Explanations made by Shell and ENI about payments made for a controversial oil deal in Nigeria are no longer sufficient and they must immediately come clean with more information about the deal, said Global Witness today. The call comes in response to a statement made by the Nigerian government which contradicts those made by Shell and ENI.
Earlier this month, Global Witness highlighted details of payments agreed by Shell and ENI to the Nigerian Government for a controversial oil deal exposing the need for the very transparency measures which Shell is currently opposing in the US and Europe.
In a press release dated 20th May, Global Witness exposed how Nigerian subsidiaries of Shell and ENI had agreed to pay the Nigerian Government US$1,092,040,000 to acquire offshore oil block OPL 245. It was also revealed that the Nigerian government agreed, in the same month, to pay precisely the same amount to Malabu Oil and Gas, a company widely reported as controlled by Abacha-era oil minister, Dan Etete, who was convicted in France in 2007 of money-laundering. The revelations came to light as a result of the publication of New York court documents.
Both Shell and ENI deny paying any money to Malabu Oil and Gas in respect of the licence and suggest that their agreements were only with the Nigerian Government. However, a recent statement from Nigeria’s Attorney General appears to contradict this. In a recent interview he stated that “SNUD [A Royal Dutch Shell subsidiary in Nigeria] and ENI agreed to pay Malabu, through the Federal Government acting as an obligor, the sum of US$1,092,040,000 billion in full and final settlement of any and all claims, interests or rights relating to or in connection with Block 245.”
News reports from Nigeria have also claimed that the Government of Nigeria has instructed the release almost 80% of the funds paid for OPL245 (US$801,540,000) into accounts controlled by Malabu, and that this money was subsequently shared through a set of complex corporate structures to accounts owned by a number of Nigerian companies and individuals.
Global Witness is not in a position to confirm these claims about the release of funds, nor their subsequent distribution. However we believe that these claims raise serious further questions about the transparency of the arrangements for the settlement of OPL245 and the ultimate beneficiaries of the deal. Nigerian media has also reported that Nigerian Economic Financial Crimes Commission (EFCC) is conducting an investigation into the transaction.
Both Shell and ENI deny that they had any agreement with Malabu. According to the Nigerian news site The Premium Times, Shell’s Nigerian spokesperson recently commented that, “Shell was not aware that that (sic) money was to be paid to Malabu” and repeated that Shell made no payments to Malabu. ENI’s subsidiary Agip also stated that their arrangement was solely with the Government of Nigeria. “The government who is the major concessionaire and owner of the land where the oil block was located did not want the block to continue to be left fallow over a misunderstanding between the other parties, and that was why government sold the block to us,” the spokesman for Agip told Nigeria press.
On the basis of the recent statement made by the Nigerian Government that “SNUD and ENI agreed to pay Malabu”, the explanations coming from Shell and ENI that they made no agreement with Malabu are insufficient. Global Witness calls on Shell and ENI to provide more details about how these deals were arranged and who the parties were. They should answer the following questions:
- Did Shell or ENI agree to pay any money to Malabu Oil and Gas, through the Federal Government of Nigeria, in view of a settlement for OPL245?
- What due-diligence did Shell and ENI conduct into the beneficial ownerhip of Malibu, and what was discovered about who owns Malabu?
- Did Shell or ENI negotiate directly or meet with representatives of Malabu at any point in the settlement of OPL245? If so, when, and what was discussed, or agreed?
- Did Shell or ENI negotiate directly or meet with any of the consultants hired by Malabu, specifically Dele Adesina and Co, Onyeabol Obi or Edin Agnev?
- Are Shell and ENI aware that some of the above individuals might be entitled to hundreds of millions of dollars from the sale of OPL 245 collectively for their role in representing Malabu?
- Does Shell continue to advocate for revenue disclosure regulations that would continue to keep these sorts of payments obscure?
- Given the clear public interest to be able to follow payments to governments, as illustrated by this case in Nigeria, will Shell and ENI now publicly support the strongest possible interpretation of US and EU laws requiring transparency of extractive company payment on a project-by-project basis with no exemptions?
- If not – what is Shell's and ENI’s explanation to Nigerians for continuing to keep these sorts of payments obscure?
Simon Taylor, Director of Global Witness says, “Shell’s credibility on revenue transparency is now horribly tainted – all the more so, since it has been at the forefront of efforts to gut both US and EU disclosure laws. Beyond demanding detailed explanations from these companies, law-makers and regulators should now move quickly to require effective transparency. Laws must include “project-by-project” disclosure requirements, as stipulated by Provision 1504 of the US Dodd Frank Law – and no exemptions.”
Notes and sources
 Global Witness, 21st May 2012, Shell’s obscure payments kill its case for weak US and EU transparency laws, viewable at: http://www.globalwitness.org/library/shell%E2%80%99s-obscure-payments-kill-its-case-weak-us-and-eu-transparency-laws. Also reported in Financial Times, 21st May 2012, Nigeria oil deal puts focus on energy sector, ft.com/cms/s/0/291c7b48-a28a-11e1-a605-00144feabdc0.html#ixzz1vR0IeNZE;
 Vanguard: Nigeria: Money Laundering – French Court Hands Dan Etete 3-Yr Jail Term, November 7, 2007, available at http://allafrica.com/stories/200711080184.html; Agence France Presse: Paris court upholds Nigerian minister laundering conviction, March 18, 2009.
 The information comes from contracts disclosed in a New York arbitration case, the judgement from which was made in March 2012. A consulting firm initiated a claim as they acted as sellers for the block on Malabu’s behalf, but claim not to have been paid. The case was reported on by African Energy Intelligence, Where the millions flew, Africa Energy Intelligence, 29th February 2012. For the original case documents see Matter of International Legal Consulting Ltd.v Malabu Oil &Gas Ltd., Sup Ct, New York County, March 15, 2012, available at https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=IlMhqMX_PLUS_/fJrxxubSXRkww==&system=prod
 The Premium Times, 27th May 2012, Adoke lies, misleads Nigerians in reaction to N155billion oil block scandal in which a statement made by Mr. Mohammed Bello Adoke, SAN, CFR Honourable Attorney General of the Federation and Minister of Justice is reprinted in full, http://premiumtimesng.com/news/5309-adoke_lies_in_rection_to_n155bn_scandal.html
 Nbm News, 24th May 2012, Malabu Oil Scam: How $1.1bn Was Shared, http://www.nigerianbestforum.com/blog/?p=114673; The Leadership, 24th May 2012 Malabu Deal Latest - Shell's Dirty Lies; The Daily Trust, 23rd May 2012, FG Pays U.S.$1.1 Billion To Dan Etete's Company
 The Premium Times, 21st May 2012, Jonathan, Etete, Shell in fresh N155billion scandal http://premiumtimesng.com/business/5215-jonathan_-shell_-etete_-in-fresh-n155billion-scandal.html
 The Leadership, 25th May 2012, Malabu Oil Deal - FG Sold Block To Us – Agip, reported on AllAfrica.com, http://allafrica.com/stories/201205250165.html