Did you know that Nigeria is the 12th largest oil producer in the world and the 8th biggest exporter? That makes it a mid-range powerhouse when it comes to the oil industry. Now, did you also know that Nigeria ranks at #144 on the Corruption Perception Index with a rating of 27. To put that into perspective, the rating number is between 0 and 100 where zero is really, really bad – Denmark is at the top of the list with a rating of 88 as at last year. Put those two items together: oil and corruption, and you have a recipe for disaster, as both Royal Dutch Shell (RDS) and Eni SpA have found.
Back in 2010 both companies reached an agreement with the Department of Justice in the US having been implicated in bribery schemes in Nigeria. However, they continued to trade in the country and a year after reaching the agreement in the US, the two companies bought an oilfield called “OPL-245” from the Government for $1.3bn. The oilfield was estimated to hold nine billion barrels of crude oil and was a key area for the industry. However, the Government funnelled $1.1bn of that cash to a company called Malabu – which was controlled by a fellow called Dan Etete, a prior oil minister and a convicted money launderer! Etete had used a false name, “Kweku Amafegha“, for the company registration.
The two oil companies are now being charged with failing to prevent bribery and several executives are personally being charged as well. Prosecutors have alleged that the oil companies knew that once the payment was made to the Government that the money would find its way to Malabu and be distributed to pay off officials and politicians. Prosecutors also allege that $50m was given to certain oil company executives as a “thank you”. Both RDS and Eni have rejected the charges suggesting that there would be a paper trail to show that the money came back towards their employees, however there are emails from RDS management speculating – and raising concerns – that there was a strong possibility that Etete would distribute the money between a politically active group. The Prosecution have used these emails to try and prove that RDS knew that it was going to happen and that they should have been focused on where the money was going rather than the entity who signed the contract – which was with the Government. On the back of the charges, Dutch prosecutors then started their own battle and even tapped RDS company phone lines in the hope that they would find a smoking gun. RDS is part Dutch and part British.
It seems that Etete had appropriated the oilfield when he was the oil minister under a previous administration and sold it to Oil and Gas Malabu, a company that he secretly owned. The Government at the time revoked the licence and gave it to RDS/Eni and then revoked that new licence and gave it back to Malabu – which started a legal battle. The result of that battle was the $1.3bn purchase and payment into a London bank account controlled by Nigerian government officials!
The first charges were filed in 2017 with an Italian court hearing the case. When the case opened, it seemed that the Nigerian Government were keen to see it fail and sent third division lawyers to play in a premier league court case! However during the start of the proceedings, RDS notified the Dutch investigators that they wanted their Vice President of Sub-Saharan business, Peter Robinson, investigated because they had uncovered several bank accounts in Switzerland and the Seychelles in his name. It appeared that he had taken bribes in relation to another Nigerian oilfield. The oil company then filed a criminal complaint against him.
Italy appears to be the centre of the legal battle because of the split of the funds between Eni and RDS: Eni had put in $980m of the $1.3bn. The legal work then started to spread outwards and when the Dutch investigators tapped the phone lines of the RDS offices, they learnt something quite interesting: RDS had employed a company called Hakluyt and Company to help with some negotiations that involved Malabu and to try and discredit anyone who spoke against the oil company. Hakluyt was filled with ex MI6 spies! Several of the Hakluyt employees are now part of the ongoing court cases.
With the Italian court looking into the corruption case, the Federal High Court in Nigeria heard a case where a civil rights group wanted to force the Government to revoke the licences again and take control of the oilfield themselves.
Of the $1.1bn that went to Malabu, more than half was given out to the President and his cronies. It is thought, therefore that Etete kept the rest – and despite being charged in Nigeria and Italy for his part in the scheme, he “disappeared”. However he is in contact with the media through intermediaries and in June of 2018, a leak of papers in Dubai uncovered that he had splurged a big chunk of his money on property there. It seems that when the money arrived in Malabu’s account, a large portion was transferred to another Nigerian entity: Rocky Top Resources who immediately bought a private jet! Rocky Top (owned by Etete) was also making large regular payments to another entity: Gunes General Trading LLC in the United Arab Emirates. Gunes was an informal money exchange and was used to funnel the cash into the country for the purpose of buying and fitting out properties. Etete was using different forms of his name for the many bank accounts between Africa and the Middle East.
All these shenanigans came to light after a Nigerian, Emeka Obi, and an ex Russian diplomat, Ednan Agaev sued Malabu to recover monies that were promised to them for arranging meetings between Malabu and the oil companies. During their London court cases, it became apparent that something bigger had happened. The judge suggested that Obi should be given $100m for his efforts and Agaev $65m – not bad for a few hours work! It was the bank documents used in the case by the duo that triggered a bigger investigation.
Another issue then arose, Emeka Obi, the middleman who connected the Government with the oil companies and who was awarded $100m was found to be as corrupt as the others. As part of another investigation into a corrupt ex Credit Suisse executive (not related to this Nigerian investigation), a Geneva apartment was raided and the occupant (who cannot be named) had a bag with a hard disc containing lots of documents, SIM cards, Nigerian passports and a veritable treasure trove for the investigators. That bag belonged to Obi who was added to the list of people charged in the oil companies corruption case. He did try unsuccessfully to stop the contents of the bag being added to the pile of evidence.
In September last year, Obi and another Italian middleman were found guilty and sentenced to four years in jail. Obi had most of the $100m awarded in the court proceedings that triggered this case confiscated! His partner in the original case, Ednan Agaev was also charged with corruption and in December, the Russian Foreign Minister, Sergei Lavrov presented a letter to Italy’s foreign office demanding that all charges be dropped against Agaev suggesting that they were unreasonable!
Just to really screw things up, the Nigerian Attorney General, Abubakar Malami, issued a letter to the Nigerian Federal High Court as part of that ongoing case suggesting that the charges be dropped against the European companies and that the whole case should be abandoned. That letter was then used against Nigeria in the Italian trial! So it appeared that in their own country, the Government wanted the charges to be dropped for fear of possible civil unrest against them, however they wanted the cases to continue overseas. Perhaps this was being done to limit the information circulating about the relationships.
Also in December, the Nigerian Government launched a fresh case in a London court against RDS and Eni over the OPL-245 oilfield claiming damages of $1.1.bn. Included in this case is a claim against JP Morgan for making the financial transfers from RDS/Eni to the bank accounts controlled by their own politicians! The corruption case, however, hasn’t affected the RDS relationship with the Nigerian Government – they were awarded another $5bn contract last year!
This month (February 2019) another scalp was taken. Bayo Ojo, the Nigerian Attorney General and Minister of Justice at the time of the 2011 agreement to sell the oilfield, admitted in the Italian Court to receiving $10m for his part in helping to get the deal done. Etete had apparently agreed to give him $50m and Ojo was upset about being short-changed! He had used some of these ill-gotten gains to start a real gold mine as opposed to the paper one he was involved in!
The trials in Italy and London are still ongoing and it is expected that more heads will roll this year. Look out for more updates!