Nigerian authorities seize billion dollar oil block from Shell and ENI following corruption probe, showing why US transparency law must be protected

Nigeria’s anti-corruption law enforcement agency, the Economic Financial Crimes Commission (EFCC) has secured a court order in the Federal High Court of Abuja mandating the return of oil block OPL 245 to the Government, following an investigation into corruption allegations over how the deal was done. The historic news shows exactly why a landmark transparency rule now under threat from Republican lawmakers in the US is so important.

In 2011, Shell and Eni paid $1.1 billion to Malabu Oil and Gas, a front company secretly owned by a former Nigerian oil minister  This crooked deal deprived Nigeria’s people of a sum worth 80% of its 2015 healthcare budget. Shell and Eni have always denied that they knew the money would go to Malabu, but documents seen by Global Witness show that the companies constructed the deal knowing that the money would flow ultimately to Etete’s company. Given that the block in question is estimated to hold as much as 9.23 billion barrels in probable reserves, investors face substantial losses from a backroom deal they knew nothing about.

This shows exactly why a rule now under threat from Republican lawmakers and Big Oil in the US is so important.  The Cardin-Lugar anti-corruption provision requires companies to disclose what they pay foreign governments for natural resources – deals just like this one. After long delays in finalizing the rule due to oil industry opposition, it was issued in June 2016. Had the measure been in place in 2011, this crooked deal would never have gone through, leaving the companies’ investors and the Nigerian people much better off. The rule is now under threat as Republicans plan to introduce a resolution to void this important provision.

“This is historic. Generations of Nigerians have been robbed of life-saving services while oil men have grown rich at their expense. With US Republicans supporting the corrupt by slashing landmark laws and appointing an oil executive as their most important diplomat, it is inspiring to see Nigeria fight back.  Now that Shell and Eni are finally facing consequences, companies and their investors must understand they can no longer do backdoor deals with corrupt officials without paying a hefty price,” said Simon Taylor of Global Witness.

The EFCC was granted an order for the block to be returned to the Nigerian Government, pending the prosecution of the oil companies involved. The EFCC’s affidavit labels the oil block as “proceeds of crime” and states that Nigerian authorities are “in the process of preferring a further charge bothering on Conspiracy, Bribery, Official Corruption and Money Laundering” against Shell and Eni subsidiaries. The EFCC alleges that Shell and Eni “conspired” with the Nigerian Attorney General in 2011, Mohammed Adoke, to send the payment of “$1.2 Billion bribe money through Federal Government Escrow Account with JP Morgan Chase Bank”.

Nick Hildyard of The Corner House said, “We applaud the Nigerian Government for fighting back against corruption without fear or favour. Authorities in the US, UK, Italy and the Netherlands need to continue to do their bit in holding all parties responsible to account."

Antonio Tricarico of Re:Common said, “As the largest shareholder in Eni, the Italian Government has a responsibility to intervene. It must take action over Eni’s mismanagement and alleged corruption.”

In December 2016 Italian authorities officially concluded their preliminary investigation into the deal and appear set to lay charges against Shell, Eni and executives from both companies, including Eni’s CEO and COO, for international corruption offences. Prosecutors have alleged that over $500m went to alleged “fronts for [former] President Goodluck Jonathan of Nigeria”. Jonathan has denied the allegations saying in a statement that he has never used the alleged front to “seek favour or collect any gratification on his behalf.”

Eni has not received notification of the court order, spokesman Roberto Carlo Albini told The Associated Press. “Eni denies any wrongdoing,” he said. Shell Nigeria spokesman Bamidele Olugbenga Odugbesan also told the Associated Press he had no comment.

In December 2016 money Laundering charges were filed by the EFCC against Dan Etete and the former Nigerian Attorney General and Justice Minister Mohammed Adoke. In a statement in December 2016, Mohammed Adoke said “I hope to at the appropriate time make myself available to defend the charge for what whatever its worth,” he also emphasized that he did not benefit from the deal, which he said saved the government from a breach of contract suit in which Shell was claiming $2 billion. He called the charges "orchestrated plans to bring me to public disrepute in order to satisfy the whims and caprices of some powerful interests on revenge mission."