Bribery – Royal Dutch Shell Plc .com http://royaldutchshellplc.com News and information on Royal Dutch Shell Plc Tue, 23 Jan 2018 18:40:26 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.2 https://i0.wp.com/royaldutchshellplc.com/wp-content/uploads/2017/04/cropped-Screen-Shot-2017-03-31-at-15.44.47.jpg?fit=32%2C32 Bribery – Royal Dutch Shell Plc .com http://royaldutchshellplc.com 32 32 4172002 AMNESTY INTERNATIONAL SAYS SHELL KNEW ABOUT HUMAN RIGHTS VIOLATIONS IN OGONILAND http://royaldutchshellplc.com/2018/01/20/amnesty-international-says-shell-knew-about-human-rights-violations-in-ogoniland/ http://royaldutchshellplc.com/2018/01/20/amnesty-international-says-shell-knew-about-human-rights-violations-in-ogoniland/#respond Sat, 20 Jan 2018 15:27:59 +0000 http://royaldutchshellplc.com/?p=95317 AMNESTY INTERNATIONAL SAYS SHELL KNEW ABOUT HUMAN RIGHTS VIOLATIONS IN OGONILAND was first posted on January 20, 2018 at 4:27 pm.
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Throughout 1994 and 1995 when many of the events described in this report occurred, Shell and the government were also in negotiations over a $4 billion dollar liquefied natural gas project, at the time one of the largest investments in Africa. Shell announced that this joint venture project was going ahead just five days after the execution of the Ogoni Nine. 

Extract from page 9 of an Amnesty International document headed: “A CRIMINAL ENTERPRISE? SHELL’S INVOLVEMENT IN HUMAN RIGHTS VIOLATIONS IN NIGERIA IN THE 1990s”

Under Executive Summary.

SHELL KNEW ABOUT THE HUMAN RIGHTS VIOLATIONS IN OGONILAND

From mid-1993, as the violence increased in Ogoniland, it is inconceivable that Shell was not aware of the worsening human rights situation. The involvement of the armed forces was widely reported on at the time, both in Nigeria and internationally. Organizations, including Amnesty International, published numerous documents, drawing attention to specific incidents, such as the detention of Ken Saro-Wiwa and extrajudicial executions of Ogoni residents by the security forces.

Shell’s knowledge went beyond widely reported events. Executives met regularly with top government officials, and discussed the government strategy for dealing with the Ogoni protests. Shell had close links with Nigeria’s internal security agency. Shell’s former head of security for the region gave a witness statement saying that he shared information with the agency on a daily basis.

SHELL MOTIVATED THE GOVERNMENT TO STOP THE OGONI PROTESTS

Internal Shell documents reveal that company executives repeatedly underlined to government officials the economic impact of the Ogoni protests and requested they resolve the “problem.”

For example, on 19 March 1993 Shell sent a letter to the governor of Rivers State, where Ogoniland is located, requesting his “intervention to enable us carry out our operations given the strategic nature of our business to the economy of the nation.” After General Sani Abacha seized power in November 1993, Shell wrote almost immediately to the newly appointed military administrator of Rivers State (on 13 December) saying that “community disturbances, blockade and sabotage” had led to a drop in production of almost nine million barrels during the course of the year and asked for help to “minimize the disruptions.” In the letter, Shell named the communities, including those in Ogoniland, where these “community disturbances” had taken place. Shortly afterwards, the military administrator created the military force, the ISTF.

Shell then had other opportunities to lobby the government for action. The then chairperson of Shell Nigeria, Brian Anderson, had at least three meetings with Sani Abacha during the height of the Ogoni crisis from 1994-5. During their first discussion (which took place on 30 April 1994), Anderson said he raised, “the problem of the Ogonis and Ken Saro-Wiwa, pointing out that Shell had not been in the area for almost a year. We told him of the destruction that they had created at our sites of which he was apparently unaware.”

Throughout 1994 and 1995 when many of the events described in this report occurred, Shell and the government were also in negotiations over a $4 billion dollar liquefied natural gas project, at the time one of the largest investments in Africa. Shell announced that this joint venture project was going ahead just five days after the execution of the Ogoni Nine.

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AMNESTY INTERNATIONAL SAYS SHELL KNEW ABOUT HUMAN RIGHTS VIOLATIONS IN OGONILAND was first posted on January 20, 2018 at 4:27 pm.
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Nigeria sues JP Morgan for $875 million over Malabu oilfield deal http://royaldutchshellplc.com/2018/01/18/nigeria-sues-jp-morgan-for-875-million-over-malabu-oilfield-deal/ http://royaldutchshellplc.com/2018/01/18/nigeria-sues-jp-morgan-for-875-million-over-malabu-oilfield-deal/#respond Thu, 18 Jan 2018 19:24:59 +0000 http://royaldutchshellplc.com/?p=95298 Nigeria sues JP Morgan for $875 million over Malabu oilfield deal was first posted on January 18, 2018 at 8:24 pm.
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Late last year, a Milan judge ruled that Shell and Eni must stand trial in Italy… 

A spokeswoman for JP Morgan dismissed the accusation on Thursday, saying the firm “considers the allegations made in the claim to be unsubstantiated and without merit”.

The suit filed in British courts relates to a purchase of the offshore OPL 245 oilfield in Nigeria by oil majors Royal Dutch Shell and Eni in 2011.

At the core of the case is a $1.3 billion payment from Shell and Eni to secure the block that the lawsuit says was deposited into a Nigerian government escrow account managed by JP Morgan.

The lawsuit said JP Morgan then received a request from finance ministry workers to transfer more than $800 million of the funds to accounts controlled by the previous operator of the block, Malabu Oil and Gas, itself controlled by former oil minister Dan Etete.

