By Tirana Times | July 23, 2025
Albania’s most lucrative oilfield has become the epicenter of what could be the country’s most consequential investor-state confrontation to date, after Bankers Petroleum — its largest oil producer — threatened to sue the Albanian government in international arbitration courts. The company claims its rights as a foreign investor are being violated, while prosecutors allege it has siphoned off billions of euros through what they describe as one of the largest corporate frauds in Albania’s post-communist era.
The standoff escalated following the arrest of Bankers’ CEO Hongping Xiao and former executive Leonidha Çobo, as well as an announcement from the company that it has retained legal teams to explore arbitration under international investment treaties. In a public statement, Bankers condemned Albania’s ongoing criminal probe as “disproportionate” and harmful to the “integrity” of its operations. Yet for prosecutors and many observers, the case represents something far graver than a routine tax dispute.
Decades of Untaxed Oil Revenues
According to documents and audit reports reviewed by prosecutors, Bankers Petroleum generated over €5 billion in oil sales between 2004 and 2024 from the Patos-Marinza field, the largest onshore oil deposit in Europe. But despite these staggering revenues, the company paid zero profit tax to the Albanian state — declaring consistent losses for two decades while claiming it had not yet recouped its original investment.
The company’s fiscal advantage hinged on a clause known as the R-Factor, embedded in its concession agreement. Under this model, Bankers would only begin sharing profits with the Albanian government once its cumulative revenues exceeded investment costs — a threshold it was projected to reach in 2013, later delayed to 2015, then indefinitely. More than 20 years later, officials say the R-Factor is still “below 1” on paper, despite the firm publicly reporting hundreds of millions in net profits.
Critics, including the State Supreme Audit Office (KLSH), have for years warned of creative accounting practices, inflated expenses, and related-party transactions that allowed the company to artificially lower its taxable base. Investigators now allege a network of offshore contractors and internal collusion enabled the extraction of profit while evading Albanian tax obligations — including VAT fraud and money laundering.
A National Resource, a Strategic Loss
The unfolding scandal has reignited national debate over how Albania manages its natural resources. While the state received some revenue through royalties — roughly 10% of gross production — those earnings are dwarfed by what critics argue the country was entitled to under a fairer fiscal regime.
“If the allegations hold, Patos-Marinza has been drained while the public gained almost nothing,” said one analyst, speaking anonymously due to the sensitivity of the case. “This is not just an accounting scandal — it’s a systemic failure in protecting national wealth.”
Editorials and watchdogs have called for the revocation or renegotiation of Bankers’ 25-year concession, which is nearing expiration. Some warn that, without restitution or international scrutiny, Albania risks being left with “empty wells and poisoned lands.”
Investor Confidence vs. Sovereignty
Bankers Petroleum’s threat to sue Albania in international arbitration tribunals could complicate the government’s position. The company argues that the criminal investigation, which includes surveillance of internal communications and asset seizures, violates international protections granted to foreign investors. In turn, the Albanian government risks reputational damage if the process is perceived as politically motivated or legally flawed.
But many observers see Bankers’ legal threats as a defensive move against mounting criminal evidence — not a genuine investment dispute. The charges include fraud, VAT abuse, money laundering, and failure by public officials to act, raising questions about the complicity or negligence of Albanian institutions over two decades.
A Defining Test for Albanian Governance
What emerges from this case is not only a test of Albania’s legal and fiscal systems, but also its broader approach to resource governance and foreign capital. The Bankers Petroleum affair may determine whether Albania can enforce corporate accountability without compromising investor trust — or whether it remains vulnerable to high-level exploitation behind opaque contracts and passive enforcement.
With the case now drawing international attention, Albania stands at a crossroads: to assertits fiscal sovereignty and investigate potential state capture, or risk further undermining its credibility in the eyes of citizens and foreign partners alike.
Whatever the outcome of the arbitration threat or criminal proceedings, the Bankers scandal will likely become a landmark moment in Albania’s post-transition history — a litmus test for how a country rich in resources can confront the costs of long-term impunity.
The post Bankers Petroleum Threatens Arbitration Amid Fraud Probe in Albania appeared first on Tirana Times.
