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Chinese oil firm under probe in the US for bribes in Nigeria
September 12, 2017, 12:07 pm
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The US government is investigating China Petroleum and Chemical Corporation (Sinopec), over an alleged $100 million bribe paid to some Nigerian officials.

According to media sources, the bribe was aimed at resolving a $4 billion business dispute between Sinopec’s Addax Petroleum unit in Geneva and the Federal Government of Nigeria.

Investigators from the US Securities and Exchange Commission, SEC as well as the US Department of Justice, are reportedly looking into allegations that bribes were paid to resolve the dispute on tax breaks and division of royalties between Addax and the Nigerian National Petroleum Corporation (NNPC), and on matters related to drilling and other capital costs.

In 2009, Sinopec bought Addax for about $7.8 billion, in what is considered one of its biggest acquisitions, so as to build a corporate presence in Geneva and to also expand its oil production in Africa.

However, the Nigerian government decided that the side letter agreement, which granted Addax tax breaks and reimbursements for the capital cost, would no longer apply to the Sinopec-owned entity. That was in 2014 during which the government also demanded that Addax repay about $3 billion of past benefits.

Addax, however, filed a lawsuit to protest the government's decision. It also claimed the NNPC had taken more than its share of crude allotments, a practice known as 'over-lifting', and sought the reimbursement of at least $1 billion.

The bribery allegations came up in January after Deloitte, the international auditing firm, resigned as Addax's auditor, following claims that there were no satisfactory explanations given for $80 million Addax paid to an engineering company for Nigerian construction projects in 2015.

Shortly after the said payment was made on 25 May, 2015, Addax and the Nigerian government reached a settlement which was approved by a Nigerian high court. The agreement validated the original terms of the side letter, effectively nullifying Nigeria's demand that Addax repay $3 billion.

On assumption of office, President Muhammadu Buhari reportedly left the original terms of the letter intact but revoked its terms with effect from 1 January, 2016. This decision would deny Addax at least $1 billion in future benefits and end reimbursement claims.

Deloitte had also revealed details of additional payments "exceeding $20 million" made by Addax to "legal advisers" in Nigeria beginning from 2015. The US authorities are now investigating the matter to establish whether payments handled by an unidentified Nigerian lawyer who is a member of the California bar were used to pay some of the alleged bribes. The lawyer in question was reportedly hired to advise Addax executives on the terms of the settlement with the Nigerian government.

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