Oil exploitation, Bankers accused of 20-year fraud scheme

The Fier Prosecutor's Office announced on Thursday that it had issued 14 security measures against the managers of the company "Bankers Petroleum Albania Ltd" and several people with management positions in this company, who are, according to the prosecutor's office, suspected of tax evasion and other criminal offenses over a 20-year period.

The company's CEO, Hongping Xiao, and former director Leonidha Çobo were arrested on Wednesday, while seven other security measures issued by the Fier Court were executed. The prosecution announced that five people, mostly foreign nationals, are wanted.

The prosecution said that those arrested and wanted are accused of the criminal offenses of "Creating fraudulent schemes related to value added tax", "Hiding income", "Laundering the proceeds of a criminal offense or criminal activity", "Abuse of office" and "Failure to perform duties by tax authorities", provided for by articles 144/a, 180/3, 287, 248, 181/a of the Criminal Code".

In a public response after the arrests, Bankers stated that she was cooperating with authorities to be transparent, but said that it was the Tax Office that owed her a VAT refund worth $36 million.

“In response to the recent regulatory investigations, BPAL and our parent company, BPL, are committed to fully cooperating with the Albanian authorities,” the company said in a statement. The company said it would appoint a senior representative to ensure full cooperation and transparency.

According to the Fier Prosecutor's Office, the company Bankers Petroleum and its executives were responsible for evading obligations in the amount of "millions of euros." "The investigation so far has resulted in the company "Bankers Petroleum Albania Ltd", from 2004 to the end of 2024, having incurred losses, which has meant that the Albanian state has not benefited from any income from this activity for 20 years," the prosecutor's office said in a statement.

According to the indictment, the company had exported and sold 532 billion lek of oil, or about 5 billion euros, but had declared losses of 11 billion lek, or about 110 million euros, throughout the entire period. The prosecution took the clue from an investigation by the Tax Investigation Directorate, according to which this loss came because the company had “fictitiously increased its expenses, in order to result in a loss in the annual balance sheet, and then did not pay any tax on the profit, but benefited from VAT reimbursement through fraudulent schemes.”

The head of the Fier Prosecutor’s Office and the prosecutor in the case, Elion Mustafaj, told BIRN that investigations were ongoing. He said that despite the time that had passed, the criminal offences under investigation had not been statute-barred. “We are investigating those offences that have not been statute-barred,” Mustafaj said.

Bankers has not directly responded to the prosecution's allegations, but in a press release the company said that since 2016, when ownership changed hands, it had implemented honesty and transparency.

The company also claimed that Albania had benefited from its work.

“We have invested $4.5 billion in the Albanian economy; we have provided 83% of the national crude oil production; and we have supported more than 1,500 local families through quality employment. We are humbly proud to have contributed $730 million in royalties,” the company said. It also said $40 million was given to environmental protection and $10 million to strengthen communities.

The company insisted it would support the investigations. “We respect and support all legal measures to maintain regulatory and integrity standards in Albania,” the statement said.

Bankers Petroleum was founded in 2004 as a small publicly traded company, and it grew rapidly over the following years after obtaining a concession to exploit oil resources in Patos-Marinza, which is the largest source of oil production in Albania.

The company signed a hydrocarbon contract with the Albanian government in 2004, under which it acquired the right to exploit the Patos-Marinza oil field. The contract stipulated that Bankers had to invest to increase oil production and had to pay the Albanian government a 50 percent profit rate after repaying the initial investment. In 2016, the company's shares were sold to a new group of investors.

This is not the first time that the country's authorities have investigated the company Bankers Petroleum, which they have accused of failing to fully pay its obligations to the state. The National Agency for Natural Resources accused Bankers in 2012 of evading payments to the state through expensive subcontracting. The case was sent to arbitration and last summer, the Ministry of Infrastructure and Energy announced that the Albanian state had won the arbitration claim. Reporter.al