Fuel Subsidy Fraud: Senate Subpoenas Wale Tinubu, Folawiyo

.... KPMG Tells Senate That NNPC's Inefficiency Cost FG $65m

ABUJA, May 31, (THEWILL) – The Senate panel investigating the fraud in the payment of fuel subsidies to importers of petroleum products on Thursday subpoenaed the controversial managing director of Oando Plc, Mr. Wale Tinubu over his role and Oando’s in what has emerged one of the biggest financial crimes against the Nigerian state.

Also subpoenaed is the chief executive officer of Folawiyo Oil, Mr. Tunde Folawiyo.

They are to appear before the Senate Committee on Tuesday, June 05, 2012 to explain their roles.

Recall that THEWILL had previously reported that Oando was a major beneficiary of subsidy payments, having been the dominant player in the fraudulent scheme for many years, claiming over 80 per cent of petrol import contracts awarded by the Nigeria National Petroleum Corporation (NNPC).

Folawiyo Oil, on its part, also imported petrol and largely provided storage for imported petrol for the NNPC.

Their subpoena by the Senate Committee followed revelations in a report by international audit firm, KPMG, which revealed that the Petroleum Pricing Regulatory Agency (PPPRA) fraudulently made subsidy payments totaling about N25 billion to Oando Plc, Folawiyo Oil and other marketers.

The KPMG further revealed that the Nigeria National Petroleum Corporation’s (NNPC) inefficiency in managing demurrage cost the country $65million between 2007 and december2010.

The auditing firm, which appeared before the Senate panel investigating the management of fuel subsidy regime, also said that PPPRA granted unregistered companies, as well as companies that had failed to deliver in the past, its nod to import fuel into the country on government’s behalf.

Following the revelations before the committee, the senate committee subsequently directed the Minister of finance, Dr. Ngozi Okonjo Iweala and former executive secretaries of the PPPRA to appear before them on Tuesday next week over the subsidies.

A representative of KPMG, Dimeji Salaudeen, stated that the report, which had since been submitted to the minister of finance and coordinating minister of the economy, Dr. (Mrs.) Ngozi Okonjo Iweala, revealed that PPPRA did not comply with laid down procedures for issuance of import permit.

Salaudeen claimed that the audit was at the instance of the finance minister, saying, “unregistered companies and companies undergoing registration process got allocation; companies with historical poor performance based on PPPRA recommendation in deliverance also got allocation,” he said.

He also stated that the executive secretaries operated as sole administrations in the allocation of import permits, adding that the governing Council of PPPRA was very weak as “there was no sufficient inclusion of the board in carrying out critical decisions.”

On the NNPC he said, “NNPC is responsible for 60 perbcent market share in terms of products brought into the country. Over $198m was actually paid out as demurrage within the period. We did an analysis of the companies that recorded the bulk of the payment. We determined, on average, how long it took the NNPC to clear the cargo and we discovered that NNPC has room to be more efficient on how it plans and delivers the product it brings into the country.

But, the group managing director of NNPC Austin Oniwon, who also appeared before the committee, said the NNPC has no knowledge of the report by the auditing firm. “NNPC was not aware of the activities of the auditing firm,” he said.

Claiming that the NNPC neither saw the report nor were its officers questioned in the course of the audit, Oniwon, stated thus, “I just want to put on record that NNPC is not aware of the report. We were not questioned by KPMG on the report. Most of the recommendations were not given to us. We are getting to hear this for the first time today.”

However, Mr. Salaudeen maintained that he engaged all the marketers as well as the NNPC in the course of their audit exercise adding, “in keeping with world best practices, we engaged PPPRA and NNPC as part of our work. We could not, at the moment, provide record of engagement with the NNPC.”