Malabu Oil Scandal – The Trial of Shell and Eni Corruption Case in Nigeria

Alao Abiodun
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On December 17th 2018, An Italian judge revealed that the oil majors Eni and Royal Dutch Shell were fully aware their 2011 purchase of a Nigerian oilfield would result in corrupt payments to Nigerian politicians and officials.

The Milan judge made the comment in her written reasons for the September conviction of Nigerian Emeka Obi and Italian Gianluca Di Nardo, both middlemen in the OPL 245 deal, for corruption. The pair were jailed for four years.

It should be recalled that Shell and Eni in 2011 jointly acquired the license to the area known as OPL 245 in the waters off Nigeria’s coast, but so far development has been fluctuating amidst the investigations.

This account of the deal is based on interviews with more than a dozen people with knowledge of the case, internal company emails and documents, and hundreds of pages of court documents from cases in Britain, Italy and Nigeria reviewed by the Journal.

Global Witness last year released emails that they claim show that Shell knew much of the money initially paid for the oil block would be passed to Dan Etete, a convicted money launderer and former Nigerian oil minister, and would be used to bribe Nigerian officials.

The Malabu Deal

The Malabu deal, struck in 2011 under former President Goodluck Jonathan, saw the Nigerian government as a negotiator in the sale of OPL 245 oil block in offshore Nigerian waters.

Two international oil and gas giants, Royal Dutch Shell and Italian Agip-Eni, paid out about $1.1 billion to Dan Etete, a former Nigerian petroleum minister who had previously been convicted of money laundering in France. The payout would later become a subject of cross-border investigation spanning over six countries.

Eni CEO Claudio Descalzi and four ex-Shell managers, including former Shell Foundation Chairman, Malcolm Brinded, are on trial in one of the largest cases in the history of the oil and gas industry. All the accused have denied wrongdoing.

Two men named in the case – Emeka Obi, a Nigerian consultant in England, and Gianluca Di Nardo, an Italian – stood as middlemen in connecting parties and ensured the transfer of the funds through international bank accounts in the oil deal, prosecutors alleged. They were convicted last month in Italy.

OPL 245 Deal

OPL 245, one of Africa’s most valuable oil fields, contains an estimated nine billion barrels of untapped oil, worth nearly $500billion even with today’s bargain bin oil prices. Its eventual purchase boosted the world’s fifth-largest company’s proven reserves by a third (proven reserves are a key statistic for shareholders).

The field has been at the center of legal battles since 1998, when Etete first acquired rights to it through his front company. Months before it finally sealed the deal in 2011, Shell had to pay $30 million in a separate settlement on bribery charges in Nigeria.

The controversial oil deal — the OPL 245 oilfield — was said to have been signed off to Shell and ENI after both companies allegedly paid bribes to Nigerian officials to the tune of $1.1 billion.

The struggle over OPL 245 dates back to 1998, when the Abacha government awarded the oil rights to a newly minted Nigerian firm called Malabu Oil and Gas. According to court documents, the company was ultimately owned by figures close to Mr. Abacha’s regime, including his son and Mr. Etete, then the country’s oil minister.

The company was meant to pay the government $20 million for the license, but paid only a little over $2 million, according to the court documents.

In 2001, Shell agreed to acquire a 40% interest from Malabu in the oil field. Shell, already a dominant producer in Nigeria, hoped the move would expand its footprint in the oil-rich waters off the coast. But within months, Malabu’s ownership was revoked by the new, democratically elected president, Olusegun Obasanjo.

The Corruption Allegations

The corruption case against Shell and Italy’s Eni filed by prosecutors in Milan is centered on the shady $1.3bn deal for a vast African oil field. A former Nigerian president got indicted in the allegations of hundreds of millions of dollars paid as bribes including Giant oil companies, offshore accounts, ex-MI6 agents.

The Allegations of corruption and bribery had been mounted over the years, forcing Shell and Eni to repeatedly maintain that they acquired the rights to the lucrative block in line with Nigerian law.

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But email exchanges between Shell management cited in a report by corruption watchdog Global Witness, suggested that Shell was aware the money was likely to be funnelled to individuals, including Etete and Jonathan.

Several Nigerian government officials were believed to have received several million dollars in bribes for the enabling roles they played. Ex-president Goodluck Jonathan, under whose watch the deal was struck, has also denied wrongdoing. However, the former president is not on trial over the long-running case.

In 2017, APRECON embarked on an investigative quest down to the Niger Delta axis which is Nigeria’s concentration of oil companies and saw first hand environmental devastation, It was quite visible that there was lack of Environment Impact Assessment & Environment & social impact assessment.

APRECON in series of detailed articles got the authorities to pay attention to the effects of the industrial activities on the people and the ecosystem, as well as improving the lives of those inhabiting the area. This is the simplest of demands, and rightly so, that has ironically kept the region a battle ground for three unequal gladiators: the government, the oil companies and the people who decide to speak out in whichever way they chose to.

Everything has turned sour, so long as the people are concerned as, since then, the region has instead harvested a basket of multi-faceted problems: environmental degradation, high rise in violence, boundary disagreements and readjustments; oil thefts and fatal accidents, loss of the ecosystem and dangerous depletion of food/water resources, underdevelopment.


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