Malabu Scandal: Shell, Eni await fate as Italian court rules on $1.1 billion ‘bribe’

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Oil multinationals, Eni and Shell, will on Thursday be on the lookout as a Milan judge will decide for the first time whether $1.1 billion of the sum paid in the controversial Malabu oil deal was siphoned in bribes to win the license to the field.

Eni and Shell are embroiled in a long-running graft case over the purchase in 2011 of Nigeria’s OPL 245 for about $1.3 billion. The oil field is reputed to be one of Africa’s biggest oilfields. The controversial case involves Eni’s Chief Execuive Officer, Claudio Descalzi, and four former Shell managers including one-time Shell Foundation Chairman, Malcolm Brinded.

The Thursday ruling, involving Emeka Obi and Gianluca Di Nardo, is a case running parallel to the main trial of both oil giants. It may however give clues to what might be round the corner for the two companies.

Emeka Obi is one of the middle men who had claimed that he deserved a share of the $1.3 billion, saying he helped mediate negotiations between the oil giants and ex-Nigerian petroleum minister, Dan State.

Italian prosecutors allege that Mr Obi received a mandate from Mr Etete to find a buyer for OPL 245, collecting $114 million while Mr Di Nardo took $24 million of that amount for putting Mr Obi in touch with Eni.

Mr Obi, a Nigerian, and Mr Di Nardo, an Italian, are said to be middlemen.

Eni and Shell, as well as their managers, have denied any wrongdoing.

A legal source told Reuters on Tuesday that although the Thursday ruling will not tie the court’s hand in the main trial, it will nonetheless constitute a sort of pre-judgement.

“It’s clear the ruling will become a first building block in favour of the prosecution or the defence … it will be a first verdict by a third-party judge on the matter,” the source said Tuesday.

A fast-track procedure that began in November will ensure the judge be called on to decide whether Messrs Obi and Di Nardo should be convicted in the case or acquitted for receiving payments prosecutors alleged to be illegal kickbacks.

Messrs Obi and Di Nardo, who have previously denied any wrongdoing, asked for a fast-track trial which under Italian law allows any eventual sentence to be cut by a third. If found guilty, the individuals on trial face possible jail terms for bribery while the companies face hefty fines.

Earlier, some documents had been seized in a raid on a Swiss financier’s apartment that could be crucial to the case. The raid, according to Independent newspaper, uncovered a briefcase belonging to Mr Obi, who is in the dock along with several former Shell employees and current and former Eni executives.

According to Swiss prosecutors, the suitcase contained a laptop, two Nigerian passports, five sim cards and a hard drive containing 41,000 documents that prosecutors believe could be crucial to the trial playing out on the other side of the Alps.

Meanwhile, Italian prosecutors alleged that, of the total $1.3 billion fee paid by Shell and Eni for the oil field, $1.1 billion went not into the coffers of the Nigerian state but the accounts of former oil minister Dan Etete who then distributed hundreds of millions to well-connected individuals, including former president Goodluck Jonathan.

Mr Jonathan, who faces no charge on the case, has denied wrongdoing.

The busted Geneva apartment belonged to Olivier Couriol, a former Credit Suisse banker who has been named in two other international corruption cases. Mr Couriol, who is under investigation for his role in separate crime-related deals, said that Mr Obi was merely a friend who left the bag at his flat by mistake while on holiday. But a Geneva prosecutor, Claudio Mascotto, believes it was stashed there to keep it hidden from authorities.

Earlier in June, a court in Geneva said some of the documents found in Mr Couriol’s possession could be unsealed and be sent to Milan but Mr Obi launched another appeal, meaning a Swiss federal court must now decide on the matter. It is still unknown when the case will be dispensed with by the Swiss court but reports said authorities believe the documents may also contain details of other questionable deals in Nigeria’s oil fields.

In the wider trial, defendants include Eni’s current chief executive Claudio Descalzi and his predecessor Paolo Scaroni as well as former Shell board member Malcolm Brinded and Peter Robinson, a former Shell vice president for sub-Saharan Africa.

Infograph – The Malabu Scandal

Analysts say Shell, which had for years denied culpability, and Eni could potentially be forced to pay huge damages in the case after judges ruled that Nigeria had the status of victim.

Barnaby Pace, an anti-corruption campaigner at Global Witness, said the trial should signal a turning point for the oil industry.

“Some of the most senior executives of two of the biggest companies in the world could face prison sentences for a deal struck under their watch,” he said.

The Malabu deal controversies, struck in the final days of the regime of Sani Abacha in 1998, started when Mr Etete award the oil field to a company called Malabu Oil and Gas, which details later revealed he partly owned and later controlled .

After years of controversies, rights to the field were finally sold in 2011, and all of the payments went through the Nigerian government but a large part of $1.1 billion was then paid into Malabu’s accounts, via banks in London. Although Mr Etete, who had been convicted of money laundering charges earlier, turned out to be in control of the accounts, Shell denied knowledge of such details.

But after years of investigations by PREMIUM TIMES and other anti-corruption groups including Global Witness, Finance Uncovered and others, Shell admitted last year that it did know Mr Etete was behind the deal and that he had been convicted in 2007.

Emails revealed that a former MI6 agent hired by Shell, who is also a defendant in the case, had been in contact with Mr Etete from at least 2009, two years before the deal was sealed.

Hundreds of millions of pounds of that money passed through JP Morgan in London, which is being sued by the Federal Government of Nigeria for “gross negligence”.

But JP Morgan in a court filings seen by PREMIUM TIMES in April said the UK’s top anti-money laundering authority gave the green light for the payments. It argued also that it did no wrong because it raised a series of suspicious activity reports and that the payment had Nigerian officials’ authorisation.

No charges has been brought against former President Goodluck Jonathan who authorised the controversial settlement agreement and transfer of the funds to Malabu.

But that administration’s Attorney-General and Minister of Justice, Mohammed Adoke, who signed the settlement agreement on behalf of government, is being prosecuted in Nigeria. He is currently on exile and has never personally attend his trial.

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