Monumental Oil Subsidy Fraud And Corruption At The NNPC-The Damning KPMG Report :Premium Times

Petroleum resources minister, Diezani Allison-Madueke-Reuters photo
By Musikilu Mojeed

On Thursday December 1, the Minister of Finance, Ngozi Okonjo-Iweala, cringed when the senate joint committee investigating the management of funds set aside for petroleum subsidy handed her a seven-day ultimatum to produce a secret forensic report on the Nigerian National Petroleum Corporation in her custody.

The audit, done for her ministry by renowned audit and advisory consultancy, KPMG, which exposed the massive financial malfeasance and monumental corruption in the NNPC, is one document the federal government, the petroleum ministry and the NNPC have worked hard to conceal for a little over a year now.

The report, which could trigger a fierce face-off between the federal and state governments, is one of the most closely guarded secrets in Nigeria today.  It contains shocking details of how the NNPC, and by implication, the federal government has been swindling the states.

So when the committee requested Mrs. Okonjo-Iweala to produce it, she became a bit uneasy, knowing that doing so might embarrass the administration and sparked some troubles for the NNPC, a source close to her told the Times. Initially the minister didn’t make any commitment, but when pressed by committee members, she reluctantly acceded to the request.

It is not known at press time whether she has sent the document to the committee. Contacted yesterday, her spokesperson, Paul Nwabuikwu, said he had no information on the matter.  Calls to the chairman of the senate joint committee, Magnus Abe (PDP, Rivers), were unanswered. But as at noon today, long after the ultimatum given to Mrs. Okonjo-iweala expired, a source close to the committee said the minister was yet to make the report available. He said there was high-powered lobby by the NNPC not to make the document public.

The damning report
But the Times has scooped the report for you in case the minister fails to
produce it or does so to the committee in camera. As far as the 41-page report is concerned, the NNPC is a cesspool of monumental corruption and fraud. The report detailed the corporation’s sharp business practices, violation of laid down rules and regulations, illegal deductions of funds belonging to the state, and failure to account for several billions of naira that should go to the federation account.

The agency, the report says, has also severely defrauded our country in subsidy claims. Auditors found that between 2007 and 2009 alone, the NNPC over-deducted funds in subsidy claims to the tune of N28.5 billion. It has not been able to account for the sum ever since.

The over-deduction from its remittance to the federation account for 2010 and 2011, believed to be in several billions of naira, is not captured in the report.

The Federal Government, through the Federal Ministry of Finance, hired KPMG and another Nigerian auditing firm, S.S. Afemikhe & Co., in July 2010, to look into the books of the corporation following allegations of “wrongful deductions at source by the NNPC to fund its operations” by the 36 state governors.

There were also concerns at the time that “the procedures for managing and
reporting the country’s crude oil and gas revenues are opaque and characterized by gaps, overlaps and inconsistencies in the role of key parties responsible for the assessment, collection and reporting on these revenue streams.”

Officials of the petroleum ministry and the NNPC, a source at the finance ministry disclosed, developed cold feet after the auditors were sent in, and indeed tried hard to frustrate the representatives of the two audit firms by failing to supply evaluation criteria for commercial bids submitted in respect of petroleum products importation.

Believing that would turn the auditors away, our source further explained, the corporation also failed to provide them with other relevant documents such as the criteria for allocation of products and product volumes to importers/suppliers and periodic pre-qualification list of approved products importers/suppliers.

But in spite of the difficulty they faced, the auditors were able to determine that the NNPC had been anything but transparent in the management of our country’s oil resources.

The report that emerged from the audit was just too damning that the leadership of the petroleum ministry, the NNPC and some few other elements in the Federal Government have worked hard to keep it away from the 36 state governors and federal lawmakers in particular and Nigerians in general.

Stealing the states blind
In what is likely to anger state governors, the audit established that the
corporation was in the habit of arbitrarily estimating subsidy claims and then over-deducting funds from proceeds of domestic crude sales.

“For example,” the report said, N25bn was deducted as subsidy estimate for
September 2009 from domestic crude sales proceeds while PPPRA approved a subsidy
of N23.8bn. N35bn was also deducted as subsidy estimate fro November 2009 but
PPPRA approved of N21.3bn.”