The lawsuit said that JP Morgan then transferred the funds to two accounts controlled by Etete, without sufficient due diligence to make sure the money did not leave accounts controlled by the Nigerian government.

Reuters was unable to reach either Etete or Malabu for comment.

MILAN CASE

The filing seen by Reuters was made in London in November on behalf of the Federal Republic of Nigeria, and says that JP Morgan acted with gross negligence by allowing the transfer of the money without further checks.

It said JP Morgan should have known that, under Nigerian law, the money should never have been transferred to an outside company.

“If the defendant acted with reasonable care and skill and/or conducted reasonable due diligence it would or should have known or at least suspected … that it was being asked to transfer funds to third parties who were seeking to misappropriate the funds from the claimant and/or that there was a significant risk that this was the case,” the filing said.

Late last year, a Milan judge ruled that Shell and Eni must stand trial in Italy, where Eni is headquartered, for a separate legal case in which Milan prosecutors allege bribes were paid to Etete and others as part of the same oilfield deal, including sums that went to Etete’s Malabu.[nL8N1OK25L]

Both Eni and Shell have repeatedly denied any wrongdoing in relation to that case. Malabu has never commented on the case and Reuters has not been able to contact it. [nL8N1HI1NA]

Shell last year said it knew some of its payment to the Nigerian government as part of the deal would go to Malabu “to settle its claim on the block”, but that it was a legal transaction. [nL8N1HJ4EN] [nL8N1OK25L]

There are also ongoing investigations regarding the deal in Nigeria and the Netherlands, where Shell is based. [nL8N1O53PS][nL5N1FG757]

The license for the offshore block was awarded to Malabu in 1998 under then-President Sani Abacha, but Shell finalised a deal for the block with the Nigerian government in 2011.

A British court, in a judgment late last year that agreed to return to Nigeria $85 million in frozen funds related to the deal, said that Malabu was controlled by Etete. [nL8N1N244M]

Additional reporting by Alexis Akwagyiram in Lagos, Writing by Libby George; Editing by Andrew Heavens

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Nigeria sues JP Morgan for $875 million over Malabu oilfield deal was first posted on January 18, 2018 at 8:24 pm.
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OPL 245: Shell Den Haag HQ was raided by 60 investigators http://royaldutchshellplc.com/2018/01/03/opl-245-shell-den-haag-hq-was-raided-by-60-investigators/ Wed, 03 Jan 2018 11:27:44 +0000 http://royaldutchshellplc.com/?p=94986 OPL 245: Shell Den Haag HQ was raided by 60 investigators was first posted on January 3, 2018 at 12:27 pm.
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Snippets from an article originally published by Dutch magazine Vrij Nederland on 9 November 2017. Translated from Dutch to English by Iefke Prins.

Clearly, Shell has played a crucial role in criminal activities; ‘the most important decisions were made at the headquarters in Den Haag’; Top management at Shell looked the other way and did not want any contact with Etete’; In the early morning of 17 February 2016, thirty tax authority investigators together with thirty Italian colleagues raided the Shell headquarters at the request of the Italian prosecutor. In the directors’ offices, 1800 pages of documents and e-mails were seized.; According to the e-mails, Shell was very much aware that Etete was corrupt.; On the day of the raid on Shell’s offices, the company’s CEO Ben van Beurden’s phone was wiretapped by Dutch police. In a leaked conversation with CFO Simon Henry, he mentioned ‘unhelpful e-mails’ from Copleston, who speculated ‘who would get paid what’. Van Beurden chalked up the conversations as ‘pub talk’, which he called ‘foolish’. He also decided that it would be better if the raid would not be reported to shareholders.; He instructed CFO Henry to ‘not voluntarily say anything other than what’s being asked’ to the authorities.; Shell’s behavior is all the more striking because the company was already under enhanced control by US authorities because of another Nigerian corruption case.

FULL ARTICLE BELOW

Bags filled with Naira’s were divided amongst politicians. Photo: Shuttershock.

A scheme to purchase an oil field from a corrupt Nigerian former minister of oil was devised and approved at Royal Shell’s headquarters in The Hague. The complete file landed on journalist Harm Ede Botje’s desk. A reconstruction.

A raid on Shell’s headquarters, two former UK Secret Service MI6 agents negotiating with a corrupt Nigerian former minister of oil affairs on behalf of Shell, a former Russian ambassador intermediary in talks with the FBI, a fugitive Nigerian ex-Minister of Justice, millions of dollars in kickbacks for employees of the Italian oil company Eni, bags of Nigerian Nairas being divided among politicians and businessmen. They seem the right ingredients for a riveting thriller, but these events actually happened.

It is the story of a major corruption case during the purchase of an oil field in the Gulf of Guinea. Royal Shell played a key role: at the headquarters in The Hague the group created a paper reality. The upper echelons of the company set up and approved a framework to buy an oilfield from a corrupt ex-oil minister, a framework that did not comply with their own business principles and appears to be in violation of the law.

Earlier reports have already come out regarding the corrupt practices during the purchase of the oil field in Nigeria, also by Dutch media. But Vrij Nederland recently came into possession of the complete case the Italian Prosecutor’s Office has compiled: a hard drive containing nine gigabytes of information – thousands of pages of internal e-mails, reports and wire tapped phone calls.

During a lawsuit in London last year, the current Nigerian government said there had been a ‘corrupt agreement with an oil consortium’ of Shell and Eni. Italian prosecutor Fabio de Pasquale requested prosecution of five high Eni officials and four former Shell employees at the Italian court earlier this year. ‘Clearly, Shell has played a crucial role in criminal activities,’ De Pasquale wrote to his Dutch colleagues on October 15, 2015, and: ‘the most important decisions were made at the headquarters in Den Haag’. Shell has always taken the view that even if corrupt payments were made, they happened without their knowledge or control and that there is no cause for prosecution of Shell or Shell employees. It remains to be seen whether that position will prove tenable.

