$213m alleged fraud: Court gives EFCC approval to arrest Mobil Nigeria MD
A Federal High Court, Abuja has given the Economic and Financial Crimes Commission, (EFCC), the approval to arrest Mr. Richard Laing, Managing Director, ExxonMobil Nigeria. This follows failure of Laing to honour EFCC invitation in alleged contract fraud of $213 million.
At issue, is the fraudulent creation of Change Orders worth over $213million USD.
Justice Okon Abang on Friday January 29, 2021 granted the Commission’s application for a Bench Warrant to arrest the managing director of the international oil company.
The EFCC approached the Court for a Warrant after three invitations to Mr. Liang were rebuffed.
The Commission is investigating alleged procurement fraud in the Major Integrity Pipelines Project involving Mobile Producing Nigeria as the contracting company, Suffolk Petroleum Services Limited as the main contractor, Saipem Contracting Nigeria, Global Offshore Limited and Van Ord as sub-contractor to SPSL.
A recent publication revealed that ExxonMobil affiliates in Nigeria are surrounded by controversy over multiple layers of ownership and tax haven issues which are currently being investigated secretly by top tax officials of the Federal Inland Revenue Service ( FIRS) with the support of Nigerian National Petroleum Corporation ( NNPC) a major Joint Venture ( JV ) partner in the upstream sector of Nigeria’s oil and gas industry.
It will be recalled that the Company’s offices in Lagos, Akwa Ibom and Rivers States were shut down for up to ten weeks in 2018 because the company was unwilling to abide by the ruling of the Supreme Court against it in favor of hundreds of security personnel, after nearly twenty years that the company used legal maneuvers to deny that they were its employees, despite the fact that it recruited, trained and issued them employment letters. That shut in, one of the longest in recent history, resulted in a loss millions of dollars of revenue for NNPC and Nigeria, as did several other reckless disruptions that have become recurrent in the company’s operations.
Nigerian NewsDirect gathered that the recent decision by tax authorities to investigate revenue inflow of foreign players in the oil and gas industry follows higher revenue earned by telecom companies over impressive result of the FIRS during the first half of the year affected by COVID-19 lockdown.
According to an industry official, the investigation of upstream players on getting higher income from them follows recent legal successes against some of the upstream players in Nigeria’s courts which has become an eye opener for tax officials on how these companies are escaping tax payment. This, we gathered will become issues of discussion by Federal lawmakers with the submission of a new Petroleum Industry Bill ( PIB) in August 2020 to the NationalAssembly.
Also, tax officials are discussing issues on the sideline of the ongoing annual conference of the Chartered Institute of Taxation of Nigeria ( CITN) on how tax officials need to collaborate with the federal lawmakers for new laws that will help to bring upstream players more under the control of Nigeria’s government to check capital flight through papers obtained by these companies at tax haven countries.
For instance, officials are asking critically the questions such as if a foreign company doing business in Nigeria “is above Nigerian law? Can a multi-national corporation be sued in a Nigerian court for illegal actions done in the country? Should a corporation which is publicly quoted in a foreign country be shielded from being called to account under Nigerian law simply because it has created a web of private shell companies in exotic tax havens, as a multilayered buffer between itself and a private subsidiary in Nigeria? Should global giants be allowed to take refuge in a maze of shell companies in obscure tax havens to dodge legal, fiscal and stock market scrutiny? Is Nigeria, Africa and the developing world not being shortchanged for tax, law, investment and more, if such smokescreens are allowed to stand, however craftily woven?”
The questions also include whether it is right for a global corporation which is under the securities regulator in its home country to escape the Nigerian stock market regulator because it has conveniently hidden its business in a private company in Nigeria, or uses offshore alibis to escape legal and fiduciary challenge for its actions here? How would it be if the situation was flipped?
Investigation revealed that ExxonMobil for years sought to drag the Nigerian National Petroleum Corporation to US courts for mere commercial arbitration over oil lifting. In one instance, the ExxonMobil corporation which all but disowned its Nigerian subsidiary had no problem claiming that NNPC is one and the same as Nigerian government itself. No surprise, those gambits failed dramatically. The company has continued to battle the national assembly for years when it sought to compel the corporation to register its corporate existence with the Corporate Affairs Commission. And yet, peers such as Total have simple, easy to regulate structure that consolidates its subsidiaries, unlike ExxonMobil’s smoke-and-mirror arrangements by which it seeks to puzzle not just the legislature, the stock market regulator, if not the courts.
However, we gathered that several of the shell companies that Exxon listed as buffers between itself and the Nigerian subsidiary are allegedly registered in Delaware, a well-known tax haven. A Transparency International report on Delaware shell companies describes the location as “a place where extreme corporate secrecy enables corrupt people, shady companies, drug traffickers, embezzlers and fraudsters to cover their tracks when shifting dirty money from one place to another. It’s a haven for transnational crime.”
However, Nigerian NewsDirect gathered that some of these questions above were some of the crucial questions which Mr. Paul Arinze, a Nigerian corporate executive, put to the test through a suit against the US giant ExxonMobil Corporation,and its subsidiary, before Hon Justice O.A. Obaseki-Osaghae of the National Industrial Court of Nigeria, siting in Lagos.
Her Lordship recently issued a landmark ruling against ExxonMobil’s defense in the suit, where it sought not to be joined in the suit with its subsidiary Mobil Producing Nigeria Unlimited as co-defendant. By that ruling handed down on Tuesday September 29, ExxonMobil suffered a major setback against its historical claim that, as a global corporation headquartered in the US, it cannot be sued in Nigeria, a ruling of significant impact on the conduct of multinationals operating in Nigeria and other developing countries in Africa.
In a bid to establish an alibi ExxonMobil’s defense listed chains of offshore shell companies in far-flung places, and claimed that it had no business “whatsoever” in Nigeria, which then raises the question of who exactly Nigeria has entrusted with the operation of its critical oil assets? How should NNPC react to the revelation that the entity they’re bed with is a disjoined tail of a serpentine labyrinth, a contraption so hard to pin down, one they cannot sue?
Efforts to get reaction of ExxonMobil Nigeria proved abortive. In response to enquiry by Nigerian NewsDirect,Manager External Relations MPN Mr Ogr Udeaga thanked our correspondent for reaching out to MPN.
He added, “As a matter of practice, we do not comment on legal matters.”
