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Sunday 31 August 2014

Shell denies links to money laundering allegations

Tim Cocks

Published 24/07/2013 | 14:07

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Shell is among the companies being investigated over allegations of price-fixing

British police are investigating a money-laundering allegation related to a big oil field bought by Shell and ENI from Nigeria for $1.3bn (€982m), after most of the cash they paid ended up in a company linked to a former Nigerian oil minister.

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The probe concerns offshore block OPL 245, which industry sources say contains up to 9.23 billion barrels of crude - more than enough to keep China running for two and a half years - the ownership of which had been in dispute for more than a decade.

"The proceeds of crime unit is investigating a money-laundering allegation in the UK in connection with OPL 245. The investigation is at an early stage," a UK spokesman said.

Transparency campaigners, who asked the UK to look into the matter, assert that Shell and ENI used the Nigerian government as a go-between to obscure the fact that they were dealing with former oil minister Dan Etete, who also has a 2007 money-laundering conviction in France related to bribes he was alleged to have taken when in government.

In his capacity as oil minister, Etete awarded block OPL 245 in 1998 for a payment of just $2m to Malabu Oil and Gas, a company in which he played a prominent role.

The critics claim that Shell and ENI, which haven't been accused of any legal wrongdoing, wanted to distance themselves from Etete given his reputation and his involvement in the original award of the oil block to Malabu.

A Shell spokesman told Reuters it had purchased the block from the government, making no payment to Malabu, and that it acted transparently and in accordance with Nigerian law.

ENI declined to comment to Reuters, but it told shareholders in May that the transaction was with the government, not Malabu.

Reuters was not able to locate Etete for comment. His lawyer did not immediately respond to a request for comment.

While Shell and ENI say they bought the block from the Nigerian government, for which they paid it $1.3bn in 2011, Nigeria says it was helping resolve an ownership dispute over the block between Shell and Malabu and immediately transferred $1.09bn from the sale to Malabu. The government retained the remainder.

Etete had awarded the block to Malabu during the rule of military dictator Sani Abacha, whose son Mohammed and other close allies were shareholders in the company. That deal was later annulled after the death of Abacha by a new government that judged the award improper.

In a UK court case brought by Emeka Obi against Malabu for unpaid fees relating to his help in brokering the Shell/ENI deal, the judge in that case, Justice Elizabeth Gloster, concluded in her ruling last week that "From its incorporation and at all material times ... Etete had a substantial beneficial interest in Malabu."

Etete said he was only a consultant to the company, but he represented the company in the court case and in all negotiations with the oil majors, and he told the court he was the sole signatory to its accounts.

Documents relating to Obi's London case show that both Shell and ENI met several times with Etete to negotiate the deal. An email from a Shell employee to another middleman recounts how he met Etete for face-to-face negotiations over "lots of iced champagne".

Obi said in court he approached ENI on Malabu's behalf on December 24, 2009, and introduced Etete to an ENI representative to discuss the deal.

THE GO-BETWEEN

Global Witness campaigner Tom Mayne said: "It's obvious from the meetings Shell and ENI both had with Dan Etete that they knew he was the person to speak to and then agreed that the deal be structured in such a way that it went through the government."

Babatunde Oluajo, national secretary of Zero Corruption Coalition, told Reuters his Nigerian campaign group had asked the UK government to look into the matter.

"In regard to our ... commitment to the fight against corruption in Nigeria ... we wish to ... formally request for a full investigation into the activities of ... companies and individuals in the procurement of the OPL 245 in Nigeria," reads a letter the group sent to the UK High Commissioner on July 5.

Nigerian lawmakers also began investigating the deal last week to ascertain if Attorney General Mohammed Aboke, who helped finalise the deal with Eni and Shell, had acted properly, as his involvement only came to light in the London court case.

Aboke said he was acting in the interests of all parties to facilitate a deal and end the long-running ownership dispute over the oil block. He also said in a press report last week that resolving the dispute would help the government attract investment into the oil and gas sector.

The investigations highlight the regulatory risks faced by oil companies doing business in African countries with a history of weak governance and endemic corruption.

In the five years Abacha was in power, he liberally dished out oil blocks to political allies and is suspected of having enriched himself to the tune of about $4bn before he died.

Malabu had been registered on April 24, 1998, five days before Etete awarded it block OPL 245. Three months later, Abacha died.

Though Malabu's original shareholders had been Abacha's son and allies - and Etete himself, according to the British judge in Obi's court case - the company secretary Rasky Gbinigie told the court he had lost all the documents showing who owned it now.

The ownership of OPL 245 had also been unclear ever since the government annulled the initial award to Malabu in 2001, and then awarded it first to Shell and then back to Malabu after a series of court cases.

Shell was still pursuing action to recover the block when it finally struck the deal to buy it with ENI in 2011.

Reuters

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