Leaked emails show how Shell and Eni conspired to hide payment to former oil minister’s company in corrupt OPL 245 deal

Companies continue to mislead by claiming they only paid Federal Government of Nigeria, whereas they were intimately involved in the construction of the deal to send $1.1bn to Malabu.

New evidence from leaked internal emails between senior Shell and Eni managers show the companies were fully aware and actively arranged for their $1.1bn payment for Oil Prospecting Licence 245 (OPL 245) to be sent to Malabu Oil and Gas, a company owned by the former Nigerian oil minister Dan Etete, in spite of their claims to the contrary.

The emails, published by Italian journalist Claudio Gatti, show that in 2011 Eni and Shell arranged for Malabu to receive the companies’ US$1.1bn in exchange for OPL 245, and conspired to hide this arrangement. Eni and Shell have therefore been dishonest in their claim that their payments were “unrelated to the cash flows” to Malabu, as Eni said in a statement this week. It is therefore misleading for the companies to claim that they only paid the Federal Government of Nigeria (FGN). The emails reveal instead that, not only did they know the money was destined for Malabu, but that they were intimately involved in the design, negotiation, and execution of the arrangements to ensure the funds were sent to Malabu via the FGN.

Global Witness put it to Eni and Shell that they have therefore been lying to have stated that they only paid the Federal Government of Nigeria, when in reality they were intimately involved in the construction of the arrangements to send the funds to Malabu. Eni replied by saying “we believe the interpretation in your letter is erroneous.” and repeated that their payment was made to a Federal Government of Nigeria bank account and they did not sign any agreement with Malabu. Eni commissioned an external audit of the case from a US law firm which it has shared with investigators and it claims did not find evidence of illegal conduct. When asked for further details Eni has failed to provide the terms of reference, detailed findings or any supporting evidence for this audit’s findings.

Shell did not respond to questions about this new evidence. Previously Shell has insisted that they did not pay Malabu and in a response from April 2015 said “We do not agree with the premise behind various public statements made by Global Witness about Shell companies in relation to OPL 245”.

Six weeks before the final deal was concluded, a draft escrow agreement was drawn up, dated 7^th March 2011. An escrow agreement is an arrangement by which one party deposits an asset with a third person (called an escrow agent), J.P. Morgan in this case, who will in turn make delivery to another party if and when the specified conditions of the contract have been met. The escrow agreement was between the Federal Government of Nigeria, Malabu Oil and Gas Limited, Nigerian Agip Exploration Limited (NAE) (Eni’s Nigerian Subsidiary), Shell Nigeria Exploration and Production Company Nigeria Limited (SNEPCO) (Shell’s Nigerian Subsidiary), and J.P. Morgan Chase. A leaked passage clearly shows that the companies intended the money to go to Malabu:

 (C)         Pursuant to the Resolution Agreement, NAE, on behalf of SNEPCO and NAE, has the obligation to wire transfer to the Escrow Account an amount of XXX million US Dollars ($XXX) to the benefit of FGN, within five (5) days from the date of execution of the Resolution Agreement.

(D)          The above amount shall be released by the Escrow Agent to MALABU on behalf of FGN pursuant to this Agreement, upon receipt of the Completion Notice.

In an email dated 30^th March 2011 between senior Shell and Eni managers, Shell proposed a “New Structure” for the deal, with the apparent aim of distancing the companies from the payments to Malabu. This new structure, which would later be agreed by all the parties, was in the form of separate Resolution Agreements (RAs). The email from an Eni manager to Shell managers says:

In general terms, Shell’s proposal to divide the RA in two separate agreements addresses part of Eni’s concerns, although it will need some re-work on our side. More specifically: […]

- FGN is envisaged to be the one paying Malabu directly. There is no need to refer to the Escrow Agreement no2, NAE paying to FGN etc; FGN shall pay Malabu and the fact that the money shall come to FGN from NAE is another matter dealt with under RA2.

- In general, we request to de-link, as much as possible RA 1 from RA 2, so that completion of RA 2 in [sic] not subject to the transaction under RA 1. […]

Minutes from a meeting held two weeks before the final deal for OPL 245 on the 14^th April 2011, confirm that these resolution agreements - in effect the deal for OPL 245 - were discussed and agreed with all the parties including Malabu in the room at the same time.⁴  The minutes state the attendees at the meeting as including; Malabu representatives Rasky Gbingie, Dr Nele [sic – possibly Dele] Adesina, Shell managers Peter Robinson and Nike Olafimihan, Eni managers Roberto Casula, Vicenzo Armanna and Giorgio Vicini, Attorney General Mohamed Adoke and officials of the Ministry of Justice and Department for Petroleum Resources. The minutes then read:

Agenda

Discussion of draft OPL 245 agreements

The parties discussed the New Structure of agreements, in particular with respect to the comments from DPR.

Parties agreed to have 3 separate agreements and discussed the body of the text.

Finally parties agreed on the final wording as per attached documents

Way forward

The 3 agreements have been initialled by the respective parties. Parties to define the date for execution of the agreements.

A final email from Eni to Shell, dated the day before the OPL 245 deal was signed, showed that Eni and Shell discussed whether Malabu would be in the same room to sign the agreements at the same time. The email included the line:

- would Malabu attend the meeting as well? The resolution agreement with Malabu shall be signed at the same date, as well as the Shell resolution agreement. Is this going to happen?

“We now know beyond all possible doubt or denial that Shell and Eni knew exactly where their payment was going. It’s high time they stopped trying to mislead the public and investors about their role in this dirty deal, which deprived Nigeria’s citizens of over $1.1bn.  To put that into context, $1.1 billion is equivalent to 80% of Nigeria’s health care budget for 2015,” said Simon Taylor, a Director of Global Witness. “The Nigerian government needs to demonstrate to Nigerians and the wider public that it can and will rigorously defend Nigeria’s public interest by cancelling this contract and prosecuting all found culpable of wrongdoing.” said Dotun Oloko, a Nigerian anti-corruption campaigner.

“This evidence shows that high level executives in Shell personally took part in the creation, negotiation, and execution of this corrupt deal.  It is now a matter of urgency that the judicial authorities in the UK, the US, the Netherlands and Nigeria, join forces with the Italian investigation into Eni, and properly investigate the role of Shell and its senior executives in this deal,” said Nicholas Hildyard of The Corner House.

Antonio Tricarico of Re:Common said: “Given the gathering pace of investigations into this deal and a call by the Nigerian House of Representatives to cancel the deal in 2014, investors in Shell and Eni, including the Italian public should demand to know why they were exposed to such risk.”