The auditors’ analysis indicates “over-deduction for these two months amounted to N14.9 billion. However, only N4.2.bn was swept into the Federation Account by the NNPC as adjustment for subsidy claimable in the two months.” That is beside the N11.8 billion subsidy claim the NNPC claimed it paid for imported products that didn’t reach consumers.

State governors have always complained that the NNPC was shortchanging them
through illegal deductions from revenues payable to the federation account.

Fraudulent underhand tactics
Over-deduction is however not the only way the corporation is defrauding the federal and state governments. According to laid down regulations, the NNPC is invoiced in dollars for domestic crude allocations but is expected to remit the equivalent naira value to the Federation Account. But auditors found to their chagrin that in doing that, the corporation used exchange rates far lower than those published by the Central Bank of Nigeria.

Using this “fraudulent underhand tactics”, the NNPC succeeded in cheating
the three levels of government of a whooping N85.2bn in three years – N25.7 bn in 2007, N33.8 billion in 2008 and N26.7 billion in 2009.

When the auditors requested explanations for these exchange rate disparities, the NNPC claimed it obtained the exchange rates it used from the CBN via telephone.

The report also severely indicted the NNPC over the shoddy and non-transparent manner it renews crude sale contracts every year. The auditors noted that “evaluation criteria for renewal of contracts are not clearly stated in the contract document”, and that the selection exercises were based on individual discretion and wrong assumptions and criteria.”

The NNPC claims that renewal of contract was based on performance of off-takers (buyers). But the auditors observed that the basis and process for determining performance were not clearly defined.

The auditors wondered why in 2007 and 2008, some companies not on the approved list of buyers for that year were allocated crude, a practice the examiners believe had led to crude being sold to non-credible buyers, even with relevant guarantees and safeguards not implemented.

Specifically the auditors queried the allocation of crude to Ovlas Trading (2,852,316 barrels in 2007 and 906, 269 barrels in 2008) Petrojam (2,818,914 in 2007), Oil Fields (950,166 barrels in 2007) and Zenon (906,000 barrels in 2008) even when they were not on the list of authorized buyers for that year.

Contracts for the importation of products, the auditors wrote, were also
routinely awarded without regard for approved guidelines and procedures. “We observed that contracts for the importation of petroleum products were awarded to companies and suppliers not listed in the approved pre-qualification list used for the fourth quarter 2008 importation,” the report noted.

The auditors specifically queried the award of contracts in that manner to
Astana Oil Corporation Limited, Natural Energy and Oando, when they were not prequalified for patronage that year.

Among other forms of misdemeanour, ranging from poor accounting and shoddy
record keeping, the auditors also indicted the corporation for leaving its own storage facilities, unused, and then proceeding to incur additional cost from leasing of third party storage facilities.

The auditors reported that DPK tanks (with storage capacity of 18,000 cubic
metres) at the PPMC depots within the Mosimi Area had not been used for three years even though there were in good condition. Yet the corporation, the examiners added, had been leasing storage facilities from third parties.

The spokesperson of the NNPC, Levi Ajuonuma, declined to comment on the report, saying he had nothing to say until the government releases it officially.

See Raw KPMG Report below:

Comments
108 comment(s)
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Is it not this type of thing

Is it not this type of thing the president suppose to be fighting instead of removal of subsidy that does not exist.

@AyoO

Well said by brother!

@otile

It saddens me when i read comments on this forum nd realise a lot is comin from idiots.at this stage,all some pple can talk abt is religion nd tribalism.are they sayin their governors and local goverment chairmen are from the another tribe or religion?lets ask them what ve they done for them?.can this mediocres do better than d below average GEJ when they cant transform thier state within their means.i dont care the religion or tribe a president come from,he shld just do what is right.it will not suprise me that u will find out that most of the idiots on this forum are unsuccessful.how can they be when most of them ve cerebral atrophy.long live a better FRN

bloody revolution is the only way out

Timidity is our greatest undoing as Nigerians....before our own eyes, our future n dat of our children is being destroyed, and we re so afraid to act coz we think they will let the bullet fly at us. Any avid student of history will knw that no country on the surface of this earth had it on a platter of gold..watever they are today they fought for it...is it England, remember the magna carta wich king John was forced to sign wich greatly liberated the masses frm the king's tyranny. The french needed to take their destiny in their hand..this did culminating in the french revolution of 1786, so evry country has risen up in their country against dictatorship and massive corruption coz it threaten their destiny....if nigeria is to move forward we must collectively eliminate these criminals n their bloodline....in a bloodlt revolution.

