CEO Arrested, €4 Billion in Oil Sales Revealed, and Zero Profit Tax Paid to the Albanian State
FIER/TIRANA, Albania (Tirana Times) — Albania’s largest oil producer, Bankers Petroleum, is at the center of a sweeping scandal that prosecutors say involves one of the most egregious cases of tax fraud and profit-shifting in the country’s history. The arrest of the company’s CEO, Hongping Xiao, and former executive Leonidha Çobo this week has brought renewed scrutiny to the firm’s 20-year operation in the Patos-Marinza oilfield — an operation that generated billions in revenue, yet contributed no profit tax to the Albanian state.
Prosecutors in Fier confirmed they executed 14 security measures, including 9 arrests, with five foreign nationals still at large. The investigation, which began in December 2024 and lasted six months, alleges that the company falsified financial reports, inflated operating costs, and laundered funds via a network of contractors in order to continuously declare losses and benefit from fraudulent VAT refunds — while completely avoiding corporate income tax.
Between 2004 and 2024, Bankers Petroleum reported over 532 billion lek in revenue (approx. €5 billion). However, according to investigators, the company simultaneously declared losses totaling over €11 million and avoided paying a single euro in profit tax, exploiting a controversial clause in its concession agreement known as the “R-Factor.”
Under this clause, the company was only required to pay profit tax once its accumulated revenues surpassed its investment costs — at which point profits would be split 50-50 with the state. Bankers initially projected that this threshold would be crossed by 2013. It then revised the projection to 2015, and again failed to meet the target in 2016. Eight years later, the R-Factor remains below 1 — at least on paper.
A National Resource, a National Loss
What has now emerged from press investigations and official audits is staggering: Bankers Petroleum generated over €4 billion in net revenues from Albania’s largest oil reserve between 2006 and 2023. Yet during the same period, it paid no profit tax. The only state revenue came from royalty fees — just 10% of gross production — which auditors say is a fraction of what the state should have received under a proper fiscal regime.
Even more troubling, the company declared €800 million in net profits, including €110 million in just the last two years, while claiming that it still had not recovered its investment. Critics argue this is the result of creative accounting and inflated expense declarations, facilitated through a web of offshore entities and preferential contractor relationships. The Supreme State Audit (KLSH) had warned for years that the R-Factor had been manipulated, but no enforcement followed.
The result: what was once considered a national asset — the Patos-Marinza oilfield — has been drained with impunity. “We are witnessing the perfect example of a private operator exploiting a strategic resource, while the host state watches billions disappear,” said a fiscal analyst familiar with the case.
Criminal Charges and Impunity Risks
The charges filed against Bankers Petroleum executives include “Creation of fraudulent VAT schemes,” “Concealment of income,” “Money laundering,” “Abuse of office,” and “Failure of tax authorities to perform duties.” These stem not only from the company’s internal actions, but also from alleged collusion with contractors and possibly complicit tax officials.
Prosecutors seized company records and personal devices in raids this week to prevent evidence tampering. According to sources, the investigation is expanding to cover offshore beneficiaries and contractor networks that helped facilitate financial distortions.
The company has so far remained silent on the arrests and allegations. Under Albanian law, all suspects are presumed innocent until proven guilty in a court of law.
End of Concession, or End of Accountability?
With Bankers Petroleum’s 25-year concession nearing expiration, observers fear that unless immediate measures are taken — including a forensic audit, contract revision, or criminal restitution — Albania may walk away from the deal with nothing but “rusted wells, poisoned lands, and a dried-out reservoir,” as one editorial put it.
“Patos-Marinza oil may turn out to be the greatest economic curse for Albanians,” anexpert told Tirana Times on condition of anonymity. “A strategic national asset was plundered by a private operator while the state stood silent for 20 years.”
If the allegations are proven, the Bankers Petroleum case will stand as one of the greatest failures of fiscal sovereignty and public interest protection in Albania since the fall of communism.
This case is likely to become a defining moment for Albania’s resource governance, testing not only the credibility of its institutions but also the integrity of foreign investment in strategic sectors. If the allegations are proven, the Bankers Petroleum affair may well go down as Albania’s most costly failure of fiscal sovereignty.
The post Massive Fraud Uncovered: Bankers Petroleum Under Fire for Decades of Tax Evasion and Billions in Untaxed Oil Revenues appeared first on Tirana Times.
