The National Petroleum Marketing Company Ltd (NP) lost more than $8 million on the soured bunker fuel deal with a Suriname-based company named Black Gold.
The explosive details of the bad deal are contained in an audit that was completed in 2019.
Last Monday, Guardian Media reported that outgoing Chief Executive Officer Bernard Mitchell wrote a good-bye email to staff at NP and referred to the "Black Gold fiasco" in that email.
There are no details or reports of this matter in the public domain.
It was first mentioned in Mitchell's January 14 email to staff in which he said that the "fiasco" cost NP over US $500,000.
Mithcell also referred to the 2019 audit which named the people responsible for that heavy loss.
The audit, which Guardian Media received just days ago, shows that the Suriname company Black Gold was less than three months old and yet was still able to get over $4 million in bunker fuel from State-owned NP for free in 2014.
The company was registered in Suriname in January 2014 and by March was in discussions with NP for the sale of gas oil outside of T&T, which was not part of NP's business purview.
By 2019, the state company suffered an additional loss of over $3 million in finance charges on that same bad deal before the company decided to write off the loss.
According to the audit, NP was left holding the following multi-million bag:
•Actual worth US $633,661.64
•Finance charges US $584,572.87
•Total loss US $1,218,234.51.
Since then, NP has defended itself by politicising the loss, saying the bad deal was struck under the former PP administration and not the current board which was installed in 2016.
The NP did not comment on the audit findings even though the current board was responsible for writing off almost double the original figure.
The audit found that the 2014 transaction between Black Gold and NP proceeded without "approvals both from Board level and at ministerial levels."
"The contract was executed on 2014 December 6. However, board approval was only obtained on 2014 December 22," the audit stated.
"A proper due diligence on Black Gold Company NV was not conducted by NP."
The audit showed that the principals of Black Gold disappeared and that the company itself had very little finances so NP could not sue for damages or breach of contract.
"The internal audit department concluded that NP ought not to have done business with Black Gold NV and even after having entered into the transaction, the company took 49 days before the Sales Agreement was officially terminated," the report stated.
According to the audit report, the decision to do business with the three-month old Black Gold company was taken by the then general manager of Business Ventures and sanctioned by the then acting CEO.
It was NPs first foray into the international bunker fuel market as NP did not have authorisation to conduct fuel sales outside of T&T
"It is not known when or how the supply of product was procured by NP...the requisite checks having been made by on the file in the Legal Department, the Legal Department does not have information as to when the product supply was requested and how/in what manner it was obtained," the audit said.
According to the audit, the board did agree to the purchase of fuel with another company to resell to a buyer, but this transaction, however, "did not materialise."
NP struck another deal with another company and according to the audit findings, did not seek a second board approval for this new deal, but utilised the original board approval.
According to the audit, this was done by the then general manager of Business Ventures, with the knowledge of the then acting CEO.
The new deal was sent to the NP's legal department for review and that department advised that approval and direction must be sought from the Ministry of Finance and the Ministry of Energy and Energy Affairs. The legal department also questioned whether NP had ministerial permission to sell fuel outside of the jurisdiction of T&T.
NP received approval and direction from the Energy Ministry to have a one-off trade transaction with Black Gold but were directed that there be evidence of proper procurement, thorough due diligence and all required permits received before proceeding.
"The Corporation Sole's response in respect of the same remains outstanding," the report stated.
But while this second deal was still being fine-tuned, the company pulled out of the agreement.
"In order to not incur exorbitant storage fees at (international buyer named), the general manager Business Ventures and CEO (ag) made arrangements with Black Gold Company with whom NP had previously had discussions in July 2014," the report stated.
According to the report, NP and Black Gold discussed marine bunkering and fuel storage before striking up this new deal.
On December 15, 2014, NP chartered a fuel tanker and sent it, loaded with fuel, to Suriname.
The vessel arrived in Suriname one week later and because of tidal restrictions had to outsource another smaller vessel to make four trips to get the fuel to its final destination.
"However, Black Gold did not pay the Customs Duty in Suriname," the report noted.
"Black Gold also did not pay the required demurrage charges incurred for the days that the vessel was anchored in Suriname. As a result of the breaches, NP formally terminated its agreement with Black Gold."
Investigation launched in 2015
According to the information contained in the audit, in March 2015, the company's Internal Audit Department sought to determine NP breached customary procedure when it purchased 50,000 barrels of low-grade sulphur gas oil from an international seller to re-sell to Black Gold.
This investigation found that by the time the Board met on January 22, 2015, to do its due diligence on Black Gold, "the fuel had already been transported to Suriname."
"It was noted that a proper due diligence exercise was not conducted," that 2015 investigative report stated.
According to the report, the Board was informed on February 3, 2015, that the total cost of the transaction was US $4,362,403, inclusive of the cost of the product, the chartering of the vessel and the demurrage charges while the vessel was anchored in Suriname.
The NP listed several concerns that should have raised red flags for the general manager of Business Ventures and the acting CEO at the time, including:
•Black Gold was formed in 2014, January 29, less than a year before the transaction.
•NP was only provided with a company fact sheet when more information was requested after the deal.
•Black Golds' response to the Company Fact Sheet was written in Dutch with no English translation.
Guardian Media contacted former energy minister Kevin Ramnarine on the matter but he directed all questions to the former CEO and board of NP.
Guardian Media reached out to former NP executive Neil Gosine but did not receive a response.