeria Ltd
28	Mainland	15,000
29	Masters	80,000
30	Matrix	30,000
31	Mettle Energy	15,000
32	MRS Plc.	60,000
33	MRS Oil & Gas	60,000
34	Mobil	60,000
35	Nepal	30,000
36	Nipco	120,000
37	NNPC	1,350,000
38	NorthWest	75,000
39	Oando	135,000
40	Obat	30,000
41	Optima	15,000
42	Rahamaniyyah	45,000
43	Rainoil	80,000
44	Sahara	60,000
45	ShoreLink	80,000
46	Swift	45,000
47	Techno Oil	70,000
48	TempoGate	20,000
49	Total Nig.	90,000
50	TSL Logistics	30,000
		3,405,000

Source: Sahara Reporters