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Argus Media Group: DomRep accuses Shell of fraud

The government of the Dominican Republic is accusing Shell of defrauding the country of “tens of millions” of dollars.

The government’s corruption prevention department, Depreco, will investigate the claim, which the justice ministry made on 15 June.

The ministry accused Shell of keeping gasoline and diesel prices artificially high by altering invoices to increase the shipping cost of imported crude destined for the 35,000 b/d Refidomsa refinery, which Shell operates and jointly owns with the government.

Shell denies the allegation and says it is the victim of a smear campaign. But it supports the Depreco investigation since “transparency should be evident in all mixed capital partnerships between a private company and the state”. The investigation, it adds, “will definitely clarify the manner in which the company has been managed and the role of both partners in the operation.”

But Depreco director Octavio Lister has already said that the alleged fraud could have been committed over a period of many years. “Above all, remember that we are talking about an equal partner with the Dominican state, but that this is a foreign multinational company,” he says.

The dispute has escalated since January, when government representatives on the Refidomsa board demanded a greater say in the running of the refinery. This followed claims that Shell was refusing to accept and process crude imported from Venezuela under Caracas’ PetroCaribe oil supply initiative. Shell rejects this allegation.

Two government-appointed Refidomsa directors subsequently said they had discovered doctored invoices and accused Shell of “fraud” and “deceit” – a claim that the justice ministry is now backing.

In February, Shell announced plans to sell its assets in the country. In addition to its 50pc stake in Refidomsa – the country’s sole refinery – Shell operates 137 of the country’s 615 service stations.

Under the terms of the Refidomsa joint venture, the government must approve the disposal of Shell’s interest in the refinery. The firm has offered to sell its stake to the government, but also says it has received expressions of interest from local and foreign investors.

‘Best interests’

“The government’s interest is that this process of sale is transparent and oriented to preserve the best interests of both parties,” finance minister Vicente Bengoa says.

But government officials told Argus earlier this year that Shell’s decision to sell its stake could “force” the government to take it over, “as the refinery is old and inefficient, and may not attract any investors”. The Dominican Republic produces no oil or gas, and imports all of the 160,000 b/d it requires to meet domestic needs.

http://pingu.argusmediagroup.com/mailers/update.html?ref=wpa0707

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