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EFCC Shuts Obat Oil’s Tank Farm Over N1.2b Subsidy Cash Diversion

Published

9 years ago

January 29, 2016

The Economic and Financial Crimes Commission (EFCC) has shut down a tank farm belonging to Obat Oil and Petroleum Limited at Kirikiri, Lagos, for alleged diversion of subsidy payment.
Petrocam Trading Nigeria Limited had reported Obat Oil to EFCC for allegedly diverting N1.2 billion, which it secured as loan from Sterling Bank on behalf of Obat Oil under a Joint Venture Transaction Memorandum of Understanding (MoU) to finance the importation of 15,000 metric tonnes of petrol for Obat under the Petroleum Products Pricing and Regulatory Agency (PPPRA) import permit for Q2, Q3 and Q4 of 2014.
Rather than pay back the loan, the oil marketer alleged that the money was diverted into the personal account of Obat’s Chairman, Oba Frederick Akinrutan.
Petrocam said in a document that it jointly signed an agreement with Obat to secure a loan to finance the business, whether by its own resources or through its bank, a condition Obat allegedly agreed to.
While the marketer advances to finance the business from Sterling Bank Plc, a collection account no. 0020560534 was opened in the name of Obat Oil and Petroleum Limited with the bank to take receivables from the transaction for the purpose of repaying the loans.
However, it was later discovered that Obat Oil allegedly diverted the N1.2 billion meant for Petrocam to Asset Management Corporation of Nigeria’s (AMCON) account to clear a debt.
Managing Director of Petrocam Mr. Patrick Ilo, in a statement dated November 13, 2015, said: “Based on the agreement, Petrocam established six Letters of Credits with our facility at Sterling Bank, bearing the total risk of the transactions. It was further agreed that Petrocam will make an advance payment of the sum liable to Obat up front before subsequent transactions after the first two transactions were concluded, an obligation which Petrocam carried out to the letter by making payments in tranches to Obat account details.
“But because of the devaluation, the government agreed to pay oil marketers affected the Foreign Exchange differential, as well as the accrued interest. This led us to signing an addendum to the initially executed MoU stating that all accrued interest on these transactions will be paid to the account of Petrocam Trading Nigeria Ltd.”
Ilo claimed that Obat diverted the funds into a personal account.
“We were surprised when we found out that Obat Oil & Petroleum Ltd diverted the funds meant to cushion the effect of the accumulated bank interest on these transactions into their personal account with UBA to the tune of N239, 479,947.85, thereby violating the agreement of the signed MoU and the addendum.”
Meanwhile, in a letter written to Obat Oil by Sterling Bank Plc, signed by its General Manager Corporate, Mr. Adegboyega Adegun and Assistant General Manager, Corporate, Mr. Abiodun Odutola, the bank said: “We write to advise that we are aware that the Sovereign Debt Note serial number FGN/2014/01/Q14/1673 and FGN/2014/01/R14/1694 due on the joint venture transactions between Petrocam Trading Oil Limited and Obat Oil and Petroleum Limited, which were financed by Sterling Bank, are part of the subsidy payment approved and paid by government.
“As banker of these transactions, we write to demand that all subsidy proceeds accruing to the transaction, including exchange rate differentials and other relevant claims from government must be remitted to Obat Oil and Petroleum Limited account number 0020560534 in Sterling Bank Plc for the purpose of liquidating outstanding loan obligations in line with the terms and conditions of the facility under which the transactions were financed.”
The Head of Legal/Corporate Affairs, Obat Oil & Petroleum, Mr. Seun Bakare, did not pick his call for comment on the organisation’s side of the matter.