Kickback Scheme Diverted $1M, Oil Guys Say

     HOUSTON (CN) – A Texas oil company claims in court it lost more than $1 million to a kickback scheme between its former manager and a Greek shipping firm.
     Houston Refining LP (HRO) says that it brought crude oil from Venezuela to its Houston refinery by contracting with Tsakos Shipping, as arranged by Florida broker Southport Maritime.
     Prior to September 2007, Houston Refining says that Tsakos gave it a 1.25 percent credit or upfront rebate on shipping costs, called an “address commission.”
     But this rebate allegedly vanished because Tsakos agreed to pay the cash equivalent of the credit directly to Houston Refining shipping marine charter manager Jonathan Barnes.
     Houston Refining says Barnes initiated the scheme when Southport brought up the possibility of Houston using four Tsakos vessels instead of the standard three for its shipping needs.
     In the summer of 2007, Barnes met with a Tsakos executive and two Southport agents at a pub in London.
     “Barnes told the group that he would agree to have HRO use a fourth Tsakos vessel to ship heavy crude from Venezuela to Houston if Tsakos would give him personally something in return,” according to the complaint in Harris County, abbreviating the name of Houston Refining.
     In exchange, Barnes allegedly “wanted to get the value of the 1.25% address commission credit paid directly to him instead of having it go to HRO.”
     Houston Refining says the co-conspirators agreed that Barnes would use a British Virgin Islands company called Farid to bill Tsakos, and Tsakos would wire the kickback money into Farid’s Swiss bank account.
     “Barnes eventually prepared an invoice to Tsakos for the first kickback payment,” the complaint states. “Barnes went through HRO’s shipping files and made copies of all invoices relating to Tsakos.
     “Barnes calculated that the 1.25% kickback owed to him for Tsakos invoices since September 2007 totaled about $260,000.”
     Houston Refining says Tsakos wired the $260,000 to Farid’s Swiss bank account in January 2008.
     A Southport agent allegedly urged Barnes to send a second kickback bill to Tsakos, but “Barnes did not do so because Barnes was busy with a separate kickback scheme.”
     Houston Refining says it uncovered the scheme through an internal investigation, and has determined the kickbacks cost it more than $1 million.
     Over the scheme’s life, Houston Refining allegedly paid Tsakos more than $107 million for crude oil shipments from Venezuela to Houston, and Southport got more than $10 million in commissions.
     Houston Refining says Barnes is serving a seven-year sentence in federal prison after pleading guilty to conspiracy to commit wire fraud, and conspiracy to commit international money laundering for the other kickback scheme he carried out while working as its manager.
     That fraud also involved Southport Marine, Houston Refining says.
     Courthouse News covered the sentencing of two members of that scheme in May 2012.
     Houston Refining sued Barnes, Southport, Tsakos and several Tsakos subsidiaries. It seeks damages for breach of fiduciary duty, fraud, conspiracy, violations of the Texas Theft Liability Act and other charges.
     The refinery also wants the alleged co-conspirators to disgorge all profits they earned from the kickback scheme.
     It is represented by Geoffrey Harrison with Susman Godfrey.

%d bloggers like this: