Oil Majors May Be Charged In Tax Avoidance Probe

The Nigerian government's tax compliance agency today announced that several "major" oil firms doing business in Nigeria may soon be charged with tax evasion, and revealed that 85 percent of all the goods imported via its bustling ports were illegally imported, the country's leading daily, "This Day," reported today.

The charges come as Nigeria's relationship with foreign oil companies and domestic producers is in a politics-driven state of flux. A strong current of nationalism runs through much of the Nigerian media these days, and its favorite target tends to be the companies that exploit its natural resources and generate almost $30 billion a year of the country's revenues.

Oil companies are facing new challenges from the government and other Nigerian groups on every side, including demands that they buy exhausted refineries, build multibillion-dollar natural gas processing plants, give up awarded oilfields that they have not been exploring sufficiently, and pay fines that have ranged as high as $1.2 billion.

Meanwhile, Nigerian criminal syndicates - many with powerful political connections - are siphoning vast amounts of oil from pipelines and tankers, and so-called community activists are rampaging across their processing facilities, causing as much as $500 million in damage in a single incident.

It takes courage, persistence and animal cunning to survive in the nation's overheated economic and political climate. So far, the major multinationals in Nigeria - Italy's Eni, Total, ExxonMObil, France's Elf Aquitaine, Royal Dutch/Shell and ChevronTexaco - are meeting the challenges, but it remains unclear how long they can do so on the Nigerian mainland.

Offshore Nigeria, and particularly the Nigeria-Sao Tome and Principe Joint Development Zone in the oil-rich Gulf of Guinea, is another matter. That region is guarded by an international treaty, and several nations take an active interest in ensuring its peaceful operation. The JDZ may one day be an imprtant alternative to crisis-ridden Mideast oil supplies, many believe.

Here is the This Day article, from its online site:

EFCC Probes Major Oil Firms Over Tax Evasion
by Onyebuchi Ezigbo
Feb. 22, 2005

ABUJA -- Chairman of the Economic and Financial Crimes Commission (EFCC) Mallam Nuhu Ribadu, said yesterday that his commission has initiated investigation into the allegation that some major oil companies in the country have, in connivance with certain government officials defrauded, Nigeria by evading tax payment.

Speaking as a guest lecturer at the opening ceremony of 33rd Class of the Chief Officer's Management Development Programme of the Nigeria National Petroleum Corporation (NNPC) held in Abuja, Ribadu said some un-named big oil companies have been evading payment of relevant duties and taxes to the Federal Government over the years and that EFCC is moving in to uncover the malpractices.

Aside from investigating the oil companies, Ribadu said EFCC is also focusing its searchlight on the banking sector, where a number of senior officials have been arrested and will soon face trial in court.

"We intend to investigate all movement of money by the banks and we will seize any ill-gotten money. Banks chief executives have been directed to make available regular reports on their transactions to the commission", he said.

He said that already EFCC is recovering some money for government and will move in to do a "detailed investigation".

Ribadu disclosed that the commission recently made a startling revelation when its team, which went to investigate affairs at the Nigerian Port Authority (NPA) warehouses discovered that 85 percent of the goods were illegally imported into the country.

He described the situation as an indictment on the operations of the Nigerian Customs Service.

Giving further run-down on the efforts of the commission so far, Ribadu said EFCC has succeeded in retrieving about $700 million (N30 billion) made up of cash and properties seized from people involved in 419 and other financial offences while more than 700 persons are being detained in its cell.

Meanwhile, Punch, a Nigerian daily, launched another attack on foreign companies that made it sounde very much like multinational oil service companies were trying to bend the rules of the Nigerian National Petroleum Corporation (NNPC) to obtain contracts.

Here is a partial text of that article in Tuesday's editions:

‘Foreign firms main culprits of contract abuse’
by Oluyinka Akintunde and Michael Faloseyi
Feb. 22, 2005

ABUJA -- The Senior Special Assistant to the President and Head of Budget Monitoring and Price Intelligence Unit, Dr. Oby Ezekwesili, on Monday said that some international companies and missions were the main culprits of abuses of contract procedures in the last three years.

She made this disclosure at a meeting with diplomatic missions and international agencies in Abuja.

The Minister of Finance, Dr. Ngozi Okonjo-Iweala and her counterpart in the Federal Capital Territory, Mallam Nasir el-Rufai, also attended the meeting.

According to Ezekwesili, the BMPIU’s experiences over the past three revealed that abuses of contract procedures in most cases were aided and openly supported by some international companies with the collaboration of their Nigerian allies.

“At the BMPIU, we often get desperate calls from some missions asking us to bend the rules in favour of a company of their nationality.

“Today’s forum therefore is to seek your support in explaining to individuals and companies from your respective countries, who intend or are already doing business in Nigeria, that our public procurement reforms emphasize international best practices as obtainable in most of your country,” she explained.

The best practices, according to her, include transparency, honesty, competition, and value for money in all contract transactions.

The BMPIU’s boss refuted recent reports in the media alleging that the unit had been decentralized by the Federal Government.

“Let me comment briefly on the recent wrong and conflicting reports in some sections of the media that the Due Process Unit has been decentralised or that it has even been relieved of its functions. This is false.

“The BMPIU is intact, functional and has even been given more powers following Mr. President’s directive that the Nigerian National Petroleum Corporation’s and the Niger Delta Development Commission’s operations be brought under the Due Process Policy,” she said.

By the President’s directive, Ezekwesili said, all projects and operations of NNPC and NDDC have to be certified by the BMPIU.

Nigeria may be feeling particularly sensitive to such claims this week due to a second scathing indictment of its national probity yesterday by Transparency International, a corruption watchdog NGO that has labeled Nigeria the third most-corrupt nation in the world.