Two middlemen found guilty over Nigeria’s $1.3bn oil field scandal
A court in Milan, Italy has found Nigeria’s Emeka Obi and Italian’s Gianluca Di Nardo guilty of corruption in a case involving multinational oil companies, Royal Dutch Shell Plc, Eni SpA and the Nigerian government over the 2011 purchase of OPL 245, an oil field reputed to be one of Africa’s biggest, for about $1.3 billion.
Emeka Obi is one of the middlemen who had claimed that he deserved a share of the $1.3 billion, saying he helped mediate negotiations between the oil giants and ex-Nigerian petroleum minister, Dan Etete.
According to the ruling, the two middle men were sentenced to four years in prison as they were guilty of helping to arrange a payment between the companies and the Nigerian government for an oil license in the country, which largely went to pay bribes.
Italian prosecutors proved that Emeka Obi received a mandate from Dan Etete to find a buyer for OPL 245, collecting $114 million while Di Nardo took $24 million of that amount for putting Emeka Obi in touch with Eni.
Although, Emeka Obi and Gianluca Di Nardo can appeal the decision, the court seized over $100 million from both of them as the verdict could help bolster Italian prosecutors’ case against Shell and Eni.
Both Obi and Di Nardo, accused of being middlemen and taking illegal kickbacks, had asked for a separate fast-track trial which, under Italian law, allows sentences to be cut by a third.
Barnaby Pace, anti-corruption campaigner at Global Witness, said: “This judgment will send shivers down the corporate spines of the oil industry.”
In an emailed statement, a spokeswoman for Shell said neither Obi nor Di Nardo worked on behalf of the company, adding it was waiting to see the fast-track judge’s written decision.
“Based on our review of the prosecutor of Milan’s file and all of the information and facts available to us, we do not believe that there is a basis to convict Shell or any of its former employees of alleged offenses related to Oil Prospecting License 245 in Nigeria,” Shell said in a statement.
Also in emailed comments, Eni reiterated it had acted correctly in the purchase of OPL 245, saying it had worked directly with the Nigerian government.
Eni’s spokesperson said it has confidence in the judges in the case, and believes a “complete reconstruction of the facts” will show the company acted properly.
The Thursday ruling, involving Emeka Obi and Gianluca Di Nardo, is a case running parallel to the main trial of both oil giants. It may however give clues to what might be round the corner for the two companies.
Analysts say Shell, which had for years denied responsibility, and Eni could potentially be forced to pay huge damages in the case after judges ruled that Nigeria had the status of victim.
Barnaby Pace, anti-corruption campaigner at Global Witness said the trial should signal a turning point for the oil industry.
“This trial should signal a turning point in the way the oil industry has operated for far too long. Some of the most senior executives of two of the biggest companies in the world could face prison sentences for a deal struck under their watch,” Pace, an anti-corruption campaigner was quoted to have said in April this year.
Malabu deal controversies, struck in the final days of the regime of Sani Abacha in 1998, started when Etete award the oil field to a company called Malabu Oil and Gas, which details later revealed he partly owned and later controlled.
In July 2013, a British High Court ruled that Etete was indeed the owner of Malabu Oil & Gas. As Etete had awarded the oil block to Malabu Oil and Gas whilst oil minister during the regime of the corrupt dictator General Abacha, he had effectively given himself one of the most lucrative oil blocks in Nigeria.
Shell and Eni deny paying any money to Malabu Oil and Gas. However, High Court proceedings and other evidence seen by Global Witness reveal that, in reality, Shell and Eni were aware and in agreement that the deal was for the benefit of Malabu, and had even met with Etete face-to-face on several occasions. In fact, testimony heard during the case indicates that an official from Shell previously negotiated directly with Etete over “iced champagne” and that Eni officials had enjoyed a luxurious dinner at a 5-star hotel in Milan with him
Global Witness believes that the deal was structured primarily to allow Shell and Eni to claim that they had not struck a deal with Etete or Malabu. Yet in making these payments, Shell and Eni effectively bought the block from Etete for over a billion dollars, therefore ‘monetising’ an asset that was acquired by Malabu Oil and Gas in highly suspicious and possibly illegal circumstances.
No charges have been brought against former President Goodluck Jonathan who approved the controversial settlement agreement and transfer of the funds to Malabu.
Both Shell and Eni have strongly denied that they knew of any corruptions linked to the deal, and have said they don’t think bribes were paid at all. The next hearing in the wider case involving the companies is scheduled to be held in Milan on Wednesday September 26.
Nigeria’s OPL 245 is one of the biggest sources of untapped oil reserves on the African continent with reserves estimated at 9 billion barrels.
Eni, the biggest foreign oil producer in Africa, has been doing business in Nigeria since 1962 and last year produced 109,000 barrels of oil equivalent per day.
Shell is the biggest foreign investor in the country, producing 266,000 barrels of oil equivalent per day in 2017.