Malabu N155bn scandal: UK group seeks tougher EU action on Shell, ENI

Shell and ENI claim they did not know the money was going to Mr. Etete’s Malabu.

Global Witness, a UK based international organisation committed to transparency and accountability in the global extractive industry, has waded into the Malabu $1.1 billion scandal, asking the European Union to put in place stringent laws that would prevent companies like oil giants, Shell and ENI, from engaging in payments to illicit companies like Malabu.

A huge chunk of the $1.1 billon (about N165 billion) payments, made by Shell and ENI, ended in Malabu accounts controlled by convicted felon, and former Nigerian Petroleum Minister, Dan Etete.

In an ongoing working relationship with Global Witness, PREMIUM TIMES is the only Nigerian media to obtain, exclusively, a statement by the group calling on the European Union, EU, to put in place stronger anti-corruption laws, and showing more evidence of Shell and ENI’s complicity in the Malabu scandal.

Despite claiming to be unaware that the N155 billion (US$1.1 billion) paid to the federal government was to be transferred to Malabu Oil, fresh details from the U.S. indicated that Shell and ENI actively participated in the process that made the murky deal possible.

Dan Etete was the former petroleum minister during the Abacha regime. He was convicted of money laundering in France in 2004, and as reported by PREMIUM TIMES dubiously awarded an oil block to a company he has interest in, in contravention of Nigerian laws.

Last year, Shell and ENI made the payment into the federal government’s account for a controversial oil block, OPL 245. In a grand scheme that reeks of corruption, top government officials, chief among them Attorney General of the Federation, Mohammed Adoke; and Minister of State for Finance, Yerima Ngama; with a tacit approval from President Goodluck Jonathan, then transferred the money into Malabu’s account.

In other words Shell/ENI, with the help of the above named officials used the federal government as a conduit for transferring slush funds to a criminal company.

Information sourced from the U.S. by Global Witness shows the energy giants had advance knowledge that the money was going to be transferred to Malabu.

An affidavit sworn to in a U.S. court by a consultant central to the Malabu deal “described a process of discussion and negotiation between the parties to the deal, which commenced approximately in May 2009.”

However the negotiations stalled in December 2010. But the consultant, Ednan Agaev, swore that an ENI employee later contacted him in late December 2010 and told him that a “direct deal” with Malabu was no-longer possible.

The consultant then confessed to have proposed a new arrangement that will see the Nigerian government pay Malabu “compensation received from ENI AGIP/Shell.”

“By the end of January 2011, ENI Agip / Shell came back with a proposal similar to the one that I had suggested to Etete in December […] despite the form of the transaction, the substance of the final outcome for Malabu was the same, as Malabu was to receive US$1.1 billion. […] At the end of March 2011, I met with Etete, he accepted the proposal, and I conveyed his acceptance to ENI AGIP/Shell,” Mr. Agaev told a U.S. court.

This confession by the consultant, plus the disclosure by Mr. Adoke in an official statement that “SNUD (Shell) and ENI agreed to pay Malabu through the Federal Government acting as an obligor, the sum of US$ 1,092,040,000 billion,” confirms our earlier story that Shell and ENI were well aware of the final destination of the dirty money.

Global Witness also observed that Mr. Adoke’s confession, as well as the sworn affidavit, puts Shell and ENI in direct violation of anti-bribery legislation in the UK, U.S. and Italy that prohibits the payment of money to filthy companies.

“A substantial monetary ’reward’ ended up being paid to a company controlled by an individual, who had arguably abused his public position to obtain OPL-245 in opaque circumstances during the Abacha dictatorship,” the organisation said.

Unbelievably, Shell and ENI still continue to play their ridiculous denial game even after being presented with these overwhelming evidence.;

Responding to detailed questions by Global Witness, Shell said: “No payments were made by either NAE or SNEPCo [respectively, ENI and Shell subsidiaries in Nigeria] to Malabu Oil and Gas.” ENI also responded similarly: “the relevant agreements have been executed by ENI and Shell only with the Federal Government [of Nigeria].”

Global Witness said: “It would be surprising if Etete’s history was not known to sophisticated international companies who, in Shell’s case, have operated in Nigeria for more than half a century.”

“Something really stinks here,” said Simon Taylor, Director of Global Witness.

“On the one hand, we have Shell fighting an aggressive campaign to prevent new EU laws from mandating payment disclosure right down to the project-level. On the other, we can see that the company bought this project in Nigeria, together with ENI, with a payment that monetised an asset obtained by Abacha’s Oil Minister under dubious circumstances, worth hundreds of millions of dollars,” he continued.

“Buying assets like this in such an opaque manner, where it is not possible for citizens to follow the money is clearly not in the interests of national development, and could potentially deprive the country of much-needed revenue,” he said.

A call for the EU to act

Global Witness therefore called on the European Union for the inclusion of  “strong disclosure laws that requires a ‘project-by-project’ disclosure to ensure such payments are publicly reported in a directive being discussed by the EU Council and Parliament.”

The organisation advised the EU lawmakers to borrow a leaf from a U.S. legislation passed in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

“Provision 1504 of the Dodd-Frank Act, requires US- listed extractive companies to publish the payments they make to foreign governments for each country on a project-by-project basis. European law-makers must now follow the proposal from the European Parliament to define ‘project’ as activities governed by a single contract, license, lease, concession or similar legal agreement with a government upon which payment liabilities arise, in order to require disclosure of payments such as the one made for OPL 245.”

“The litmus test for an EU directive is whether payments like that for OPL-245 would be reported. If not, then the Directive will be unfit-for-purpose, because project payments of this magnitude would continue to be aggregated and obscured, preventing citizens from knowing exactly what is being paid, for what, and to whom. If you don’t even know a payment exists, how can you follow the money?” Mr. Taylor said


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