MEDIATRACNET
The lingering bribe scandal involving Swiss-based multinational commodity trading firm, Glencore International A.G., its affiliate, Glencore Energy UK Limited, is attracting the interest of civil society organizations in Nigeria.
Policy Alert, a civil society group dedicated to promoting economic and ecological justice in the Niger Delta region, on Friday called on the management of the Nigerian National Petroleum Company (NNPC) Limited to break its loud silence over the matter and speak out to defend the name of the national oil company, which was mentioned copiously in the allegations.
Since May this year, apart from pleading guilty to the crimes of bribery and corruption in its oil trading operations since 1993, Glencore announced its readiness to pay over $1.1 billion in fines for infractions relating to its operations in the UK, US and Brazil.
Investigations by US and UK authorities into the crimes in Glencore’s oil trading operations pursuant to the Foreign Corrupt Practices Act of 1977 began in 2018 and 2019 respectively.
Details of the crime were contained in a US Southern Court Southern District of New York presided over by Justice Schofield in Case No. 22CRIM297 between the United States and Glencore International AG.
The court documents showed that Glencore made various Illicit payments in bribes and other settlements to scores of intermediaries to secure improper advantage in approvals and award of oil contracts and business deals in Nigeria, Cameroun, Ivory Coast, Equatorial Guinea, Brazil, Venezuela and the Democratic Republic of Congo.
“For example, in Nigeria, Glencore AG and Glencore U.K. subsidiaries entered into multiple of agreements to purchase crude oil and refined petroleum products from Nigeria’s state-owned and state-controlled oil company,” it said.
“Glencore and its subsidiaries engaged two intermediaries to pursue business opportunities and other improper business advantages, including the award of crude oil contracts, with the understanding that bribes would be paid to Nigerian government officials to obtain such businesses.
In Nigeria alone, Glencore and its subsidiaries paid more than $52 million to the intermediaries, intending that those funds be used, at least in part, to pay bribes to Nigerian officials.”
Groups demand action
Policy alert in its statement signed by Senior Programmes Officer, Mfon Gabriel, challenged the NNPC Limited to publish the details of the traded volumes, payments received by government, and status of outstanding liabilities owed the federation from its oil-for-products swap deals with commodities trading companies between 2007 and 2014.
The group made the call during a follow-up engagement with journalists in Asaba, Delta State after a recent training programme it organized on tracking illicit oil deals.
Presenting the initial findings based on ongoing research by the group, Gabriel said: “The swap deals were characterized by discretionary and undocumented contracting arrangements, absence of competitive bidding, secrecy, under-reporting, and tax avoidance, a situation that allowed a number of politically-exposed persons (PEPs) who benefitted from the deals to escape the radar of public scrutiny.”
“Our laws, particularly the Petroleum Industry Act (PIA), mandate the NNPC Limited and the downstream industry regulator, the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA), as public trusts, to promptly disclose the details of all such arrangements to the public.”
He said during the five-year period the deals took place, crude oil and petroleum products contracts worth several billions of dollars were traded in poorly regulated and corruption-prone swap deals, adding that recent swap arrangements had not fared much better, as they were similarly characterized by under-delivery, unpaid tax liabilities and other violations that constitute revenue leakages to the Nigerian government.
Policy Alert listed the companies it said its research uncovered to have been involved in the transactions, namely Trafigura, AITEO, Televeras, Ontario, Duke Oil, Napoil and Calson.
The group said records available at its disposal showed that only AITEO and Televeras have cleared outstanding payments on the swap deals.
“Nigeria has been severely short-changed on all the variants of the swap deals introduced by the NNPC Limited since the country’s four refineries became grounded and unproductive. Commodity trading companies were allowed to take advantage of the absence of binding contracts with the NNPC to create arbitrariness in the deals. There are no records of sanctions on any official of the NNPC Ltd for the shortfalls recorded, neither has there been any diligent investigation and prosecution of any of the companies named in the shady deals.