Shell entity

OPL 245 is a 1,945 square kilometres stretch of ocean in the Gulf of Guinea, south of the Niger Delta, close in size to the entire province of North Holland, reaching depths of 2400 meters. An oilfield located under the sea bed contains an estimated 9 billion barrels of oil at the astonishing value of – at the current oil price – 450 billion dollars.

On April 29, 1998, Dan Etete, Minister of Oil during the brutal and corrupt regime of General Sani Abacha, allocated block OPL 245 to a company called Malabu Oil and Gas Ltd., which had been founded just 5 days prior. The company was owned by Mohamed Sani, an alias of a son of dictator Abacha, and Hassan Hindus, the wife of an accomplice of Etete. Also involved was a certain Kweku Amafagha, which turned out to be an alias of Etete himself. Malabu – a shell entity – paid the lowly sum of 2 million dollars for the very oil-rich block. The deal violated all policies and laws of the Nigerian government. After the death of dictator Abacha, Mohamed Sani disappeared from the books and Etete thus gained complete control over the company.

In March 2001, Malabu reached an agreement with Shell, with Malabu maintaining sixty percent of shares, and Shell being awarded the mineral rights. Etete, no longer a minister at that time, negotiated on behalf of Malabu.

Mr. Corruption

In July 2001, the new – democratically elected – Nigerian government headed by Olusegun Obasanjo, an avowed opponent of his predecessor Abacha, retracted Etete’s license. In December 2003, Shell received the exclusive mineral rights to OPL 245 in exchange for 210 million dollars. Etete contested that decision and received full ownership again in 2006, after years of legal proceedings. It appears now that foul play was involved here: the then-Minister of Justice Bayo Ojo was understood to have received 10 million dollars in return according to FBI research.

Etete tried to sell OPL 245, talking to, amongst others Gazprom and the Chinese national oil company CNOC, but with Shell continuing to claim rights to the oilfield these negotiations proved fruitless.

From 2009, Etete reentered negotiations with Shell, now in conjunction with the Italian oil company Eni. Etete worked closely with President Goodluck Jonathan and with Justice Minister Mohamed Adoke. The three men knew each other well: prior to his career in politics, Jonathan had been a teacher and gave private lessons to Etete’s children. Adoke is reported by middleman Ednan Agaev when interviewed by the FBI to have served as a lawyer to Etete in a previous life. Mr Adoke in a reaction via his lawyer denies he ever was.

Finally, on April 29, 2011, several agreements were signed between the Nigerian government, Malabu, Shell and Eni, and 1,3 billion dollars was paid for OPL 245. Of that amount, no more than 210 million dollars went to the Nigerian state. The remainder, 1,092 billion dollars, was deposited by the Nigerian government into various accounts, all of which were controlled by Etete. 523 million dollars was funnelled through to several companies owned by Aliyu Abubakar, known in Nigeria as ‘Mr. Corruption’ and resident of a colossal white palace in Abuja. According to Italian researchers, he made sure that Eni’s top men received their kickbacks and took care of diverting money to Nigerian politicians such as former ministers Adoke and Bayo Ojo. Part of the money was exchanged in local Naira’s and literally carried out in duffel bags. The file that Vrij Nederland received, contains a flow chart that shows what was purchased with the money: office buildings in Nigeria’s capital Abuja, a shopping mall in Dubai, five Mercedes C-Class cars, two Range Rovers and three Chevrolet buses, an armored Cadillac and a Global Jet Bombardier Vision 6000 worth 56,7 million dollars.

Conspiracy

In Nigeria – where current President Muhammadu Buhari has launched a campaign against corruption – attempts are made to recover any funds that are still traceable. In Britain for example, a legal case regarding a frozen account of 85 million dollars – part of the money Shell and Eni paid Malabu –  is ongoing. The state of Nigeria claims that there is ‘a conspiracy’ to withhold money that is legally theirs. Etete received state property illegally as a public servant and the agreements that Shell and Eni entered into in 2011 were no more than ‘a cover’ for money ‘that was diverted’ to Etete.

Lawsuits against Etete, Adoke and others have been filed in Nigeria for corruption and money laundering. The only person yet to be prosecuted is former President Goodluck Jonathan, although according to the Italian investigation, it is clear that Mr. Corruption Aliyu Abubakar served as Jonathan’s puppet.

Charges were also brought against Shell and its former country director for Nigeria Ralph Wetzels, for ‘fraudulently providing 801 million dollars’ to Etete. According to the Nigerian prosecutor, the company and Wetzels are guilty of ‘conspiracy to commit corruption’.

A Blind Eye

The case started gaining traction because intermediaries who negotiated with Shell and ENI on behalf of Dan Etete were not paid. On May 21, 2013, former Russian ambassador Ednan Agaev provided a statement to the FBI in the United States which can be found in the obtained file. It offers a nice glimpse into the inner circles of Nigeria, where everybody knows each other and jobs are divided amongst them. During his time as an ambassador in Colombia, Agaev was introduced to Nigerian President Obasanjo, who was there for a visit. A friendship developed, and Agaev also encountered security adviser and former Minister of Defense general Aliyu Gusau, who has been a spider in Nigeria’s web for years.

