Nigeria Sues Shell Companies For $407m For Oil Export Fraud
The federal government of Nigeria has sued Shell Petroleum Development Company of Nigeria Limited and its allied Shell Western Supply & Trading Limited for nearly $407 million as part of its
battle to recover all monies siphoned through undeclared/under-declared lifting of the nation’s crude oil.
The government says $406,751,070 is the total sum of the missing revenues from the shortfall/undeclared/under-declared crude oil shipments of the government, including interest on the money.
The government has so far filed 15 separate suits against 15 oil companies at the Federal High Court in Lagos.
In an amended statement of claim filed before the court by Professor Fabian Ajogwu, a Lagos lawyer, and accompanied by the sworn affidavit of three United States-based professionals, the government alleged that sometime in 2014, it experienced a decline in the revenue derived from the export of crude oil. The ensuing investigation showed that the decline was partly attributable to un-declaration and under-declaration of crude oil shipments by some major oil and gas companies operating in Nigeria.
The three professionals employed by the Federal Government of Nigeria are:
- Professor David Olowokere, a US citizen who is the lead Analyst at Loumos Group LLC, a technology and oil and gas auditing firm based in United States of America;
- Jerome Stanley, a counsel in the law firm of Henchy & Hackenberg, a law firm the USA and head of the legal team engaged by Loumo Group LLC; and
- Micheal Kanko, a citizen and resident of the state of Arizona, also in the USA, who is the founder and the current Chief Executive Officer of Trade Data Services Company.
The Nigerian government used the consortium of experts for the intelligence-based tracking of the global movements of the country's hydocarborns, including crude oil and gas, with the main purpose of identifying the companies engaged in the practices that had led to missing revenues from crude oil and gas exports sales to different parts of the world.
In reconciling the export records from Nigeria with the import records from respective ports of entry in the USA in the case of the two Shell companies and others, the Data on shipment of the company, including its Bills of lading, Oil Vessels name used for the shipment, date of arrival at the destination ports, ports of origin, were used to identify the buyers of the undeclared Nigerian crude oil, and the sellers thereof, as well as quantity of crude oil exported from Nigeria. The same data for the same shipment imported into the United States were compared, and the comparison showed that the crude oil shipments declared to have been exported from Nigeria was less than what was declared to have been imported into the US, using the same shipment by the same vessel on the same bill of lading while on the other hand, some other shipments were not declared by the defendants to the requisite authorities, particularly the pre-shipment inspection Agents. In some instances, the crude oil shipments were completely undeclared.
The Nigerian government alleged further that all crude oil and gas shipments/exports from Nigeria are required to be declared and inspected by pre-shipment agents appointed by the Central Bank of Nigeria of revenue due from the crude oil shipments. The inspection records are to be deposited with the Ministry of Finance.
The government averred that high-technology information systems, including satellite tracking systems, were deployed by the consultants in gathering the various validated information establishing the shortfalls in the export declarations and the import declaration in the country of destination.
The plaintiff averred that:
- On the 6th of January 2013, the defendants lifted crude oil on board and using a vessel named AUTHENTIC, shipped same to BP Oil Supply of 28301 Ferry Road, Warrenville, Illinois, USA at the port of Chester, Pennsylvania, United States of America with Bill Lading number ALMYSVDM161212A3. That shipment was however not declared to the relevant authorities, resulting in a shortfall of 660,712 barrels of crude oil in the value of $72,678,320 as revenue to the Government.
- On January 3rd, 2013, the defendants lifted crude oil that resulted in the shortfall of 979,031 barrels of crude oil in the value of $107,693,410.
- On the 14th of December, 2014, the defendants lifted crude oil using a vessel named EAGLE TUSCON, and shipped same to Shell Deer Park of 5900 Texas 225, Deer Park, TX77536, USA through the port of Houston, Texas, USA, with Bill of Lading number AETK0909US14; with the shipment undeclared to the relevant authorities, resulting in a shortfall of 499,048 barrels of crude oil in the value of $54,895,280 as revenue to the Federal Government.
The defendants were also alleged at three different times on board three different ships: EAGLE TUSCON, EAGLE SEVILLE, and OVERSEAS EVERGLADES, shipped crude oil that resulted in a shortfall of 3,697,737 barrels of crude oil in bringing the total value of all the shortfalls to $406,751,070.
On January, 21, 2016, the Federal government through its legal representative, wrote a letter to the defendants drawing their attention to the above discrepancies and requesting them to explain with specific documentation to clarify the discrepancies as a prelude to the repayment of the revenues and debt they now owe the government. Up until now, the government said it has not received from the defendants any payment pursuant to the said letter, or received the requested documents.
The government further averred that it has suffered huge and enormous financial losses as a result of the defendants’ under-declaration of the value of the crude oil they lifted and exported to the USA.
Consequently, the Shell Petroleum Development company of Nigeria Limited and Shell Western &Trading Limited action has not only hindered economic development in the country but has also undermined the sustainable economic development of the Nigeria for the benefit of its people.
The government’s claims against the two companies severally and jointly are as follows:
- An order of the court compelling the two companies to pay into the Federal government of Nigeria account with the Central Bank of Nigeria, the total sum of USD 406,751,070, being the total value of the missing revenue from the shortfall /undeclared/under -declared crude oil shipments of the country, made by the companies to USA;
- Interest against the defendants at the rate of 21% per annum on the sum of $406,751,070 until the entire sum is liquidated;
- General exemplary damages in the sum of $406,751,070; and
- The cost of instituting the legal action.
The presiding judge, Mojisola Olatoregun Isola, adjourned the suit to 20th of October, 2016.
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