Former Petrotrin chairman Wilfred Espinet is disputing suggestions that the board of directors he led cost taxpayers millions of dollars, now that Trinidad Petroleum Holdings Ltd (TPHL) has agreed to pay A&V Oil and Gas Ltd $120 million to settle its lawsuit in the “fake oil” matter.
In a paid newspaper advertisement yesterday, Espinet said the only new cost TPHL (Petrotrin’s parent company) has to pay was $18 million. He explained that when the then Petrotrin board terminated A&V’s contract in December 2017, it put the $84 million it owed the company in escrow pending a resolution of the situation.
He said the $120 million settlement comprises the $84 million, approximately $16 million in invoices from A&V and $18 million that the TPHL board of directors has agreed to pay as a settlement.
“I think it is also needs to be pointed out that the former Petrotrin board, which I chaired, did not cost the taxpayers of Trinidad & Tobago millions of dollars, as has been erroneously stated in some quarters,” Espinet said.
His advertisement follows the publication of a media release by A&V CEO Hanif Nazim Baksh last week. In that release, Baksh said his company had saved taxpayers from having to fork out millions of dollars by agreeing to settle its legal dispute with Petrotrin. This was in response to TPHL going against the “extremely strong views” of its legal team and choosing to settle instead of challenging the arbitration panel’s decision in the matter.
As part of the settlement, TPHL also granted A&V a new ten-year Enhanced Production Services Contract (EPSC) with one of Petrotrin’s successors, Heritage Petroleum. Baksh said A&V recognised that Petrotrin may not have been able to pay the debt and costs of a judgement and that the Government would have had to step in to pay the damages. Without the settlement, he said those damages could have amounted to $800 million.
Dubbed the “Fake Oil” scandal, Opposition leader Kamla Persad-Bissessar first raised the issue on a political platform in Couva in 2017, when she leaked the contents of an internal audit report which suggested that A&V had invoiced Petrotrin for oil it did not deliver.
This was a week after the government had appointed a new board at Petrotrin to deal with the company’s debt of more than $12 billion.
In his statement yesterday, Espinet said the story evoked public outcry and calls for an investigation. He said the story also took on a political dimension after the press had reported that Baksh was a friend of Prime Minister Dr Keith Rowley.
Espinet explained that A&V invoiced Petrotrin $84 million for crude oil it had allegedly produced, but according to Petrotrin’s internal audit report, the invoice was inconsistent with the volumes received at the Pointe-a-Pierre Refinery.
“Having just assumed office, the board had a responsibility to ascertain the veracity of the internal audit report and to act in the interest of the people of Trinidad & Tobago who, ultimately, were the owners of Petrotrin and its assets. In this regard, the board sought independent external expertise,” Espinet said.
He said the board contracted Kroll Inc of Canada and Gaffney Cline & Associates to review the report. He said both consultancy firms confirmed the internal audit findings and based on this, the board terminated A&V’s contract.
He noted that A&V attorney Ramesh Lawrence Maharaj SC and Baksh’s calls for the settlement of the matter to be made public.
Of this, however, he said, “This, in my opinion, is an attempt to sanitise the situation.”
He ended by saying that in 2017, Petrotrin reported a loss of $2.4 billion after tax. The former board ceased Petrotrin’s operations in November 2018 and a year later, Heritage Petroleum Ltd’s exploration and production activities recorded a profit of over $1.4 billion for a 10-month period in 2019.