It was Gusau who asked Agaev, now a lawyer in Moscow, whether he would negotiate with Shell on OPL 245 on behalf of Etete. According to Agaev, Etete had agreed that Agaev would receive 65 million euro for his consultancy work. However, after the deal was closed on April 29, 2011, Etete announced that there would be no money left because Nigerian politicians needed to be paid off first. Agaev was not amused and started an arbitration case in the US. He told his interrogators that he conducted negotiations with Shell and Eni representatives on behalf of Etete several times between 2009 and 2011. Soon, it became clear to him that Peter Robinson, vice president of Sub-Saharan Africa for Shell, ‘hated Etete and did not trust him’.

Agaev concluded that a deal would never be achieved without mediation by the Nigerian government. At that point, Etete asked the Nigerian Minister of Justice Mohammed Adoke for help. ‘Etete wanted to sell OPL 245 and asked Adoke whether the Nigerian state wanted to act as a buffer between him and Shell and Eni,’ said Agaev. On the Nigerian side, a coalition was formed that could result in a breakthrough. Problem was that at Shell, but more so at Eni (more on this later on) there were objections against Etete. In light of his reputation, they preferred not to do any direct business with him, according to Agaev. He therefore suggested to transfer the money to the Nigerian government through a third party bank account. Nigerian officials would subsequently funnel the money to Etete. And that’s exactly what happened.

When asked whether Shell could have known that the money would end up with Malabu and Etete via the Nigerian government, Agaev told his FBI interrogators: ‘Of course, they knew. Shell did not want to do business directly with Etete, but felt comfortable with a money transfer to a Nigerian government account. Top management at Shell looked the other way and did not want any contact with Etete’.

A Ten Million Dollar Bribe

Another agent, Nigerian businessman Emeka Obi, was introduced by Agaev in Etete’s colossal villa in Abuja in December 2009. Obi claimed that he had been promised 215 million dollars, but he never actually saw a penny of that. In 2013, Obi filed a case in London which uncovered many details. Obi revealed for example that he had made arrangements with people at Eni to divert millions of dollars in kickbacks back to Italy. This accusation was repeated by the Italian prosecutors who claim that Eni’s CEO, Claudio Descalzi, as well as other Eni officials, were in on the plot.

In July 2014, Italian investigators spoke to Eni manager Vincenzo Armanna about Obi and kickbacks: the corruption money paid to Etete that, as agreed, would be paid back to particular employees at Eni. According to the Italian prosecutors, 50 million dollars was delivered to Roberto Casula, director of Eni in Nigeria. Armanna said that Obi was viewed in Nigeria as ‘the man who would receive  200 million dollars’ to pay out kickbacks to the Eni employees. Armanna felt uncomfortable about that, ‘I realized I was at risk,’ he said to his interrogators. He also told him that he had talked about corrupt practices with Nike Olafimihan, head of Shell Nigeria’s Legal Department. ‘You cannot get the 200 million dollars that way,’ she had said according to Armanna. ‘If you want to go ahead with this, you will have go about it differently and do not expect us at Shell to pay.’ Armanna added that Olafimihan was probably so well-informed because she is related to former Attorney General and Minister of Justice Bayo Ojo, who is currently being prosecuted for receiving 10 million dollars in bribes. According to Armanna’s statement, an Eni employee openly spoke to a Shell lawyer about potential corruption, and this was never reported internally as far as can be concluded from the e-mails in the file.

The trial in London attracted scrutiny of organizations such as Global Witness and the Italian Re:Common. They made enquiries with Shell and Eni, and reported corrupt conduct to the Italian justice department.

Mrs. E.

In the early morning of 17 February 2016, thirty tax authority investigators together with thirty Italian colleagues raided the Shell headquarters at the request of the Italian prosecutor. In the directors’ offices, 1800 pages of documents and e-mails were seized.

These e-mails were already widely quoted in a report of the Global Witness organization and in articles by Buzzfeed, the Italian newspaper Il Sole 24 Ore and The New York Times, amongst others. The perception that emerged from these publications was damning. According to the e-mails, Shell was very much aware that Etete was corrupt. The ex-oil minister had a vested interest in an agreement because he had ‘a wide range of stakeholders with whom he had to settle’, according to a Nigeria-based Shell employee who ended his e-mail on the remark that OPL 245 was a ‘big apple’ which they ‘could not afford to lose’.

Former MI6 employee John Copleston, who was hired by Shell, reported on January 5, 2009 that he had spoken to ‘my Delta Man’, a local source. They had been informed by Etete’s wife that of the 300 million dollars promised, her husband could only keep 40 million: ‘the remainder was needed to pay people off’. Copleston wrote that ‘significant revenue would flow to GLJ (Goodluck Jonathan)’.

He also wrote that ‘it will be very difficult to meet the chief’s expectations on the amount of cash that Shell will be able to put on the table. (…) Peter (Peter Robinson, at that time vice president of Shell Africa), should talk to The Hague and come back with a number’. Copleston stressed that the personal relationships were good. ‘Lots of lunches and lots of chilled champagne,’ he wrote. ‘This time we are negotiating face to face, a major improvement compared to talking via intermediaries.’

Wiretapped

On the day of the raid on Shell’s offices, the company’s CEO Ben van Beurden’s phone was wiretapped by Dutch police. In a leaked conversation with CFO Simon Henry, he mentioned ‘unhelpful e-mails’ from Copleston, who speculated ‘who would get paid what’. Van Beurden chalked up the conversations as ‘pub talk’, which he called ‘foolish’. He also decided that it would be better if the raid would not be reported to shareholders. ‘The last thing you want is a request to make an announcement to the stock exchange when there is nothing more to report than that we were asked to provide information’. He instructed CFO Henry to ‘not voluntarily say anything other than what’s being asked’ to the authorities.

