The Human and Environmental Development Agenda Resource Centre (HEDA), has urged the Economic and Financial Crimes Commission (EFCC) to investigate the bribery and corruption allegation contained in the report of lead audit firm, Deloitte, against ADDAX Petroleum and some Nigerian officials and law firms.

In a petition sent to the acting Chairman of EFCC, Mr. Ibrahim Magu, and signed by its chairman, Mr. Olanrewaju Suraju, HEDA said it is request a full-scale investigation of the allegations and subsequent prosecution of all indicted officials.

HEDA took a cue from the report of an online newspaper, The PremiumTimes of November 25, 2017, where a detailed story with respect to the Chinese owned Addax Petroleum, whose operations was wound up on December 10, 2017, the report also recounts how the company paid millions of dollars in bribes to Nigerian officials to secure juicy contracts in the oil industry.

According to the non-governmental organization, the assertions in the report was based on a report by lead audit firm; Deloitte obtained by Swiss Newspaper, Le Temp, on the said company which alleged that a significant proportion of Nigerian contracts by Addax management involved bribing of government and other related officials and kickbacks.

The petition reads: “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.

“It is also noteworthy that in March 2017, Addax’s Chief Executive Officer, Zhang Yi, and the Legal Director, were arrested and charged in Geneva with the offence of paying millions of dollars in bribe to some lawyers and an unnamed company in Nigeria. While in June, Addax Petroleum reached an agreement to pay 31 Swiss Francs (about N12 Billion) fine in Geneva to settle the bribery allegations.”

HEDA wrote in the petition that some of the allegations are as follows:

a.       Payments for questionable transactions to Nigeria Lawyers:

“The Deloitte report said payments in excess of $20 Million were made to four (4) Nigerian “Legal Advisers” (one of them based in the United States).

The law firms who received the over $20 Million controversial payments from the company, ‘in relation to side letter negotiations in 2015’ included Messrs. Ahmed Raji & Co., Messrs. Pollie Okoronkwo Immigration Attorneys, Messrs. Solola & Akpana Chambers, and Messrs. Consolex Legal Practitioners. There were also allegations that the Addax Chief Executive Officer acknowledged that the Nigerian legal payments were used for purposes other than legal work. He was quoted in this regard as saying:

“what lawyers do with the money after we pay it is none of our business, it’s only the results which counts”

Some of the concerns raised by the audit in the legal payments were unprofessional conduct; low standard documentation, not the standard expected 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 payments by the management.

The audit firm was quoted to have said: “We have not received sufficient audit evidence that their payments were legitimate business expenses compliant with the relevant laws and regulations”. The report further suspected that some of the said funds may have ultimately been utilized to bribe government officials to receive a favourable response with respect to the side letter.

Officials of the law-firms involved have individually denied all allegations of wrongdoing and vehemently opposed the suspicion that the payments were for bribery purposes.

b.     Payments for questionable projects/allegations of use of company funds for bribing purposes:

According to the aforementioned report, there were payments for “questionable transactions” made to politician Emeka Offor, with a huge chunk of the money believed were used to bribe Nigerian government officials.

The Deloitte report alleged that a significant proportion of Nigerian contracts involved bribing of government and other related officials and kickbacks by Addax management. In an instance, more than $80 Million was paid to Kaztec Engineering Ltd for questionable construction projects, such as the Antan & Udele/Ofrima developments. $70.8 Million was paid in 2015, including $48.7 Million for the Antan development which was suspended in early 2015 and $15.8 Million for value engineering work on the said Udele/Ofrima development. This value engineering work has allegedly not taken place as at the date of this letter.

The allegations included the use of company funds to buy a 75,000 Swiss Francs (about 30 Million Naira) chopard watch intended as a “gift” for the then Nigerian Minister of Petroleum, Diezani Alison-Madueke. The wristwatch is suspected not to have reached Mrs. Diezani 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 said Nigerian official was alleged to have chosen the goods whilst in China and Addax paid for the goods through the said Winfield.

c.      High level bribing of Nigeria government officials in the clinching of the settlement:

Report of high level bribing of Nigerian government officials in clinching of the settlement was made when the then Attorney General of the Federation, Mohammed Adoke, negotiated the shocking deal, wherein an agreement was 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 and 137.

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% obtainable in the industry. Addax claimed it committed a ‘significant investment’ in excess of $3 Billion in the development of the contract areas. However, in 2011, the Federal Inland Revenue Service (FIRS) and the Department of Petroleum Resources raised an objection to the fiscal regime.

The organization stated further that in 2014, Addax dragged the NNPC before a Federal High Court in Abuja over allegations of miscalculation of oil royalties and taxes and a breach of their 1998 production sharing contract regarding the OMLs with the Ministry of Petroleum Resources and the FIRS joined as a respondent in the suit with suit no.FHC/ABJ/CS/1099/2014.

“Four (4) 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).

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

HEDA said, “Overall, we hereby request a full-scale investigation of the above allegations and subsequent prosecution of all indicted officials. This action has become necessary and urgent in view of the monumental cases of bribery and corruption that has become commonplace in the petroleum industry, a sector that constitutes the major economic strength of our country.

“Thus, all requisite investigations and actions aimed at ridding the industry of all corrupt practices should be taken with a sense of priority and urgency with a view to serving as deterrence to companies in the industry,” the Centre said. 

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