Shell, Eni hit with Nigerian oil deal corruption charges

Joe Sandler Clarke / Energydesk: 13th February 2017

Weeks after a major legal victory in London’s High Court over oil-polluted communities in Nigeria, writes Joe Sandler Clarke, Shell has suffered a dramatic reversal of fortunes as Italian prosecutors charge the company, and Italy’s Eni, on corruption charges over a $1.3 billion oil deal.

Italian prosecutors have charged oil giants Shell and Eni with international corruption offences, as the companies struggle with the fallout from their controversial 2011 purchase of an oil licence in Nigeria.

Several senior executives from the two companies – including Eni’s current CEO Claudio Descalzi – have also been asked to stand trial individually over the $1.3 billion deal, along with former Nigerian oil minister Dan Etete.

In a statement issued yesterday, Eni said it had no involvement in the “alleged corrupt conduct subject to investigation”.

Shell declined to comment when approached by Energydesk. Individuals briefed on the matter said the company had not yet received notice from the Italian prosecutors.

But last month, in response to the Nigerian courts decision to temporarily revoke the licence, the company said: “we are aware of the Italian prosecutor’s investigation and we hope to show that there is no basis to prosecute Shell. Shell takes this matter seriously and is co-operating with the authorities.”

A document issued by the public prosecution office in Milan shows Italian legal officials are seeking charges against four Shell executives, including the chairman of the Shell Foundation, Malcolm Brinded.

Brinded was an executive director at the company at the time of the OPL 245 deal, as well as chairman of the board of trustees at the Shell Foundation, the company’s independent charity. He left Royal Dutch Shell Plc in 2012, but retains his post at the foundation. The Shell Foundation declined to comment on this story.

The UK Department for International Development (Dfid) is partnered with the Shell Foundation on a £65 million project aimed at promoting clean energy across Africa and Asia. Energydesk asked Dfid if it will look at its relationship with the Shell Foundation in light of the charges. A spokesperson said:

“We are monitoring this situation closely and understand that at present no legal action has been taken.”

OPL 245 – the 9 billion barrel question …

The fallout from the purchase of oil licence OPL 245 has dogged both Shell and Eni for years. The license is thought to hold around nine billion barrels of oil.

It is alleged in the document released by Italian prosecutors that both companies knew money paid out as part of the deal would be used to make payments to named Nigerian officials and politicians. The FT reports that Shell and Eni both say they made payments directly to the government and did not make any arrangements with any third parties.

Last month, a court in Nigeria forced both companies to temporarily hand the licence back to the Nigerian government while the country’s anti-corruption agency investigated the deal.

Anti-corruption NGO Global Witness  has investigated the deal for years. The organisation director and co-founder Simon Taylor said in a statement: “This request demonstrates that major international companies and their senior executives are not above the law. Shell and Eni look now to be finally facing a trial over these matters.”

In a press release, Eni’s board of directors said it was fully behind Descalzi. “Eni is entirely free of any involvement in the alleged corrupt conduct subject to investigation. The Board of Directors also confirms its total confidence that the company’s CEO, Claudio Descalzi, was not involved in any way in the conduct under investigation, and maintains their utmost support for him as CEO.”

High Court rules Shell not liable in UK for Nigeria oil spills

The move represents a dramatic change of fortune for Shell after the company won an important legal case in London last month. The High Court told Nigerian communities they cannot sue Royal Dutch Shell in the UK for oil spills in the Niger delta, in a case that could set a precedent for others seeking to hold UK multinationals accountable for their actions abroad.

The judge ruled that parent company Royal Dutch Shell (RDS) has no legal responsibility for alleged pollution in fishing waters and on farming land by its subsidiary in Nigeria. Mr Justice Fraser said in his judgment that the claim could not proceed because it had no chance of success: “Based on the state of the law as it is today, in my judgment those claims against RDS will fail.”

King Okpabi, paramount ruler of the Ogale community in the Niger delta said the communities will challenge the decision at the Court of Appeal: “Royal Dutch Shell makes billions of dollars of profit each year from Nigerian oil but our communities which host its’ infrastructure have been left environmentally devastated.

“Shell underestimate us if they think this judgment will affect our resolve. There is no hope of justice in the Nigerian courts. We still very much believe in the British justice system and so we are going to appeal this decision.”

Lawyers say that the case would take 20 years in the Nigerian courts because of its complexity.

Joe Sandler-Clarke is a UK-based journalist specialising in investigative and public interest stories. His writing has been published in the Guardian, Independent, The Sunday Times, VICE and others, and he currently works at Greenpeace UK.

This article  combines two articles originally published on Greenpeace Energydesk.