What will be the final result of the Royal Dutch Shell/ENI imbroglio around a license to explore oil and gas in block OPL 246, offshore Nigeria?
At this point it is difficult to say. In a recent article in the Financial Times, an un-named industry figure termed it “an unholy mess.”
Jaclyn Jaeger, writing in Compliance Week, quoted a statement from Simon Taylor, director and co-founder of Global Witness, that “This is one of the worst corruption scandals the oil industry has ever seen, and this is the biggest development so far.”
All of this came out from emails leaked to Global Witness which had been uncovered in a raid by Dutch prosecutors at Shell’s corporate headquarters, in search for documents in February of this year. Global Witness issued a report entitled Shell Knew based upon the leaked emails and its own research.
The basic facts center on the $1.1 billion payment for the license. Half of that payment went to the former license holder, an entity called Malabu, which was owned by a Nigerian government official, Dan Etete.
Etete had been awarded the rights to the block when he was the Nigerian oil minister.
Both Shell and ENI denied any involvement with Malabu or Etete. But after Global Witness released its report, Shell changed its tune.
Jaeger reported in Compliance Week that Andy Norman, Shell’s vice president for global media relations, told the New York Times, “Over time, it became clear to us that Etete was involved in Malabu and that the only way to resolve the impasse (over disputed ownership claims) through a negotiated settlement was to engage with Etete and Malabu, whether we liked it or not.”
ENI continues to deny that it did anything wrong.
Both parties claimed they simply paid the Nigerian government and it was not up to them where the Nigerian government allocated their payment.
Prosecutors in Milan have asked an Italian judge to allow prosecutions of both companies and the current and former CEOs of ENI for corruption.
Dutch prosecutors apparently have an investigation ongoing, based on their February raid for documents.
In the United States, it’s not clear yet if the Justice Department or Securities and Exchange Commission are investigating Shell under the FCPA or if the FCPA applies to this transaction.
About the only thing that is clear is that it is one fine mess.
Tom Fox is a Contributing Editor of the FCPA Blog. He has practiced law in Houston for 30 years. He’s the creator of the award winning FCPA Compliance and Ethics website. He is the Compliance Evangelist. His best-selling seminal book, “Best Practices Under the FCPA and Bribery Act: How to Create a First Class Compliance Program” (available from Amazon here) is widely viewed as one of the top volumes on the nuts and bolts of compliance.