How Drowning Chinese-Owned Oil Firm Paid Millions of Dollars As Bribe To Nigerian Officials | PremiumTimes

As the Chinese-owned Addax Petroleum winds up its operations on December 10, a confidential document has emerged showing how the company paid millions of dollars in bribes to Nigerian officials to secure juicy contracts in the oil industry, PREMIUM TIMES can report.

According to the report, there were payments for “questionable transactions” to Nigerian lawyers and a company owned by politician Emeka Offor, with a huge chunk of the money believed to be used to bribe government officials, PREMIUM TIMES can report.

The document, a report by leading audit firm Deloitte obtained this week by Swiss newspaper, Le Temps, said payments in excess of $20 million were made to four Nigerian “legal advisors” (one of them based in the U.S.), while more than $80 million was paid to Mr. Offor’s Kaztec Engineering Limited for questionable projects.

“We have concerns over payments in excess of $80 million, which were made by Addax to Kaztec regarding construction projects for the Antan and Udele/Ofrima developments,” the audit firm stated in the document dated November 18, 2016.

“$70.8m was paid in 2015, including $48.7m for the Antan development, which was suspended in early 2015, and $15.8m for value engineering work on the Udele Ofrima development. This value engineering work has not taken place.”

The audit revelations on the misuse of Addax corporate funds came amidst moves by the company, a subsidiary of Sinopec International Petroleum Exploration and Petroleum Corporation, to wind up some of its operations across the world.

Last August, it announced a proposed closure of its corporate offices in Geneva, Aberdeen, and Houston as oil prices continued to shrink.

In 2001, the Olusegun Obasanjo government granted a fiscal incentive of graduated rate of royalty based on the volume of crude oil produced from OPL 98/118, now OML 123, 124, 136, and 137, as against the flat rate of 20 per cent obtainable in the industry. The fiscal regime was deemed to become effective on January 1, 2000.

Addax claimed it committed a “significant investment” in excess of $3 billion in the development of the contract areas.

However, in July 2011, the Federal Inland Revenue Service and the Department of Petroleum Resources raised an objection to the fiscal regime.

In 2014, Addax Petroleum dragged the Nigerian National Petroleum Corporation before a federal court in Abuja over allegations of miscalculation of oil royalties and taxes and a breach of their 1998 Production Sharing Contract regarding the OMLs.

Joined as respondents in the suit FHC/ABJ/CS/1099/2014 were the Ministry of Petroleum Resources/Department of Petroleum Resources and the Federal Inland Revenue Service.

But just four days before leaving office, the administration of former President Goodluck Jonathan negotiated a controversial out of court settlement with Addax Petroleum, agreeing to pay the company $3.4 billion (about N1 trillion).

‘Questionable legal fees’

In 2015, PREMIUM TIMES reported how then Attorney General of the Federation, Mohammed Adoke, negotiated the shocking deal in what industry experts said was reminiscent of the infamous Malabu Oil deal in which the same Mr. Adoke was involved in.

“The parties expressly acknowledge and agree that this Agreement is being executed and delivered as part of a legally binding commercial transaction in full and final settlement of all disputes concerning or related to the applicable fiscal regime in respect of OML 123, 124, 136 & 137,” the agreement stated.

“The parties agree and acknowledge that time is of the essence with regard to the Settlement Agreement.”

The audit report stated that high-level bribing of Nigerian government officials was instrumental in clinching the settlement.

However, in a letter to Addax dated September 7, 2015, the NNPC reversed that agreement in a decision endorsed by then newly elected President Muhammadu Buhari, in one of his first moves to clean Nigeria’s monumentally corrupt oil industry.

The Deloitte report alleged that a significant proportion of Nigerian contracts involved bribing of government and other related officials and kickbacks by Addax management.

The allegations included the use of company funds to buy a 75,000 Swiss Francs (about N30 million) Chopard watch intended as a “gift” for the then Nigerian Minister of Petroleum, Diezani Alison-Madueke.

The watch never reached Mrs. Alison-Madueke.

Another allegation was the use of a Bermuda based company called ‘Winfield’ to purchase about $150,000 worth of gifts to an unnamed Nigerian official.

“The Nigerian official is alleged to have chosen the goods whilst in China and Addax paid for the goods through Winfield,” the audit report stated.

There were also allegations that the Addax Chief Executive Officer acknowledged that the Nigerian legal payments were used for purposes other than legal work, with him quoted as saying “what the lawyers do with the money after we pay it is none of our business, it’s only the result which counts.”

In March this year, Zhang Yi, Addax’s CEO in its Geneva Office, and the Legal Director were arrested and charged with the payment of millions of dollars to some lawyers and an unnamed company in Nigeria.