“By reason of Nigeria’s membership of several global anti-corruption organizations, like the Financial Action Task Force (FATF); the Intergovernmental Action Group on Against Money Laundering in West Africa (GIABA) and the Extractive Industries Transparency Initiative (EITI), the NNPC has an obligation to investigate these allegations of bribery and corruption and make its findings public,” the group said.
Other groups have further suggested that the NNPC, which is not only a member of the National Stakeholders Working Group (the Board) of the Nigerian EITI, but also one of the 65 EITI supporting companies in the world, should be suspended from the two bodies till such a time the Federal Government compels it, or on its own takes steps to address the Glencore scandal.
“As a signatory to the recently enacted Money Laundering (Prevention & Prohibition) Act 2022, NNPC is under an obligation to observe due diligence in conducting transactions, especially where it involves Politically Exposed Persons (PEPs). The Nigerian Financial Intelligence Unit (NFIU) and the Economic and Financial Crimes Commission (EFCC) need to work with the financial system to track all unpaid funds from these deals, to identify any PEPs involved with the companies, recover missing government revenues, and prosecute erring officials.
“We urge the NNPC Limited to fully publish all the traded volumes, payments received, and status of outstanding liabilities owed the federation from its oil-for-product swap deals between 2010 and 2014.
“The Federal Inland Revenue Service (FIRS) should also publish all outstanding tax liabilities owed by these companies within the period and disclose what measures it has put in place to recover these unpaid taxes.
“Furthermore, given the huge share of the extractive sector in overall government revenues, we call on the Corporate Affairs Commission (CAC) should collect beneficial ownership information to further verify data submitted by extractive sector companies, including commodity traders,” the group said.
The Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), Auwal Musa Rafsanjani, said the Economic and Financial Crimes Commission should wade into the matter and deliver justice against the Nigerian perpetrators.
“We are hoping that EFCC will move, not only to investigate, but to ensure that justice is delivered for the Nigerian people and communities against these people who have continued to sabotage our economy.
Nigeria is going through challenges as a result of oil theft, sabotage and corruption, perpetrated by some few greedy officials, who have no decency or fear of God,” Rafsanjani said.
Despite all the calls, neither the NNPC, nor the Ministry of Petroleum Resources has responded to enquiries by these newspaper on what steps they have taken to identify the culprits and sanction.
How the bribery happened
In his testimony in a London court in 2021, one of Glencore Energy UK Limited former senior officials, Anthony Stimler, a UK citizen, who was in charge of Glencore operations in West Africa between 1993-2009; 2010-2012, and 2015-2017, pleaded guilty to a seven-counts charge of bribery and money laundering involving millions of dollars paid in bribes to several Nigerian officials.
The court document obtained from the court’s official website showed how most of the bribery occurred.
Between 2010 and 2015, it said an unnamed high-ranking official of the Federal Ministry of Petroleum Resources colluded with a senior official in the Pipelines and Products Marketing Company, a wholly-owned subsidiary of the NNPC, to commit the crime.
The crime, the court document revealed, involved the use by Glencore Energy of a third-party agent and consultant, to dispense bribes to top government officials in Nigeria and other countries in West Africa in order to secure oil contracts and other business advantages.
Between 2007 and 2018, Glencore and Glencore subsidiaries set up multiple agreements to purchase crude oil and refined petroleum products from the NNPC and its subsidiaries.
During the period, the court documents revealed that Glencore and its UK subsidiary engaged the services of two intermediary companies – West Africa Intermediary Company and Nigeria Intermediary Company to pursue business opportunities and other improper business advantages, with the primary role of handling the payment of bribes to Nigerian officials to secure those business opportunities and advantages.
Under the terms of the agreement with the Nigerian Intermediary Company, Glencore offered to pay an agency fee for facilitating the process for allocation of refined petroleum products from NNPC; fronting for Glencore UK subsidiaries by purchasing crude oil cargoes from NNPC and immediately reselling them to the Glencore UK subsidiaries.
