Unexplained payments in Nigeria exceeding $100 million are the main focus of ongoing investigations by the Switzerland authorities into allegations of corruption in the operations of Addax Petroleum.
SweetcrudeReports gathered that Deloitte LLP, a firm of auditors handed in their resignation from the audit function in December 2015 prior to having completed the audit for the year ending 31st December, 2015 for Addax Petroleum United Kingdom Limited, APUK, over “a number of payments made for which we have been unable to obtain satisfactory explanations or sufficient audit evidence”.
It has been established that Kaztec Engineering, a company being promoted by Sir Emeka Offor received over $80 million in payments from Addax Petroleum Nigeria Limited (a subsidiary of APUK) regarding construction projects for the Antan and Udele/Ofrima project development. Other payments in excess of $20 million were recorded as legal expenses that were made to several ‘legal advisors’ in Nigeria and the United States.
Checks also reveal that between 2009 and 2014, a space of 6-years, Addax Petroleum Nigeria awarded Kaztec Engineering Nigeria Limited five Single Source Contracts with a total value of $1.244 billion.
In a statement of the circumstances relating to its resignation as auditors to APUK, Deloitte LLP disclosed that it could not obtain a business rationale or validity for the payments made by Addax Petroleum Nigeria.
“The magnitude of these payments appears to be in excess of the demonstrable value of work performed and their purpose and timing raise issues which have not been resolved,” Deloitte LLP disclosed.
Regarding the payments to ‘legal advisors’, Deloitte LLP noted that “among other concerns, it has not been clearly established what services were delivered for the amounts paid”.
“In addition, we have received a number of whistle-blowing allegations, both from within and external to Addax, some of which allege that such payments have been made to bribe foreign government officials and that certain amounts have been embezzled by certain members of management within Addax Petroleum group,” Deloitte said.
Deloitte LLP said the responses and explanations it obtained from certain directors of APUK and Addax Petroleum Holding Limited, APHL, “lacked credibility, were inconsistent and at times directly contradictory to previous documentary information provided”.
SweetcrudeReports investigation revealed that the unsatisfactory explanation for the payment to Kaztec Engineering was approved by the National Petroleum Investment Management Services, NAPIMS, a subsidiary of the Nigerian National Petroleum Corporation, NNPC as Contract No. ETB-3219; Contract title: EPICC(M) Contract for Ofrima Udele Project in OML-137.
Further checks revealed that a total Kaztec Engineering received a total sum of $81.9 million payment under the Ofrima/Udele project scope for which Deloitte LLP said the payment appears to be in excess of the demonstrable value of work performed.
Kaztec Engineering received $1.244bn in SSC award from Addax
In an unusual letter he sent to the Group General Manager of NAPIMS, dated July 24, 2014, titled ‘Facilities Contracting for Ofrima Udele Development and Other Key Projects, the Managing Director of Addax Petroleum Development Nigeria Limited, Cornelius Zegelaar specifically recommended Kaztec Engineering for the job.
“At this time there is no single indigenous contractor other than Kaztec that has the proven capability and track record of delivering such EPIC projects.
Zegelaar provided numerous justifications for the project to be awarded to Kaztec, proffering arguments that precluded an open competitive tender.
Other SSC projects awarded by Addax Petroleum Nigeria to Kaztec Engineering include: “construction & installation of the Adanga-Calabar Gas Transmission Pipeline & Metering Station” at a cost of $191 million – 2009; “TB-1921 Installation of Subsea Pipelines and Topsides in OML 123” at a cost of $350 million – 2010; “Variation order of the TB-1921 award” at a cost of $350 million -2012; “Antan Jackets and Piling works for OML 123” at a cost of $300 million – 2011; “Njaba field OML 124, Owerri procurement of 60% of all materials” at a cost of $12 million – 2011; “Installation of the BC-2 Compressor at OML 123” at a cost of $40 million – 2014.
Just over one week ago, the chief executive officer and legal director of Addax Petroleum in Geneva were both arrested and charged with suspected bribery of foreign officials, the spokesman for the canton’s prosecutor disclosed.
A criminal procedure has also been opened against the company – an affiliate of China’s Sinopec, Asia’s largest oil refiner – prosecutor’s spokesman Henri della Casa said.