Re:3 stages of truth

Thanks for your comment.I am one of these that share that your position.One day many of us will get to z 3 stage and we will then collectively move this great country foward Amin

Mugu Nation

"I voted Jonathan not PDP" retarded thinking enjoy you stale air follow follow people you should be ashamed of yourselves enjoy your yam head smiling thieving president. Una never begin suffer .Mugu Nation

Revolution is near

The Nigerian revolution is close. Just a trigger is required to kick start it.

Mullah tundemash, You are now

Mullah tundemash,
You are now writing like your bossom friend Deri. You are afraid to address me by name. You now resort to innuendo. I stand by defending anything I write on this blog. Yes, Deri is your friend. The other day I busted you with Mrs Awo's fishy supplies Deri quickly came to your defense and both of you verbally mugged me, and you know it. But none of you could prove that the transactions never happened.

As for your stupid remark about low IQ, you are the one with chicken IQ. Go over your comments you see that you are almost like a robot tagging along with other peoples’ ideas. No originality, no discernible scholarly ideas. When you ask questions they come out as no brainer, and a mere repetition of cliches your tribesmen put up here. You are no match to Otile in intelligence, and I can prove it to you. Odale.

DERI LACKS SELF ESTEEM HENCE....

It is quite easy to identify Deri,he lacks confidence and will often pretend to be what he is not.Deri is quite local and is not what one can call a broad minded fellow,he lacks good conscience also hence if he wants to lie or abuse other tribes like the Igbo he assumes other psuedonym but exposes his limited education by not changing his style or syntext.He often shoots himself in the feet when he engages in his blind,dead end arguements in defence of President Jonathan,when he is conered like now he cowers away and uses Anonymous.One has to feel pity for this low rider,he is the clown of this blog,I find him quite amusing atimes,maybe he is one of those things everybody must learn to cope with.

IBRAHIM SAAD Don't deny what

IBRAHIM SAAD
Don't deny what these heads of states did for you: Hausa, Yoruba & Ijaw. Once in a while give the devil his due. GEJ, OBJ, YAR'ADUWA, IBB, ABACHA made most of you what you are today. The Igbo are the only people left out. We the Igbo are surviving by the Grace of God & our hard work. I believe you a Hausawa schooled free up to PhD under the tutulage of Obj & Abacha. Abacha did everything he could for Ijaw & Ogoni people only that they misused the chance. IBB created many millionaires out of his Hausa & Odua friends & rewarded them with plush ministerial jobs. Obj is the 2nd best thing that happened to Oduas after Awo. Under Obj Odua/Ijaw women became Alhajas/dames thru lucrative contracts. You know it that Jona & Musa took good care of their people, Jona is still doing it today. In all this Igbo are dispossessed of their oil, neglected of infrastructure, maimed & beheaded by the Hausa with tacit approval of the govts in power which is always devoid of Igbo presidency.

JONATHAN'S COMPROMISED POSITION.

In most honest and progressive democracies of the world,if a president discovers that the donors to his campaign fund are of doubtful integrity,such donations are returned,and the President distances himself from such people of questionable integrity.
Dangote,Ofor,Tinubu etc have been named but not shamed,the shaming process will take place if the President decides to extricate himself from this inglorious bunch,but Dangote is still part of the economic team,Ofor and Tinubu still are very influential with his government.
The problem really is that our President is roped in with these guys,immoralty in governance is of no consequence in Nigeria,the question of public office holders being role models is non-existent.

now that the truth is known consequences should follow

If the culprits are known, they should be punished. This should not end like most Nigerian expositions of fraud and graft. We have to move on

9ja my belove country, where

9ja my belove country, where corruption isnt criminalized but same sex marriage.