To groups like Global Witness and reporters, Shell could no longer continue to deny that it had been negotiating directly with Etete. On April 10 of this year, a spokesperson stated in The New York Times that ‘over time, it became clear to us that Etete was involved with Malabu and that an agreement was the only way to resolve the deadlock situation, whether we liked it or not’. The spokesperson also said that Shell was aware that the Nigerian government would compensate Malabu. A fine example of damage control, but still not the full story. From the thousands of e-mails that the Dutch tax authorities shared with their Italian colleagues, it became clear that Shell lawyers and other employees actively worked towards a deal in which Etete would be the final recipient of the millions. The brains behind that agreement with Etete were based at the headquarters in The Hague. There they were more concerned with other oil companies chasing ‘big apple’ OPL 245 than with doing business in an ethical manner. ‘We need to act soon because the vultures are circling,’ wrote Shell’s number three Malcolm Brinded on October 11, 2010, to Peter Robinson, Director of Sub-Saharan Africa.

Money Laundering

Shell employees were obviously well aware that their payments would end up in corrupt hands. How then is it possible that Shell, a company that prides itself on compliance to business principles and anti-corruption codes, still ends up doing business with a man like Etete? The file that Vrij Nederland had access to shows that Shell employees had long been aware that it involved major risks. On June 16, 2004 – Shell and Etete were involved in a legal conflict about OPL 245 at the time – lawyer Guus Klusener, who was stationed in Nigeria, wrote in an e-mail under the header ‘privileged and confidential’ that Etete and other Malabu stakeholders were the subject of international investigations into ‘money laundering and other illegal activities’. Klusener warned that doing business with a company like Malabu ‘could lead to serious issues with our own business principle’.

In November 2007, a French judge sentenced Dan Etete in absentia to a three-year imprisonment and a fine of 300.000 euros for money laundering. His faltering reputation did not prompt Shell to withdraw itself from negotiations.

One of the major issues in Malabu’s business relationships was that the deeds filed with the Chamber of Commerce in Nigeria did not clarify who held ownership. Documents were missing and false names were used. Who were Shell and Eni doing business with?

That inadequate paperwork could lead to problems, became apparent in January 2011 when Mohammed Abacha, son of dictator Abacha and former Malabu shareholder, suddenly surfaced. He wanted a share of the profit, saying he had been removed from Malabu illegally by Etete, and filed a lawsuit. ‘It could cause additional reputation damage if his name starts getting out there,’ wrote CFO Henry Simon on January 21, 2011. Once again, no concern about the deal as such but concern about reputation damage.

Into State Treasury

What is striking in the e-mail exchanges between Shell lawyers and Shell top officials in both the Netherlands and Nigeria is that it appears that thorough research into how Malabu operated and who Etete was exactly had never been conducted, which based on their own code of conduct should certainly have taken place. In an undated document titled ‘due diligence Malabu’, the first sentence explicitly states that the due diligence is limited to establishing who owns the company, nothing more than an investigation at the local Chamber of Commerce. Nowhere in the document, nor in the hundreds of e-mails the necessity for an assessment of the risks of corrupt practices is mentioned. The legality of a deal with Malabu under Nigerian law is never questioned. After all, any proceeds from oil sales must flow back into the state treasury. Should Shell not have considered how it had been possible that Etete became the owner of OPL 245 during his ministership? An issue that should have become even more pointed when, in October 2009, presidential adviser Emmanuel Egbogah stated in a conversation to Shell employees that ‘it was shameful to the Nigerian government that a minister had assigned a block to himself’?

Shell’s behavior is all the more striking because the company was already under enhanced control by US authorities because of another Nigerian corruption case. Therefore, extra caution was required. On 29 December 2010, lawyer Keith Ruddock wrote that in the light of the enhanced control, it would be wise to fully inform Peter Rees (at the time Shell’s highest legal man) after his return from vacation ‘to make sure he is fully on board’.

Alternative Structure

Where Shell was mainly trying to find a way to conduct business with Etete and Malabu, the situation was different at Italian oil company Eni. A ‘chronology of events’ report put together in August 2011, after the deal was conducted, shows that Eni’s anti-corruption department intervened repeatedly. On November 17, 2010, the unit reported that if Dan Etete indeed proved to be the owner, ‘an image issue could arise’. Concerns at ENI grew even greater when the son of dictator Abacha become involved in January 2011.

They came up with a solution to that at Shell. Peter Robinson reported to have worked out an alternative structure which amounted to a two-stage strategy previously suggested by adviser Ednan Agaev: a payment to the Nigerian state, which would then be forwarded to Malabu/Etete. An approval by the management in The Hague soon followed. ‘I can confirm that the proposal has the support of Peter Voser, Simon (Henry) and Peter Rees,’ Malcolm Brinded wrote on January 22, 2011.

Eni had yet to be convinced. ‘Yesterday, Peter (Robinson, Vice President of Shell Sub-Saharan Africa) and I spoke at length with Roberto (Casula, Eni Director in Nigeria), mainly discussing OPL 245,’ wrote German Burmeister of Shell Nigeria in an e-mail on March 12, 2011, six weeks before the deal came through. According to Burmeister, Casula said that the uncertainties about Malabu’s paperwork had led to an ‘exacerbated negative effect’ in the ‘risk perception of the entire transaction’. It was Eni’s ‘hottest topic’, he reported back to The Hague.

Eventually Eni came around. On March 31, 2011, Shell Director Peter Robinson wrote from Nigeria to his colleagues that ‘indeed the change in ENI in the last 24 hours has been profound’. A guarantee that ‘an agreement could be reached by the following morning’ was provided. Four days later, Shell lawyer Guus Klusener reported that Eni had decided ‘to leave it up to Shell’ to resolve the issues with the Nigerian government and Malabu.

