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Shell Knew Of Bribe Payments To Nigerian Official, Global Witness Report Alleges

Apr 10th, 2017
by John Donovan.

Jonathan Webb, CONTRIBUTOR. I write about the supply chain and corruption: 10 APRIL 2017

A recent publication of leaked emails has found evidence that Shell knowingly bribed ministers in the Nigerian government. Global Witness, an anti-corruption NGO, described the episode as “one of the worst corruption scandals in the history of the oil industry”.

The affair relates to OLP 245, an offshore oilfield in Nigerian waters that is estimated to hold nine billion barrels of oil, valued at over half a trillion dollars at current prices.

In 2011, Shell alongside Eni (an Italian oil company) paid $1.1 billion to exploit OLP 245.  The money was received by convicted money launderer David Etete, who was the oil minister at the time. Through his company, Malabu Oil and Gas, Global Witness allege that Etete pocketed the cash.

Shell had previously claimed that the moneys were paid to the government in return for licensing rights. However, Global Witness’ publication of leaked emails suggest that Shell workers were in fact aware that the transfers were a personal bribe. The emails show Shell employees talking of “politicians on the take” and that Shell’s money could be used for “paying people off”.

One email details an account between a Shell representative and Etete, where the oil worker describes the project as likely to “deliver significant revenues to GLJ” (an acronym for the then president of Nigeria, Global Witness allege, Goodluck Jonathan).

Another Shell employee email notes that there were internal discussions over Etete’s amenability to a bribe. “If at nearly 70 years old he does turn his nose up at nearly $1.2 bill he is completely certifiable,” said one. “But I think he knows it’s his for the taking.”

The emails have a worldly-wise tone. Nigerian politics, with its buying of titles and votes, is murky. One missive says that Etete would only personally received $300 million, as the rest of the $1.1 billion was forwarded to bribe others.

One employee email states that “Jockeying for ministerial position remains intense, with many aspirants offering substantial sums to purchase their way into office… With an election only 10 months away the need to build war chests for campaigning is strong.” The implication is that the demand for cash within Nigerian politics at the time was high as patrons required paying-off in return for political power. The Shell representatives knew, Global Witness argues, that their payments were a personal bribe destined, in turn, to bribe other more powerful officials.

None of the moneys, unlike conventional government payments, entered the national treasury. Global Witness points to the ongoing famine within the Western African state, which currently affects five million people. The Shell payment is one and a half times greater than the sum the UN believes is required to deal with the mass starvation crisis in Nigeria.

The African Development Bank calculates that $148 billion is lost yearly to corruption on the continent.

Companies, in their interactions with African states, have a responsibility to act above board. Although businessman claim that corruption in Africa is merely ‘local custom’, there are social costs. These are articulated by the OECD, in its Compliance Guidance for trading in Africa:

“More specifically, the human cost of bribery is something that companies often underestimate. It is not a victimless crime. Bribery in business transactions can have devastating social effects. Companies must somehow recoup the cost of paying bribes, and this can only be done through the delivery of sub-standard products or through charging higher prices.”

In response to the allegations, Shell informed Global Witness that “Given this matter is currently under investigation, it would be inappropriate to comment on specifics. However, based on our review of the Prosecutor of Milan’s file and all of the information and facts available to Shell, we do not believe that there is a basis to prosecute Shell. Furthermore, we are not aware of any evidence to support a case against any former or current Shell employee.”

This scandal comes at a difficult time for Shell. Only today, a range of environmental NGOs argue that the oil company’s plan to decommission offshore platforms in the North may break international law.

Within this blog we have seen instances of corruption in the extractive industries in Western Africa before. The publication of emails discussing bribes in a thinly-veiled language is also reminiscent of the exposé of Unaoil’s alleged bribery with Middle Eastern countries.

Bribery has been a notoriously difficult practice to prove for prosecuting authorities, as deals are rarely documented and evidence scarce. But the habits of international companies – addicted to email as they are – allows whistle-blowers to potentially access and publish large caches of damning data. If these emails prove genuine, Shell may find itself subject to sizeable fines.

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Posted in: Africa, Ben van Beurden, Bribery, Business Principles, Corporate Governance, Corruption, Eni, Forbes, Gas, GoogleNews, Litigation, Netherlands, Nigeria, Oil, OPL 245, Royal Dutch Shell Plc, Shell, Simon Henry, United States.
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