Nigeria: Korean National Oil accused of fraud

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Korean National Oil Company (KNOC) is accused of defrauding the Nigerian government of $231 million, the Nigerian House of Representatives ad hoc Committee has claimed. The Korean oil and gas company will be investigated by the Economic and Financial Crimes Commission (EFCC). However, KNOC said the money was written off by the former government in return for the construction of infrastructure, including gas pipelines and a power plant.

According to reports, the Korean firm had claimed to have secured oil prospecting licence (OPL) from the Department of Petroleum Resources after paying a signature bonus of $485m into the government’s coffers at the Central Bank and duly cleared by the Ministry of Finance in 2005. But a special ad hoc committee discovered that KNOC paid only $254m and secured the balance of $231million with a letter of credit.

Co-Chairman of the ad hoc Committee, Mr. Leo Okuweh Ogor, “The EFCC and all other security agencies in the Country must follow up on this matter. The case of KNOC is a clear case of fraud. The Company has defrauded the Federal Government of a signature bonus of $231m, which we found has not been paid to the Central Bank.”

Reports have claimed that the deal between the Ministry of Finance and KNOC was struck without due process and with a clear element to defraud the Federal Government of $231million. The South Korean firm, had filed a suit seeking the restoration of two offshore oil prospecting licenses granted in 2005 and revoked in January by Nigeria on the ground that the firm had not fully paid the investment pledged.

KNOCs lawyer Robert Clarke had said the company paid most of what was due on the licences and had agreed on a production sharing contract with Nigerian National Petroleum Corporation (NNPC) before the licences were withdrawn. When NNPC cancelled the licences, it cited non-payment of some 231 million dollars which it said KNOC had promised in return for the exploration rights.

Last week, KNOC had won a suit against Nigerian Federal government following the verdict of a high court which ruled that President Yar’Adua had overstepped his brief in revoking its two exploration licenses earlier this year. But the Nigerian special ad hoc committe on oil and gas claims that the case must be re-investigated.

According to the Co-Chairman of the ad hoc Committee, “During our investigations, the DPR submitted documents on the transaction to us, and the documents showed clearly that KNOC paid $485million which is the signature bonus which was offered by ONGC Vidash, but the interesting thing is that there was a falsification of payment by KNOC.”

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