Things proceeded quickly after that. The file contains an interrogation report of Mr. Corruption Aliyu Abubakar, in which he says that ‘sometime in 2011′, which must have been a meeting on April 14 mentioned in Shell e-mails, a conversation took place in Dan Etete’s villa in Lagos. He describes that ‘eleven white people’ from Shell and ‘five white people from Eni’ were present, in addition to Minister of Justice Mohamed Adoke and Malabu Representatives. ‘An agreement was made to conduct payments via the Nigerian state because of suspicion and disagreement between Malabu on one side and Shell and Eni on the other side.’ Mr. Adoke denies he was present at the meeting in mr. Etete’s private house and states that all meetings were ‘in the presence of all parties and their counsels and were in his office at the Federal Ministry of Justice and nowhere else.

The meeting concluded matters. Peter Robinson wrote that all parties initialed the various documents, including Malabu representatives. During the closing remarks, Robinson complimented ‘our legal department’ on its ‘fantastic work’. This is rather ironic, as all that Shell’s legal department had done was to bend over backwards to create a paper reality after warning against precisely that, in order to close a deal which greatly undermined their own business principles.

Unlawful Practices

In February of this year, prosecutor De Pasquale filed a request for prosecution of Shell and Eni on charges of corrupt practices at the Italian court. He states that 1.1 billion dollars made its way to Dan Etete illegally, who then paid bribes to President Goodluck Jonathan, Minister of Oil Diezani Alison-Madueke and Minister of Justice Mohammed Adoke. Additionally, 50 million dollars in kickbacks were paid to Eni and Shell employees. According to De Pasquale, Eni as a company as well as eleven individual employees including CEO Claudio Descalzi should be prosecuted.

Shell will be on trial, as well as former MI6 agents John Copleston and Guy Colegate, and former directors Peter Robinson and Malcolm Brinded. The latter has recently stepped down from his new employer Billiton ‘due to the ongoing judicial investigations in Italy’. However, Brinded is still chairman of the Shell Foundation. Whether actual proceedings will be brought forward is to be decided by a judge.

Meanwhile, a lawsuit against Shell and former director of Shell Nigeria Ralph Wetzels has started in Nigeria (but has been postponed, because the defendants have not shown up, eds.). Former Minister of Justice Mohammed Adoke is reported to have fled. But Adoke himself states that he is not a fugitive from Justice, that he is innocent and acted in the best interest of the country. Dan Etete is also at large, allegedly living in Dubai. In January of this year, a Nigerian judge ordered Shell and Eni to temporarily return the rights to OPL 245 exploitation to the Nigerian government. Research collective HEDA Resource Centre started a petition in Nigeria to permanently retract the exploitation license from Shell and Eni.

‘Research has shown that Etete obtained OPL 245 illegally. And Shell and Eni moved forward into an agreement with him being fully aware of this fact,’ states Suraju Olanrewaju of the Heda Resource Centre. ‘Nigeria’s oil wealth should not be reserved for the lucky few, it should benefit the entire Nigerian people.’ Olanrewaju calls on the Dutch authorities to prosecute Shell. ‘We expect an in-depth investigation and subsequent prosecution from The Netherlands, where Shell is headquartered. Currently, an investigation is under way at the Public Prosecutor’s Office. According to a spokesperson, as soon as it reaches conclusion, a decision on whether to prosecute will be made.

Shell has responded to questions by stating that they are unable to comment while matters are under investigation.

SOURCE

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OPL 245: Shell Den Haag HQ was raided by 60 investigators was first posted on January 3, 2018 at 12:27 pm.
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JP Morgan ‘sent $800m to Nigerian fraudster Dan Etete’ http://royaldutchshellplc.com/2017/12/31/jp-morgan-sent-800m-to-nigerian-fraudster-dan-etete/ Sun, 31 Dec 2017 10:45:27 +0000 http://royaldutchshellplc.com/?p=94936 JP Morgan ‘sent $800m to Nigerian fraudster Dan Etete’ was first posted on December 31, 2017 at 11:45 am.
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An agreement was struck under which Malabu would be paid to give up the licence, which would then be sold to Shell and the Italian oil company Eni.

17 Dec 2017

The Nigerian government is suing JP Morgan for $875m (£660m), alleging the Wall Street banking giant acted as the middleman in an illegal oil deal and made payments to a convicted money launderer.

Papers filed with the High Court in London claim that in 2011 the bank transferred money to a company controlled by Dan Etete, a former oil minister in the Nigerian government. He had previously been convicted of money laundering by French courts and is being pursued by Nigerian authorities.

JP Morgan was “grossly negligent” in handing over more than $800m “without proper application or regard to its obligations”, the court documents allege.

Etete served under the military dictator Sani Abacha in the 1990s.

The Nigerian authorities maintain JP Morgan “failed in its duty of care” and “could and should” have done more to spot that the deal involved “misappropriation” of money from the state.

At the centre of the dispute is a payment to Malabu, an oil company controlled by Etete which was awarded an exploration licence while he was minister. It covers what is thought to be Africa’s biggest source of untapped reserves.

An agreement was struck under which Malabu would be paid to give up the licence, which would then be sold to Shell and the Italian oil company Eni. JP Morgan was to handle all transactions.

The Nigerian government claims the agreement was “merely a device” by officials inthe government of former president Goodluck Jonathan “to perpetuate the sham” that Malabu had been awarded the licence legally.

Multiple attempts to make payments to accounts in Switzerland and Lebanon were blocked, and the failure of these transactions should have raised red flags, claims the Nigerian government.

However, in August 2011, JP Morgan agreed to send $801.5m to Malabu accounts in Nigeria “without any real inquiry … without further or enhanced due diligence”, say the court papers.