DANGOTE DONATES 100M 2 LAGOS STATE FROM OIL DEAL

Also on the list are Folawiyo Oil - N113.3billion; IPMAN Investment Limited- N10.9billion; ACON - N24.1billion, Atio Oil-N64.4billion, AMP- N11.4billion; Honeywell-N12.2billion; Emac Oil- N19.2billion; D.Jones Oil-N14.8billion; Capital Oil - N22.4billion; AZ Oil- N18.613billion; Eterna oil- N5.57 billion; Dozil oil- N3.375 billion; and Fort oil-N8.582 billion.Also, Integrated Oil and Gas owned by former Minister of Interior, Capt. Emmanuel Iheanacho was mentioned and is said to have benefitted to the tune of N30.777 billion, while IPMAN Investment Limited pocketed the sum of N10.9 billion.Abe did not name the registered construction companies that benefited from the racket.

@Ibrahim Saad

That is your most naive contribution to date on this forum. I'm lividly disappointed with your comment that expects "punishment" for fraudsters from a fraudster! Remember ugly OBJ's comment in Austria not too long ago? How can you expect a certified coward, who claims he has a list of Boko Haram sponsors but is scared silly to go after them to punish non-violent criminals? Like someone said, you're on your own if you think that clown on The Rock will ever be sober enough to get anything done. In fact, as I write, he's snoring! Subsidy stays if he wants to leave in peace and one piece!

SALAMI VERSUS TINUBU-OIL MARKETERS CLUB

Also on the list are Folawiyo Oil - N113.3billion; IPMAN Investment Limited- N10.9billion; ACON - N24.1billion, Atio Oil-N64.4billion, AMP- N11.4billion; Honeywell-N12.2billion; Emac Oil- N19.2billion; D.Jones Oil-N14.8billion; Capital Oil - N22.4billion; AZ Oil- N18.613billion; Eterna oil- N5.57 billion; Dozil oil- N3.375 billion; and Fort oil-N8.582 billion.Also, Integrated Oil and Gas owned by former Minister of Interior, Capt. Emmanuel Iheanacho was mentioned and is said to have benefitted to the tune of N30.777 billion, while IPMAN Investment Limited pocketed the sum of N10.9 billion.Abe did not name the registered construction companies that benefited from the racket.

oil subsidy writers club yank the rubbish off

Also on the list are Folawiyo Oil - N113.3billion; IPMAN Investment Limited- N10.9billion; ACON - N24.1billion, Atio Oil-N64.4billion, AMP- N11.4billion; Honeywell-N12.2billion; Emac Oil- N19.2billion; D.Jones Oil-N14.8billion; Capital Oil - N22.4billion; AZ Oil- N18.613billion; Eterna oil- N5.57 billion; Dozil oil- N3.375 billion; and Fort oil-N8.582 billion. Also, Integrated Oil and Gas owned by former Minister of Interior, Capt. Emmanuel Iheanacho was mentioned and is said to have benefitted to the tune of N30.777 billion, while IPMAN Investment Limited pocketed the sum of N10.9 billion. Abe did not name the registered construction companies that benefited from the racket.

the oil subsidy pallbearers are confused

Also on the list are Folawiyo Oil - N113.3billion; IPMAN Investment Limited- N10.9billion; ACON - N24.1billion, Atio Oil-N64.4billion, AMP- N11.4billion; Honeywell-N12.2billion; Emac Oil- N19.2billion; D.Jones Oil-N14.8billion; Capital Oil - N22.4billion; AZ Oil- N18.613billion; Eterna oil- N5.57 billion; Dozil oil- N3.375 billion; and Fort oil-N8.582 billion.

Also, Integrated Oil and Gas owned by former Minister of Interior, Capt. Emmanuel Iheanacho was mentioned and is said to have benefitted to the tune of N30.777 billion, while IPMAN Investment Limited pocketed the sum of N10.9 billion.

