UK Newspaper Detail How Oando Made Its Whopping Quarterly N3.1 Billion Profit By Dodging Taxes PDF  | Print |  E-mail
Saturday, 15 May 2010 13:12

Oando CEO, Wale Tinubu and late Yar'adua
This week, Oando Plc, the so-called “highly successful” oil trading company owned by Governor Bola Tinubu's cousin, Wale Tinubu, declared a massive quarterly profit of N3.1billion, an “achievement” that was advertised in Nigerian newspapers. This would be a significant achievement for any company, except that the success of Oando hinges on a clever policy of dodging taxes. In stories published by Private Eye, a United Kingdom newspaper, it has been explained how Oando is taking advantage of the Department for International Development, through its development fund CDC (formerly the Commonwealth Development Corporation). 


The following, according to Private Eye, is how it is done:


Oando attracts foreign capital flow from an American private equity fund known as "Emerging Capital Partners" based in Washington DC, which in turn receives funds from the UK government  through the CDC Group, Oando a privatized Nigerian oil company is known and called Oando plc.  But to avoid paying taxes to the Nigerian government Oando carries out its investment partnerships through an offshore company known as "Ocean and Oil Mauritius", itself owned by a British Virgin Islands vehicle called "Ocean and Oil Holdings (BVI) Limited " whose well-connected investors bought their 34 percent stake in Oando from the Nigerian government in year 2000.


It has been established from investigations carried out by the UK Metropolitan police that James Ibori and his schoolmate, Henry Imashekka, sent funds stolen from the sale of shares owned by the Delta State government to an offshore account, they later invested $10 million that were stolen in acquiring Notore Chemicals (formerly NAFCON).



CDC and its privileged offshore co-investors in Oando earn “technical fees” of 5 percent of profits and “management fees” of 4 percent through a Nigerian company called Ocean and Oil Investments, giving them a significantly better return than standard Oando plc shareholders. In 2008, the last year for which figures are known, $8.5m was paid by Oando in this way, signed off by Oando’s auditor PricewaterhouseCoopers.


Of Oando’s $91m remaining profits after these fees have been creamed off, $21m was earned by a company called Oando Trading Ltd, which boasts of being “Africa’s largest independent and privately owned oil trading company”.  Except it is registered in the not-so-African tax haven of  Bermuda.  Unsurprisingly, the UK Private Eye’s efforts to locate some actual oil trading by Oando in Bermuda were fruitless: the contact number in Hamilton turns out to be the firm’s old administrators, called Appleby, while its new ones, the Harbour Group, could not connect the Eye to anybody with anything to do with Oando.



This is of course, a crude arrangement to avoid more than $7m a year in tax – which would provide quite a few schools or hospitals in Nigeria where the company really operates through offices in Abuja and Lagos.  The scheme would not work if Oando were based in a developed economy such as the UK, where tax rules prevent the more blatant scams to stuff profits into tax havens, but poorer countries such as Nigeria are more vulnerable.

SEEDY CDC

METROPOLITAN Police charges naming a prominent Nigerian businessman, which can be revealed following the easing of reporting restrictions on a trial scheduled for later this year, pose more questions about Britain’s international development fund CDC formerly the Commonwealth Development Corporation, and its attempts to maximise profits by entrusting taxpayer’s money to questionable private equity firms.

One of the charges arising from Knacker’s long-running investigation into money laundering involving Nigeria is that a group of businessmen including Henry Imasekha “concealed, disguised, converted and transferred criminal property, namely the sum of $10m ,  knowing or suspecting that the sum constituted the benefit from criminal conduct of another person , ”



Henry Imasekha, it so happens, is a major shareholder and director of one of CDC’s main Nigerian investments, privatised fertilizer company Notore.  CDC invested in the company in 2007 through American private equity fund manager Emerging Capital Partners, which also invested CDC’s money in a couple of other large Nigerian businesses, including privatised oil company Oando, which does a nice line in tax avoidance.

CDC: Haven help us

TAX avoidance, explained Treasury minister Stephen Timms to a Paris conference recently, “costs developing countries billions each year in lost revenue – a major drain on often fragile economies and a genuine barrier to economic growth.  These are vital resources for schools, hospitals and infrastructure”.

Perhaps he should explain this to the Department for International Development, which is busily fleecing fragile economies by sponsoring corporate tax avoidance at its development fund CDC, formerly the Commonwealth Development Corporation.

Through American private equity fund Emerging Capital Partners, CDC funds a privatized Nigerian oil company called Oando plc.  But it doesn’t do this directly since this might mean it and its co-investors would have to pay some tax.  Instead, it invests through a mysterious company called ocean and oil Mauritius, itself owned by a British Virgin Islands vehicle called Ocean and Oil Holdings (BVI) Limited whose well-connected investors bought their 34 percent stake in Oando from the Nigerian government in 2000.


            Tax avoidance among CDC’s companies is unsurprising since the fund has modelled itself as a private equity investor, a structure in which tax dodging has always been an intrinsic part.  But that doesn’t make the British development fund’s indulgence in the shady business any less damaging for poor countries like Nigeria.


http://www.saharareporters.com/real-news/sr-headlines/6081-uk-newspaper-detail-how-oando-made-its-whopping-quarterly-n31-billion-profit-by-dodging-taxes.html

This is of course, a crude arrangement to avoid more than $7m a year in tax – which would provide quite a few schools or hospitals in Nigeria where the company really operates through offices in Abuja and Lagos. The scheme would not work if Oando were based in a developed economy such as the UK, where tax rules prevent the more blatant scams to stuff profits into tax havens, but poorer countries such as Nigeria are more vulnerable.

terrible. How they short-changed hapless Nigerians.

Who is the owner of OANDO? Your guess is a good as mine. Hhahahha! the rump of these people are consistently being exposed. First it was the CBN showing us that most of them are merely debtors. Now add to that the realization that they are also tax evaders. Should this ngbatiman not be in jail?

@Post

This is a very thorny issue, becos it brings to fore issues around domiciliary tax. Ofcos d Uk govt will want all taxes 2 b paid to the UK, bt we all kno dats nt how it happens. I guess Afren Plc shuld watch out (Bt then I cnt comment on otha people's issues).