Malabo oil deal: Shell & Eni face corruption trial in Italy today

It’s another day in court in the city of Milan, as an Italian court is set to resume corruption trial against executives of two oil giants (ENI and Shell) and Nigeria’s ex-oil minister Dan Etete in what seems to be one of the biggest straggling international corruption case in recent years.

The case, which has been repeatedly delayed, involves the 2011 purchase by Royal Dutch Shell Plc and Italy-based Eni S.p.A. executives of Nigeria’s OPL 245 offshore oilfield, one of Africa’s most valuable oil blocks.

The trial started in 2011 when Shell and Eni reportedly transferred $1.3 billion into a Nigerian government bank account. The two companies wanted to secure the rights to an oil field called OPL245, which according to estimates by the oil companies was worth $3 billion. However, the majority of the payments did not end up in the Nigerian treasury but went to a company called Malabu Oil & Gas, which was controlled by then oil minister Etete.

In December 2017, Italian judges in Milan ordered the companies and a number of individuals, including top executives at Shell and Eni, to stand trial. The trial has been slow to unfold and remains in preliminary hearings.

Milan prosecutors allege the corrupt deal was negotiated and enacted between 2009 and 2014 in a complex web of interests.

In court documents, prosecutors allege the deal involved top oil company executives, two former British secret service members, shady bank transfers and cash payments, many of which went to former Nigerian oil minister Dan Etete, who allegedly obtained the lucrative oilfield through a company called Malabu Oil and Gas Ltd.

Among those accused of international corruption are Paolo Scaroni, who was the CEO and executive director of Eni at the time of the alleged bribery, and Claudio Descalzi, who serves as Eni’s CEO now.

Also facing charges are Malcolm Brinded, former chief exploration director at Shell, and Peter Robinson, a former vice president for sub-Saharan Africa at Shell.

The court is also scheduled to hold a preliminary hearing and the judges in the case are expected to issue a decision on whether Nigeria should be granted the status of victim. If Nigeria is granted such status, that could open up Shell and Eni to hefty claims for damages by the African nation.

The hearing may also decide whether non-government watchdog groups, which had a hand in exposing the alleged bribery, can participate in the trial as civil parties.

“This trial needs to be a watershed moment,” said Barnaby Pace, an anti-corruption campaigner at Global Witness, one of the groups seeking to be admitted. “We cannot keep letting multi-national companies cut shady deals which rob countries of precious assets like this oil block.”

In a statement on yesterday Shell said the company believes “trial judges in Italy will conclude that there is no case against Shell or its former employees.”

In the event Italian judges do find improper payments were made to Malabu or others, Shell said “none of those payments were made with [the company’s] knowledge, authorization or on its behalf.”

Shell added that it has “clear rules on anti-bribery and corruption … There is no place for bribery or corruption in our company.”

Eni, in a statement, said it never entered into any “commercial agreement with Malabu” and that its acquisition of the oil field known as OPL 245 along with Shell was done properly. It says it paid the Nigerian government for the license.

Eni added that an independent review of the deal, commissioned by Eni, found that the transaction was “absolutely appropriate” and “found no evidence of any illegal activity on the part of Eni staff.”

But prosecutors allege Shell and Eni executives paid $1.2 billion for rights to OPL 245 and knew that more than $1 billion of that sum would end up as payments to top Nigerian officials, others involved in the deal and to Shell and Eni managers.