‘This is one of the worst corruption scandals the oil industry has ever seen, and this is the biggest development so far’revealed.
The full investigation, titled Shell Knew, was published by watchdog groups Global Witness and Finance Uncovered on Monday. It includes newly-unearthed internal emails which show that officials at the highest level of Royal Dutch Shell and the Rome-based oil and gas company Eni were aware that a $1 billion payment in 2011 for OPL 245—said to be “one of Africa’s most valuable oil blocks”—would end up in the hands of convicted money launderer and ex-Nigerian oil ministerDan Etete, and from there “would flow onward for bribes.”
“This is one of the worst corruption scandals the oil industry has ever seen, and this is the biggest development so far,” said Simon Taylor, co-founder of Global Witness, which has been investigating the scandal for six years. The oil giants have long-denied that they were aware of any foul playing, saying that they only made payments to the Nigerian government.
“Today’s new evidence shows senior executives at the world’s fifth biggest company knowingly entered a corrupt deal that deprived the Nigerian people of $1.1 billion,” Taylor continued. “That is more than the country’s entire health budget for 2016.”
At the time Shell and Eni were jockeying to buy the oil block, which was estimated to hold nine billion barrels of reserves, the most senior civil servant in Nigeria’s petroleum department sent a previously unreported letter blasting the sale as “highly prejudicial,” warning that Nigeria was “throwing away an enormous amount of financial resources,” the report notes.
The report notes that while in power, Etete “had awarded himself ownership of the block in 1998 via a company he secretly owned, Malabu Oil and Gas.” The payments made by Shell and Eni to purchase OPL245, the emails made clear, would flow to Etete and other high-level officials, including former Nigerian President Goodluck Jonathan.
The authors summarizes how they came to this conclusion:
In January 2011—less than three months before the deal was finalized—Shell’s head of exploration Malcolm Brinded told then CEO Peter Voser that the $1.1 billion “will be used by the FGN [Federal Government of Nigeria] to settle all claims from Malabu,” Etete’s company.
The previous year Shell executives had sent each other emails saying that Etete would spend much of his money on bribes. In July 2010 senior business advisor Guy Colegate wrote to Shell vice president for Commercial Sub-Saharan Africa Peter Robinson after a meeting with Etete in Paris. Colegate related that Nigerian President Jonathan Goodluck had just written a letter confirming Malabu’s rights to OPL 245.
This letter was “clearly an attempt to deliver significant revenues to GLJ [Goodluck Jonathan] as part of any transaction” over OPL 245, he said. “This is about personal gain and politics.”
In August 2010 Robinson sent exploration head Brinded a brief, saying “the President is motivated to see 245 closed quickly—driven by expectations about the proceeds that Malabu will receive and political contributions that will flow as a consequence.” The brief was also sent to three other Shell executives.
Shell is currently facing trial for charges of international corruption; an Italian court will begin hearings on April 20 to determine whether the trial will proceed.
Notably, the new evidence comes two months after the U.S. Congress voted to repeal Section 1504 of the 2010 Dodd-Frank Wall Street Reform Act, also known as the “extraction rule,” which required that companies in oil, gas, and mining industries disclose payments to governments in the countries where they operate. It was intended to prevent fossil fuel companies from striking backroom deals with foreign governments.
“This is a huge scandal—it must trigger change,” said Shauna Leven, Global Witness’ Anti-Corruption Campaigns director, in response to the latest developments.
“For too long the world’s most powerful and profitable oil companies have masqueraded as leaders of responsible business,” Leven continued, “while robbing countries of their most precious assets. We could save countless lives across the world if ordinary people were able to benefit from the wealth of their own natural resources.”