In June, Addax Petroleum reached an agreement to pay 31 Swiss Francs (about N12 billion) fine in Geneva to settle the bribery allegations.

In the new document seen by PREMIUM TIMES, the law firms who received the over $20 million controversial payments from the company “in relation to side letter negotiation in 2015” included Ahmed Raji and Co, Pollie Okoronkwo Immigration Attorneys, Solola & Akpana Chambers, and Consolex Legal Practitioners. PREMIUM TIMES contacted the named law firms.

Some of the concerns raised by the audit in the legal payments were unprofessional conduct, low standard documentation not of the standard of reputable law firms; unverifiable information (addresses for example), provided on invoices; “extremely vague”scope of work which, in some circumstances, it was virtually impossible to determine what the law firms did; and inconsistent and contradictory explanations for the payments by management.

“We have not received sufficient audit evidence that their payments were legitimate business expenses compliant with all relevant laws and regulations,” the audit firm continued.

“We suspect that some of these funds may have ultimately been utilised to bribe government officials to receive a favourable settlement in relation to the side letter as has been detailed in the whistleblowing allegations in this letter.”

On the payments made to Kaztec Engineering Limited, the audit stated there was lack of adequate supporting documentation for the payments made in 2015 and, also, a lack of evident commercial rationale for a significant portion of the payments.

It noted that number of internal reports that were suppressed by management had expressed concerns about significant overpayments to the company.

“We have not received sufficient audit evidence that these payments were legitimate business expenses compliant with all relevant laws and regulations,” the report stated.

“We suspect that some of these funds may have ultimately been utilised to bribe government officials to receive a favourable settlement in relation to the side letter as has been detailed in the whistleblowing allegations.”

Audit report ‘a joke’

Deloitte said rather than Addax Petroleum management acting upon its audit recommendations, it chose to terminate its appointments with the firm in Nigeria, the Isle of Man, and the UK.

Mr. Offor is a controversial Nigerian politician who became broke in 2017, barely two years after donating $10 million to the Carter Centre to fight river blindness.

He did not immediately respond to requests for comments.

Pollie Okoronkwo, a U.S.-based immigration attorney, did not also respond to e-mail requests for comments.

The Nigerian law firms, however, pushed back vehemently on Deloitte’s claims of questionable payments made to them and the likelihood that it was used for bribing officials.

“If they said they didn’t know what the payment (to us) was for, then it’s a joke,” Okey Egbuchu, a partner at Consolex Legal Practitioners said when contacted by PREMIUM TIMES.

“It was a court case, so it’s a matter of records that we had representation so it’s not an issue at all. We represented (the company) in the matter, it’s a public record that you can look at, it’s at the federal high court in Abuja.

“They paid for our services, it’s been a while now so I don’t have it (the case) offhand but it involved plenty of money, hundreds of millions of dollars.”

Henry Chibor, a partner at Solola & Akpana Chambers, said his firm never worked for Addax, adding that he was not aware of any audit report.

“We didn’t do matters for Addax, I don’t know what you are talking about, any person can go and write whatever he likes,” Mr. Chibor told PREMIUM TIMES.

“If you have such document, I think that the only way forward is for us to see it then we will be able to answer anything. I can’t sit here and begin to talk about a company that has no legal relationship with us, we didn’t work for.

“Because any person can write anything he likes, until we see it then we’d know what the person is talking about. Addax that has gone down a long time ago, what did Addax do with Solola & Akpana?”

Ahmed Raji of Ahmed Raji and Co said his firm was approached by Addax in 2014 and they started work for them in early 2015.

“We did work for Addax, we were given letter of instruction and we did our job and then we agreed on fees,” said Mr. Raji, a Senior Advocate of Nigeria.

“Addax is worth about $4 billion, they had an issue that was threatening the entire state and then they contacted us as lawyers, we have letters of appointment and we did our work and we were paid our fees, I don’t know where they got that one from,” the lawyer said about allegations that part of the legal fees was used in bribing Nigerian officials.

“If they know any public officer that we bribed, let them name him.

“If a lawyer opens an office and people walk in and they say ‘look, this is our problem.’ You look at the magnitude of the problem and you say this is my bill. And you do your best. If they now want to be basking in the euphoria of speculation, they can go ahead and try it and then we’ll meet up.

“And if you are speculating that somebody had tried to bribe a public officer, as good auditors won’t you go and ask them? Won’t you know an audit trail and look at inflows and outflows from the account?”

“Because it’s very sickening, you are talking of bribing public officers, who are the public officers? Name them. Our accounts are there, they didn’t say we were paid in cash, where is the outflow to any public officer if they are not a useless and irresponsible set of auditors? This is our story, this is my argument and there is nothing like that.”

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