By HEATHER MURDOCK, Associated Press
LAGOS, Nigeria (AP) — Nigerian lawmakers have ordered an investigation into the country's oil business after an international financial watchdog group alleged that Swiss traders may be complicit in defrauding the Nigerian public.
The Berne Declaration released a report last week that calls Geneva a "haven for Nigerian fraudsters" and accuses Swiss traders of being involved in "one of the most massive frauds that the African continent has experienced."
Most of Nigeria's national budget comes from oil revenue, and last year Nigeria's parliament, in a separate report, said that between 2009 and 2011 oil officials and their partners stole $6.8 billion intended to subsidize the price of fuel. Seven of the 70 companies named in the scandal have subsidiaries in Switzerland, according to the Berne Declaration.
Swiss traders are accused of dealing directly with "shadowy middlemen" and "politically exposed persons," meaning officials or relatives of officials, who may have access to public funds and a history of corruption.
The Nigerian national oil company also lacks transparency and has not published an annual report since before 2005, Marc Gueniat, a senior researcher at the Berne Declaration, told The Associated Press.
"It seems not to be accountable for anything it's doing," he added. "It is kind of a state within a state. And this is probably one of the main problems regarding the oil industry in Nigeria."
Nigerian oil officials flatly deny corruption in the industry.
In an emailed statement, the Nigerian National Petroleum Company dismissed the report as "not only bogus but strewn with inaccurate and poorly researched data, which defies common sense and verifiable evidence on the ground."
Most of the crude oil that flows from Nigeria — the world's 13th-largest producer — goes through Switzerland, according to the Berne Declaration, which says there is evidence Swiss traders enjoy discounts on the Nigerian crude.
Below-price sales suggest officials are taking bribes and making "underhanded deals," said Clement Nwankwo, the director of the Policy and Legal Advocacy Centre in the Nigerian capital, Abuja. These deals could have drained billions of dollars from public coffers, say lawmakers.
"There must be something that (sellers are) getting in return for the discount," Nwankwo said.
The Berne Declaration report says there is evidence that Geneva-based Vitol Group and Trafigura — two of the world's largest oil traders that are major players in Nigeria's oil export business — bought discounted crude oil and engaged in other potentially corrupt practices.
Both companies deny they are involved in corruption. Vitol Group said the accusations are false, adding, "crude oil is purchased at the official price set by the Nigerian government in line with major market published assessments."
Trafigura said in an email that the company has "a zero tolerance policy towards corruption and well established due diligence processes."
Swiss law does not require traders to scrutinize partners to prevent corruption, according to Gueniat.
"There is a law preventing corruption in Switzerland. It just doesn't oblige traders to ask themselves whether their partners are corrupt," he said.
Vitol said the company voluntarily complies with some of the strictest anti-corruption laws in the world and it is "working with the authorities on a code specifically for commodity trading houses which will complement the existing (regulations)."
Despite Nigeria's production of more than 2 million barrels a day of crude oil, most petroleum products used by Nigerians are imported, a situation that allows oil profits to vanish, the Berne Declaration said.
The country's four dilapidated oil refineries usually operate at less than half of their capacity but they are allocated enough crude oil to run at 100 percent, according to the report. The rest is sold off and the profits are not shared with the government or members of the public, most of whom live in abject poverty.
In 2011, excess refinery oil was sold for $8.7 billion and 82 percent of the companies that bought it were either Swiss, or Nigerian companies with Swiss subsidiaries, according to the Berne Declaration report.
The Nigerian National Petroleum Company did not respond to questions about where the money went.
The Berne Declaration report says Swiss traders should be held responsible for doing business with potentially corrupt officials.
"Swiss traders are delivering petroleum products to Nigerian importers who have absolutely no kind of credibility businesswise and who are linked to politically exposed persons. And they are completely free to do business with such people," said Gueniat of the Berne Declaration.
Switzerland is a leading hub for commodities, dealing with between 15 and 25 percent of the world's trade and most Nigerian oil exports, according to the Berne Declaration, and the organization has repeatedly called for tougher regulations.
Swiss officials have rejected previous calls, saying more legal restraints would make the country less attractive to businesses.