Abe did not name the registered construction companies that benefited from the racket.

Reporting Bias

Much as I enjoy reading the various articles in Sahara Reporters, I cannot but state the obvious. This site is sympathetic to a particular opposition party vis a vis ACN, while pouncing on the PDP. I do not sympathize with the position PDP has found itself in, if not by their own bumbling incompetence. Why has sahara Reporters not mentioned once the bench warrant issued for the arrest of the Lagos state speaker Ikuforiji for money laundering and embezzlement of state funds? Sahara reporters I expected more free reporting and fairness, but now I have doubts.

@ IBRAHIM SAAD Re:END THE SUBSIDY AND PUNISH THE FRAUDSTERS

@IBRAHIM SAAD

U said "WHEN JONATHAN DECLARED THAT THERE IS FRAUD IN THE SUBSIDY BUSINESS HE IS DUTY BOUND TO PUNISH THE PERPETRATORS OF THE FRAUD ELSE HE BECOMES A PARTICIPANT IN THE FRAUD."

Well you are on your own if you think that (wo)man has the balls to punish any perpetrator of oil-subsidy fraud. And u are still wondering if Jonathan is a participant in the fraud ..... where in the world were u during the election campaign when the oil merchants were donating millions to Dumbo Jo's campaign ? Where do u think Dangote (N500m), Adenuga (N250m), Dantata (N200m), Femi Otedola (N200m), Wale Tinubu (N100m), Emeka Offor (N250m) got these monies to donate ? Did they pay themselves the oil-subsidy? Do u think it is possible for these frauds to take place without the connivance of the Federal Govt. at the highest level ?
Ligeration of Nigeria is not in the hands of the (wo)man, Dumbo Jo !!!

@wahala Re: Deri Is Already Posting As Anonymous!

@wahala

It's so easy for anyone to notice Deri's way of writing. I have repeatedly asked him to state here how much the oil merchants donated to Dumbo Jo's campaign and each time he shamelessly dodges the issue.

As per the low IQ ethnic bigot, saying Deri is my friend; It's obvious he hasn't gotten over the excitement of getting access to the internet and does not know my antecedent on this forum so I would rather ignore him. He's a waste of space and time. Silence is the best answer for a fool.

Please visit w.bribenigeria.com and tell us your bribe story

Please visit www.bribenigeria.com and tell us your bribe story -- bribenigeria.com -- Fighting Corruption in Nigeria!!

@ tundemash: Deri Is Already Posting As Anonymous!

@ Deri: Now you have cold feet, eh? Why are you hiding under "anonymous" to continue your mischief now that your Dumbo and Madame Oyl have been exposed? Hear yourself :

a). "does not cover the era OBJ was oil minister"
b). "does not cover the era Obj and Ya'Ardua"
c). "tinubu oil limited nko"
d). "this story is the same rubbish from tinubu"
e). "would it have come if not for the removal of oil subsidy"
f). "the minister said it before NNPC is rotten"

You just validated our claims all along that you are nothing but a stinking fraud. A coward who hides when indisputable evidence are tendered. What do you mean by "era of Obj and YARADUA"? In your drunken haze, you've forgotten there was never such an era in the history of Nigeria. Stupid fool, come out and play!

END THE SUBSIDY AND PUNISH THE FRAUDSTERS

"The credible solution would be to remove the "carcas", ie the subsidy, and the flies would automatically stop buzzing."

THE PROPOSED SOLUTION BY THE FEDERAL GOVT IS TO REMOVE THE CARCASS OF ONE PERSON (THE GOVT) AND REPLACE IT WITH THAT OF 160 MIILION PEOPLE {ORDINARY NIGERIANS). YOU CAN IMAGINE THE BUZZ AFTER SUCH REPLACEMENT. PROPOSED FUEL "SUBSIDY" REMOVAL WITHOUT A REFINING CAPACITY WILL NOT STOP IMPORTATION. IT WILL NOT THEREFORE GUARANTY THAT THE SAME BENEFICIARIES OF THE PRESENT SYSTEM WILL NOT BE THE NEW "IMPORTERS". SECONDLY WHY REMOVE SUBSIDY AND NOT PUNISH THOSE WHO CAUSED NIGEDRIANS SO MUCH SUFFERING AND RECOVER THE STOLEN FUNDS. WHEN JONATHAN DECLARED THAT THERE IS FRAUD IN THE SUBSIDY BUSINESS HE IS DUTY BOUND TO PUNISH THE PERPETRATORS OF THE FRAUD ELSE HE BECOMES A PARTICIPANT IN THE FRAUD.