Between 2007 and 2018, Glencore, through West Africa Intermediary Company, provided over $100 million for payment of bribes and other settlements to various intermediaries to secure an improper advantage and to influence the approval of oil contracts and businesses in Nigeria, Cameroun, Ivory Coast, Equatorial Guinea, Brazil, Venezuela and the Democratic Republic of Congo.
Specifically, between 2007 and 2018, Glencore, through its agents and intermediaries, provided about $79.6 million to be paid to West Africa Intermediary Company and Nigerian Intermediary Company to be paid as bribes to Nigerian officials and others in Cameroun, Ivory Coast and Equatorial Guinea to secure improper advantages in the award of juicy contract.
Commissions paid to the agents and consultants for oil contracts were used as a ploy to conceal the bribes paid to top officials in government and the oil companies.
An additional $39.9 million was paid to West Africa Intermediary Company and Nigeria Intermediary Company through correspondent bank accounts in financial institutions in the Southern District of New York for use to bribe the Nigerian officials.
In total, the documents showed Glencore intermediaries and agents paid over $52 million to fund the bribery schemes, which earned the Swiss oil trading firm profits of about $124 million over the period.
In one particular instance, the court papers said on November 17, 2008, one of the agents, in an email said Glencore UK subsidiary needed to make a $90,000 payment for use to settle PPMC officials to falsely undervalue a cargo load of petroleum products to Glencore.
Again, on January 18, 2011, about $325,000 was approved by Glencore to West Africa Intermediary Company for payment of bribes to Nigerian officials for the purchase of petroleum products from an NNPC subsidiary.
Securing crude oil term contracts
On crude oil term contracts, the court documents also revealed that between 2007 and 2014, Glencore entered multiple contracts to purchase crude oil from the NNPC.
To administer the contracts and service agreements, Glencore was said to have designated Glencore UK Limited to liaise with NNPC officials for the contracts.
To obtain these contract, Glencore UK subsidiaries facilitated bribe payments through West Africa Intermediary Company to NNPC officials.
The document cited the case of February 9, 2012 in which an email was sent to Stimler by another Glencore agent in respect of an approval for $1,050,981 bribe payment to be made to NNPC officials to secure a new crude oil contract. Payment for the amount was said to have been made on February 13, 2012.
A similar request for the payment of $500,000 was said to have been made on March 27, 2014 to assist Glencore and its subsidiaries win an annual contract for the purchase of crude oil contracts.
In March 2011, the court document revealed employees of Glencore UK subsidiaries agreed to pay West Africa Intermediary Company $14 million for onward transfer to PPMC officials for allocation of refined petroleum products on the crude oil Swap deal.
Prior to the payment of the bribe, one of Glencore agents was said to have met with the West Africa Intermediary Company and Nigeria Intermediary Company in London to agree on the bribe, which was wired on March 1, 2011 to West Africa Intermediary Company from Switzerland through a correspondent bank account in the Southern District of New York.
Again, on March 2, 2011, Glencore’s West Africa agent withdrew $1,020,000 case from a West Africa Intermediary Company account in Nigeria for the PPMC official connected with the Swap deal.
When Glencore decided not to pursue the swap deal any further, its West Africa agent was said to have returned about $8 million of the $14 million to the Glencore UK subsidiaries.
On September 25, 2014, employee of the Glencore Nigerian Intermediary Company was said to have sent an email to Stimler to demand the payment of $300,000 by all NNPC customers as an advance to the election campaign for a senior Nigerian official in exchange for receiving crude oil cargoes.
On October 3, 2014, Glencore Energy UK Limited, through Stimler, wired about $300,000 from its account in Switzerland to a Nigerian Intermediary Company bank account in Cyprus.
On May 5, 2015, the Nigerian Intermediary Company transferred $50,000 on behalf of Glencore as an advanced payment for the allocation of one of the June 2015 NNPC oil cargoes.
The crime was said to involve Glencore paying over $28 million in bribes through its representatives, employees and agents in exchange for favours in terms of preferential access to crude oil contracts, including increased cargoes, valuable grades of crude oil and preferable dates of delivery in its operations in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, and South Sudan.
