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Shell knew that US$1.1 billion payment was destined for convicted money launderer

11th March 2013

To read about ENI's alleged meetings with Etete, click here. 

Meanwhile Shell attempts to weaken laws that will reveal such payments

Proceedings in a recent UK High Court case have revealed that Royal Dutch Shell plc was aware that a US$1.1 billion payment made by Shell and Italian firm Eni S.p.A. would end up in an account controlled by Dan Etete, a former Petroleum Minister of Nigeria, who was convicted of money laundering in France in 2007. Furthermore, testimony heard during the case indicates that an official from Shell previously negotiated directly with Etete over “iced champagne”. An email cited in the case also mentions that a Shell official called "Peter" would consult with The Hague over the terms of a potential deal*. Global Witness has written to Shell’s CEO, Peter Voser, to ask whether he is the ‘Peter’ mentioned in the email, but has not received a response to the question. 

Meanwhile, Shell continues to lobby against new legislation currently being discussed in the EU that would bring much-needed transparency to payments between oil companies and governments. Shell is also part of a US lawsuit aimed at striking-out existing law that requires payment disclosure by US-listed extractive companies [1]. “This scandal demonstrates precisely why we need the new transparency laws being finalized in Europe that require companies to disclose their payments right down to the project level – with no exemption for any country,” said Simon Taylor, director of Global Witness. “In light of Shell’s behavior in Nigeria, it is difficult not to conclude that it wishes to keep its deals in the dark.”

The High Court case, Energy Venture Partners v Malabu Oil & Gas, has been brought by a Nigerian consultant who alleges that he was not paid by Malabu for his work in helping to arrange the US$1.1 billion deal for oil block OPL245 in 2011. OPL245 has been the subject of controversy ever since it was awarded to Malabu in 1998, not least because Etete awarded the block to Malabu while Petroleum Minister of Nigeria. Etete is widely believed to control Malabu, although he has denied being Malabu’s owner, maintaining in court that he was employed by the company as a consultant only after he left office.

Etete is also controversial because he was found guilty in France in 2007 of money laundering, a conviction that was upheld in 2009. During the recent High Court case, testimony was heard that Etete had accepted bribes and used aliases to hide his ownership of money which he then used to buy expensive properties in France. Despite the fact that Etete’s conviction was upheld, the court heard that an official from Shell had lunch with Etete around December 2009. In an email describing this meeting, the official said that the two men were getting along very well personally, enjoying “lunch and lots of iced champagne.”

The email also says that Etete had requested some initial figures from Shell on what it was willing to pay Malabu for OPL245, and that “Peter has to talk to The Hague and we will come back with a figure.” Global Witness has asked Shell whether the reference to ‘Peter’ may be a reference to its CEO, Peter Voser. Shell’s 2010 annual report appears to list no other senior executive called Peter who might be in a position to make decisions about negotiations of the size being discussed. If the ‘Peter’ named is in fact Peter Voser, this would indicate that the company’s most senior figure was aware that Shell was in negotiation with convicted felon Etete. Global Witness put this and other points to Shell in a letter addressed to Mr Voser: Shell did not provide a direct response to these questions.

During the court proceedings, it was alleged that Shell eventually broke off direct negotiations with Etete when it found out that the son of General Sani Abacha, the dictator of Nigeria until his death in 1998, had claimed that he was the rightful owner of a percentage of Malabu, which was set up as a limited Nigerian company during his father’s rule.

Following more negotiations, in April 2011 Shell and Eni agreed to pay US$1.1 billion to the Government of Nigeria, which itself had an agreement to pay exactly the same amount to Malabu. Global Witness believes that this was structured primarily as a way of allowing Shell and Eni to claim that it had not struck a deal with Etete. The High Court proceedings and other evidence seen by Global Witness reveal that, in reality, Shell and its partner in this deal, Eni, were aware and in agreement that the deal was for the benefit of Malabu, and had met with Etete face-to-face on several occasions.

Shell chose not to reply to Global Witness’ specific questions on alleged meetings with Etete and the knowledge of its senior management of those meetings. Instead, it responded by saying that Shell reached a settlement with the Government of Nigeria. In Global Witness’ opinion this is disingenuous, because the deal to acquire OPL245 resulted in a huge payment that Shell knew was ultimately going to Etete’s company. Shell added in relation to the allegations made in the High Court case: “we can confirm that neither [Shell’s Nigerian subsidiary] SNEPCo nor any other Shell company is party to those proceedings and, as a consequence, we cannot comment on any statements or allegations made in the course of those proceedings.”

Simon Taylor of Global Witness commented: “Shell and Eni’s claim that they did not do a deal with Malabu fails to address the question of their knowledge of where the payment was ultimately going. They also fail to explain their apparent extensive direct dealings with Etete. Both companies appeared to enjoy rather lavish meals with Etete, and ended up taking part in an arrangement that, in the absence of a better explanation, looks like an attempt to conceal their US$1.1 billion deal with Abacha’s money laundering convicted oil minister. Both companies should be laughed out of the building if they attempt to challenge the new EU Directive on transparency or the existing US transparency laws.”

Contact: Simon Taylor: mobile: +44 (0)7957 142 121; or Thomas Mayne: landline: +44 (0)20 7492 5864, or mobile: +44 (0)7939 460357; or Brendan O’Donnell: landline +44(0)207492 5898, or mobile: +44(0)7912 517 128

Notes

[1] In addition to Shell’s opposition to EU efforts to require project-by-project reporting as part of the proposed Transparency Directive, as a member of the American Petroleum Institute (API), the company is supporting a lawsuit filed by the API that seeks to completely strike out Provision 1504 of the Dodd-Frank Act that was signed into law by President Obama in July 2010.

Global Witness investigates and campaigns to prevent natural resource-related conflict and corruption and associated environmental and human rights abuses 

 

*This sentence was amended 20 March 2013 following an email from Royal Dutch Shell plc.