KPMG AUDIT REPORT

Credit should be given to the present government for allowing the audit that has led to the attendant disclosures. However, from all indications it is obvious that this rot started long ago before this government came into power and it should not be a surprise to all Nigerians. Simply put our system is bankrupt and I really pity the coming generation.

Why reacting to rumour?

Nigerians are very easy to 'on' and 'off' like china machine. A report wasnt out and some1 wrote his imagination and it's being taken for fact. How do we react when the real report is eventualy released?

tundemash, Warn your freind

tundemash,
Warn your freind Deri to stop posting the same stupid comment over and over again using different titles and assuming Anonymous. He is the greatest coward I have seen on this blog. When I hit you at least you make some feeble effort to come back, but when I hit him evaporates and sometimes appears under different names. He is not actually missing, what is missing is his Deri identity.

Well Done Sahara Reporter

Its so strange no one is commending those who help expose this fraud. Sahara reporter has done a great job here. We encourage you to do more. But the unfortunate thing will be for them to help expose these rogue so much without nothing happening on the side of the people. We knew from ages that fraud is the lingua franca of the Nigerian politics but no hard proof, this is one. Enough of complaints, the time to act is nowwwwwww

THE 3 STAGES OF TRUTH

"TRUTH PASSES THROUGH 3 STAGES, FIRST IT IS RIDICULED, THEN IT IS VIOLENTLY OPPOSED, FINALLY, IT BECOMES WIDELY ACCEPTED AS SELF EVIDENT."

I HAVE SAID IN THIS FORUM MANY TIMES BEFORE THAT THAT OUR PROBLEM IS A LACK OF CREDIBLE PRESIDENT. THE CHOICE OF THE PERSON TO BE THE PRESIDENT HAS THE SINGULAR MOST IMPORTANT VALUE IN OUR POLITY. DEEP DOWN EVERY NIGERIAN KNOWS THE RIGHT PEOPLE TO CHOOSE, BUT WHEN IT COMES TO THE ACTUAL CHOICE WE GET SCARED BY THE PROSPECT OF OTHER ETHNICITIES OR RELIGIONS RULING US. I ASK THE QUESTION OF WHAT USE IS THE FACT THAT GEJ, OBJ, YAR'ADUWA, IBB, ABACHA WERE HEADS OF STATE TO AN AVERAGE IJAW, YORUBA OR HAUSA? IN WHAT WAY IS THE LIFE OF THESE PEOPLE DIFFERENT FROM THAT OF OTHER NIGERIANS BECAUSE THEIR MEN ARE OR WERE IN POWER? IF THERE IS NO BENEFIT AND NO DIFFERENCE THEN WE MUST START THINKING AS ONE COMMUNITY WITH ONE DESTINY. THE COMMENTS I READ HERE ARE BEGINNING TO SHOW THAT.

It was the president who ordered for the audit-report liars

The Senate has formally named Nigerians who have stolen and benefitted from the oil subsidy, causing pains and hardship to ordinary Nigerian citizens with Oando, owned by Wale Tinubu, younger brother of former Lagos Governor, Bola Ahmed Tinubu and Sayyud Dantata MRS oil topping the list.
Mike Adenuga’s CONOIL and construction companies, one of them suspected to be Julius Berger were named as the culprits. Among the names reeled out by the Senator Abe led Committee are; Oando Nigerian Plc. – N228.506 b, MRS – N224.818 billion, Enak Oil & Gas – N19.684 billion, CONOIl – N37.960 billion, Bovas & Co. Nig. Ltd. – N5.685 billion, Obat N85 billion and AP; N104.5billion.

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