Press Release / May 20, 2012

Shell’s obscure payments kill its case for weak US and EU transparency laws

For further information about this story, download the Global Witness briefing: Shell’s obscure payments kill its case for weak US and EU transparency laws

The details of payments agreed by Shell to the Nigerian Government for a controversial oil deal expose the urgent need for the very transparency measures which Shell is currently opposing.

Nigerian subsidiaries of Shell and ENI agreed to pay the Nigerian Government US$1,092,040,000 to acquire offshore oil block OPL 245, New York court documents have revealed. Controversially, the court documents also reveal 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 Minister, Dan Etete, who was convicted in France in 2007 of money-laundering. 

The documents include a court judgement which states that “…it does appear that the FGN (Federal Government of Nigeria) was indeed the proverbial “straw man” holding $1.1 billion for ultimate payment to Malabu”. (Note 1)

Shell and ENI deny paying any money to Malabu Oil and Gas in respect of the licence and say they dealt only with the Nigerian Government.  The block has been subject to long-standing disputes between the government and Malabu, as well as a separate dispute between the government and Shell. (Note 2)

 “We do not allege that the companies made a payment directly to Malabu – but given the history of this block, both Shell and ENI need to explain what steps they took to ensure their payments did not ultimately end up in the hands of the Malabu or ex-Minister Etete,” said Brendan O’Donnell, oil campaigner at Global Witness. “At the very least, Shell and ENI must disclose full details about their arrangements with the Nigerian government to obtain this oil block.”  

Details of the arrangements made between the Nigerian Government and Malabu in April 2011 will be extremely embarrassing for Shell.

Shell is at the forefront of an aggressive lobby effort to critically weaken new U.S transparency laws which require oil, gas and mining companies to publish the payments they make to governments on a project-by-project basis. Shell is also involved in the intensive industry lobby campaign against moves to create similar legislation for European extractive industry companies.

Central to their effort to gut these laws, is the demand to remove the sort of specific ‘project-by-project’ disclosures that would make payments for OPL 245 transparent.

Shell and others argue that the publication of aggregate “levels of government” payments is sufficient, and that project level reporting “will not provide any meaningful transparency in a significant majority of the countries where we operate”.  But reporting at a government level only, would continue to obscure payments like those agreed for OPL 245, denying citizens the ability to ensure that they are not looted.

“Shell’s credibility to act as an honest broker in discussions around these new U.S and EU transparency laws is in tatters as a result of these revelations,” said Simon Taylor, Director of Global Witness and Co-founder of the Publish What You Pay campaign.  “This is the second time in just a few months that Global Witness has highlighted significant undisclosed payments made by big oil companies in countries known for corruption. How many more will we uncover before the penny drops that companies must disclose the payments they make on a project-by-project basis?”

Although Shell had published details of payments made to some governments in 2011, the company’s reports do not enable citizens to identify payments made for specific licences or deals, such as OPL 245. 

Policy-makers and regulators must not cave in to pressure to remove the requirement for extractive companies to publish project-level payments. It is only through project-by-project disclosure that citizens can become aware of such payments, enabling them to hold their governments to account.  Given that there is no discretionary ability for U.S regulators to remove project-level reporting from the U.S law, European policy-makers interested in ensuring a level playing field, must ignore big oil’s scare-tactics and ensure European law also requires disclosure down to the project level.

“If Shell and others have their way, far from creating effective transparency, these new laws could end-up aiding and abetting state looting by enabling payments to be hidden at the project level,” continued O’Donnell.

Global Witness is calling for:

  • Shell and ENI to publish full details about the arrangements they undertook to acquire OPL 245
  • Stop lobbying to weaken transparency requirements in the U.S, EU and elsewhere.  This must include a divorce from the American Petroleum Institute’s (API) threat to sue the Securities and Exchange Commission (SEC) should it come out with a rule consistent with the spirit of the Congress that wrote the law.
  • Policy-makers in Europe, together with the Commissioners of the U.S SEC must ensure that project-by-project disclosure remains a key part of the U.S and European extractive industry transparency laws.
  • Regulators to ensure that there are no provisions for countries to be exempt from the legislation as this would create a massive loophole, allowing corrupt regimes to pass blocking laws in their home countries – in effect, a ‘dictators’ charter’.


Notes to editors:

For further information about this story, download the Global Witness briefing: Shell’s obscure payments kill its case for weak US and EU transparency laws

1. 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. Neither Shell nor ENI’s subsidiaries were parties in the New York arbitration case.  Global Witness takes no view on this case.   The case was reported on by African Energy Intelligence Where the millions flew, Africa Energy Intelligence, 29th February 2012.  See Matter of International Legal Consulting Ltd.v Malabu Oil &Gas Ltd., Sup Ct, New York County, March 15, 2012, available at

2. OPL 245 gives exploration rights over an area off the coast of Nigeria that is thought to be rich in oil and its ownership has been disputed by Shell and Malabu for nearly a decade.  According to Africa Energy Intelligence, the OPL 245 licence was first awarded to Malabu by the government in 1998 when its reported owner, Dan Etete, was Nigeria’s oil minister.   Shell was brought in as a technical partner in 2001.  The license was then rescinded from Malabu by President Obasanjo’s administration on the grounds that Malabu had won the block under questionable conditions, afterwhich the block was awarded to Shell in 2002.  The Abuja government later re-awarded the block to Malabu in 2006 after a pro-longed legal battle.  Shell then began arbitration proceedings in Washington for the loss of the licence.  The recent New York court case reveals the negotiated settlements to resolve the disputed ownership of the block.

3. Global Witness also recently brought attention to BP’s agreement to make multi-million dollar payments into obscure “social projects” controlled by the highly opaque state oil company of Angola as part of a deal to win oil exploration rights, BP makes opaque payments for Angola oil block as petro-lobby seeks weak transparency rules, 21st February 2012,

4. Global Witness and Publish What You Pay coalition define project as, “Equivalent to activities governed by a licence, concession or similar legal agreement.  Where any payment liabilities are incurred on a different basis, reporting shall be in that basis.”


Simon Taylor: +44 (0)7957 142121 [email protected]

Brendan O’Donnell: +44 (0)7912 517 128 [email protected]

Judith Poultney: [email protected] +44 (0) 207 492 5849