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$231m scam: Reps ask EFCC to probe Korean oil firm

By Tordue Salem
The House of Representatives ad hoc Committee investigating activities in the oil and gas sector has urged the Economic and Financial Crimes Commission (EFCC), to further investigate the alleged defrauding of the Federal Government by the Korean National Oil Company by $231 million.

Co-Chairman of the ad hoc Committee, Mr. Leo Okuweh Ogor (PDP Isoko/Delta), who called on EFCC to look into the allegations, said the Korean firm had in the 2005 oil bloc bid process, claimed to have secured oil prospecting licence (OPL) for oil blocs 321 and 323 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.

But according to Ogor, his committee later discovered that KNOC paid only $254m and secured the balance of $231million with a letter of credit, which he said “is alien to paying signature bonuses.”

He said a recent judicial pronouncement backing the KNOC on the transaction arose from a paucity of information on the process and the case must be re-opened by the EFCC.

“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”, he disclosed.

The co-Chairman averred that the documents submitted before the Committee by the DPR, though showed that the KNOC paid the signature bonus sum of $485m, the information as contained in DPR’s submission was found by the Committee to be false.

“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”, he said.

According to him, “The documents also indicated that the Korean Company paid a balance of $231million, but the main issue is that the KNOC was unable to pay the balance of $231million. They then issued a letter of credit in favour of the Federal Ministry of Finance which is alien to paying signature bonuses.

“On the basis of that letter of credit, which has no financial value, NNPC signed a Production Sharing Contract, PSC with the North Korean Company”, he noted.

According to him, the deal between DPR, Ministry of Finance and the Foreign Company was struck without due process and with a clear element to defraud the Federal Government of $231million.

“But I want you to be mindful of the fact that you cannot sign PSC, when you have not paid the balance of the signature bonus to the Federation Account. The confusing thing is that from the information DPR gave to us it showed they (KNOC), had paid the $231m, the question that however needs to be answered is that who authorised the acceptance of a letter of credit for $231million which is the balance signature bonus, mindful of the fact that KNOC has the right of first refusal on the 2 blocks.

“It is important that we know that rights of first refusals are tied to downstream projects or any other project which the said company must execute.


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