JPMorgan said: “We consider the allegations made in the claim to be unsubstantiated and without merit.”

The Nigerian government has brought money laundering charges against Etete and Nigeria’s former attorney-general, Mohammed Adoke.

“The case against Adoke and Etete, who are at large, is still pending,” say the High Court documents.

Separately, the deal involving Shell and Eni is under investigation by Italian prosecutors. A judge in Milan will decide on Wednesday whether the case should go to trial.

SUNDAY TIMES ARTICLE

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JP Morgan ‘sent $800m to Nigerian fraudster Dan Etete’ was first posted on December 31, 2017 at 11:45 am.
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Leaked documents reveal how Shell blackmailed Nigeria in Malabu deal http://royaldutchshellplc.com/2017/12/29/leaked-documents-reveal-how-shell-blackmailed-nigeria-in-malabu-deal/ Fri, 29 Dec 2017 11:15:52 +0000 http://royaldutchshellplc.com/?p=94911 Leaked documents reveal how Shell blackmailed Nigeria in Malabu deal was first posted on December 29, 2017 at 12:15 pm.
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29 December 2017

Confidential internal documents of Royal Dutch Shell suggest that the oil giant capitalised on the 2011 presidential election to arm-twist the federal government into a “cheap” deal over the sale of the disputed OPL 245.

The international oil company also used an arbitration case it filed with the International Centre for the Settlement of International Disputes (ICSID), an organ of the World Bank, to railroad the government into brokering truce between it and Malabu Oil and Gas Ltd, its estranged erstwhile partner and the original licensee.

The bundle of documents made available to TheCable also gave an insight into the mindset of Shell’s executives who toyed with the idea of paying nothing for OPL 245 the moment Eni of Italy, in negotiation with Malabu, showed interest in sharing operator rights with them.

Shell also knew it was underpricing the oil block, deliberately hoarding information on the gas potential of the field in all its valuations and focusing only on the oil.

The sale of the controversial block in 2011 has unfurled a chain of scandals and litigation, leading to an unprecedented approval by an Italian court for the prosecution of Shell and Eni executives over allegations of bribery.

OPL 245 was awarded on a discretionary basis to Malabu in 1998 by the Sani Abacha government, although it later turned out that the beneficial owners included Abacha’s son, Mohammed, and Dan Etete, then-minister of petroleum.

At the same time, OPL 246 was also awarded to Southern Atlantic Petroleum Ltd (Sapetro), owned by Theophilus Danjuma, former chief of army staff and close associate of Abacha.

A discounted rate of $20 million was charged as “signature bonus” by the federal government to encourage local investment in the upstream sector of the oil industry.

While Sapetro paid its own signature bonus to the federal government in 1998, Malabu made an advance payment of $2 million before Shell — erstwhile technical partners to Malabu on the block — took it over following revocation by President Olusegun Obasanjo in 2001.

In 2002, Shell paid $210 million as signature bonus to the government but domiciled $209 million of the sum in an escrow account because of the dispute resulting from the revocation.

In 2006, CNOOC of China paid Sapetro $1.7 billion to acquire 45% contractor interest in OPL 246 — while Shell/Eni paid Malabu $1.1 billion to acquire 100% ownership of OPL 245 in 2011.

In all, Shell and Eni paid $1.3 billion for the oil block — $210 million to Nigeria as “signature bonus” and $1.1 billion to buy out Malabu.

However, the payments were made to federal government’s account at JP Morgan in London before the transfer was made to Malabu, fuelling suspicion that the oil companies knew there was sleaze in the transaction and wanted to avoid being directly linked to it.

In the leaked documents, Shell consistently made reference to “the elections” as a bargaining chip, an indication that its executives knew that some of the proceeds would end up financing the 2011 presidential election.

President Goodluck Jonathan, who returned the oil block to Malabu in 2010 — nine years after it was revoked — was preparing to contest in the 2011 elections after replacing President Umaru Musa Yar’Adau who died in May 2010.

“The ambit claim emanating from Abuja is that the price to Etete is $2bln… However, in the lead up to the elections, we believe that a figure in the range of $1-1.2bln will be accepted,” a Shell document said.

Eni initially proposed a settlement formula of paying $800 million to Malabu for 50% stake in the block  while asking Shell to pay the signature bonus of $210 million to government and another $165 million towards offering Malabu “an irrevocable offer” of $1.2 billion to part with the licence.

“The figure of $1.2bln to Etete is considered the minimum figure acceptable in Abuja,” the document said, obviously insinuating that the government was working for, or with, Etete.

Shell had previously denied knowing Etete was part of the deal but recanted after being confronted with documentary evidence.

Meanwhile, Shell did not want to pay more than the signature bonus, claiming to have spent over $500 million on drilling four wells before the re-award of the block to Malabu following a 2006 out-of-court settlement with the federal government.

ARBITRATION GAMBIT

In the documents seen by TheCable, the imminent decision of the arbitration panel was a key factor in Shell’s decision to play hard ball, although the company also noted that the case could harm its relationship with the federal government.

In 2002, Shell Nigeria Ultra Deep Ltd (SNUD), the special vehicle floated by Shell, had signed a production sharing contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) for oil exploration after the revocation of Malabu’s licence.

But Malabu headed to court seeking to nullify the revocation, and the federal government eventually reached an out-of-court settlement with the company to return the block.

Dissatisfied, Shell decided to file for arbitration at ICSID, claiming that Nigeria had violated the terms of a Nigeria-Netherlands Bilateral Investment Treaties (BIT) signed in 1994 by “expropriating” its asset in the PSC with NNPC.

ICSID was about to rule when Shell withdrew its case as part of the final settlement of the dispute in 2011.

In the “OPL 245 Brief” prepared by Shell for inside consumption, the company had expressed confidence that it would win in arbitration.

“We believe we will be successful (70% POS), which results in a cash award in favour of SNUD, payable by/enforcebale against the FGN,” it said.

It projected an award of between $500 million and $1.5 billion.

“The case presentation from the external counsel and witnesses went very well and the demeanour of the panel showed a keen appreciation of the issues at stake,” the brief read.

In a document marked “Group Investment Proposal” also seen by TheCable, Shell said while the legal case “is considered strong, it is not without risks… continued arbitration will be a significant impediment to Shell’s ability to improve relations with FGN across the breadth of business activities in Nigeria”.

Mohammed Bello Adoke, then-attorney general of the federation who was in the thick of the legal work, had said in an interview that Nigeria was at the risk of being slammed a $2 billion fine by the ICSID if a final resolution was not reached in 2011.

He said: “After the (re)issuance of licence (in 2010), Malabu was expected to pay the signature bonus within a period of 180 days. While Malabu was going around looking for technical partners because they were not ready to deal with Shell again, Shell, relying on its dominant position in the industry, issued a caveat to other IOCs that it had interest in OPL 245.

“This prevented other IOCs from pursuing their own interest in the block or entering into a working relationship with Malabu. As a result, Malabu could not move forward, and neither could Shell. Indeed, Shell was trying to claim over $2 billion from the federal government.”

Adoke, who is now on self-exile, has been charged to court in absentia for his role in the agreement.

He has denied allegations of graft, maintaining that Mohammed Abacha — who is in dispute with Etete over ownership of Malabu — was using the authorities to persecute him.

The former AGF said: “After [the deal] was done, Mohammed Sani Abacha came up from nowhere and [said] that when this money is paid, we should make sure that they were also paid for their interest. And I said to them… this is a shareholder issue. Why don’t you people call a meeting of the company? If there is no agreement between you people, go to court to find a way out. That was where the problem started for me.”

The Economic and Financial Crimes Commission (EFCC) accused Adoke of collecting a $2.2 million bribe over the OPL 245 transaction, but the former minister has denied the allegation, maintaining that the transaction being given as evidence was a mortgage he took from Unity Bank Plc in 2013 — two years after the Malabu deal was done.

“How can I wait for two years to collect a bribe if indeed I collected a bribe?” he said.

‘SHELL ECONOMICS’

Beyond the allegations of sleaze, however, documents also show that the oil companies were well aware of the enormous value of OPL 245.

Shell already had inside knowledge of the richness of the oil field, having served as technical partners to Malabu when the licence was first awarded in 1998.

In the “OPL 245 Brief”, Shell valued the Malabu block at $3.2 billion based on a crude oil price of $80, taking into account contractor rights ($1.9 billion) and concessionaire rights ($1.3 billion).

In its scenario-painting on dispute resolution after the long-drawn battle, Shell foresaw a situation in which it would share the operator rights at 50:50 with Eni of Italy, who were late entrants into the deal.

Malabu reportedly did not want to negotiate directly with Shell because of previous acrimony and allegations of betrayal after the revocation of the block in 2001.

OML 130/OPL 246 BENCHMARK

The documents indicate that Shell was seeking to take full advantage of the situation, even proposing at some point that its $210 million signature bonus payment — which had been warehoused in an escrow account since 2002 — should be “recoverable”. This means a refund by the federal government when oil production starts. Shell would have eventually paid nothing to own 50% of the block.

The brief said: “[Our] position is to maintain that Shell contribution over signature bonus is $0. That a settlement proposal is made to Etete based on ENI payment + Signature bonus alone. ENI then forced to make assessment of whether they add more to increase likelihood that Etete accepts. Once offer is made it will clearly test Abuja appetite for short term cash. At this point we expect renewed pressure on Shell to add cash.”

Shell’s appetite for a hard bargain, in the hope that the oil block would be sold cheaply, contrasted with its analysis of OPL 246.

The brief said: “In 2006, Danjuma entered into a SPA with CNNOC. Whilst the structure of this is somewhat complicated in essence:

  • CNOOC paid $1.7bln to purchase 45% contractor (to NNPC) interest in OML130;
  • Danjuma maintained 5% contractor rights and a concessionaire position;
  • At financial close CNNOC paid an additional ~$0.9bln as their share of past development expenditure;
  • In doing so, they acquired an interest in a block under development 2 years prior to first oil.

“Based on the above, indicatively the CNOOC purchase valued contractor rights at $3.9bln and total block at $7.9bln. Combining equity retained (with a carry) and cash received, Danjuma has value from the block of circa $2.3bln.”

It even said in the brief that “Abuja” believed Etete/Malabu should get $2 billion (and not $1.1 billion) for OPL 245 “based on the OPL246 benchmark”.

‘A MUST WIN’

The internal group investment proposal revealed the reasons behind Shell’s mindset on OPL 245.

The proposal made a strong case for the oil block, describing it as “a key building block” in Shell’s aspiration in offshore Nigeria “with significant strategic ‘hub’ value”.

“This project has been identified as a must win,” according to the document, signed by Malcolm Brinded, Royal Dutch Shell’s then-second-in-command.

Shell knew what it was saying.

TheCable understands that before the award of the block by Abacha, his son had contracted Shell to conduct the seismic study, and this inside knowledge apparently propelled the oil giant’s desperation for it despite the political complications.

The oil field contains over 500 million barrels of crude oil, with 419 million considered exploitable.

While it even had more gas than oil — about 600 million barrels equivalent — the negotiation valuation was based on oil only.

It is believed that the seismic study estimated that the field could contain up to nine billion barrels of crude oil — which, if proven, would inflate Shell’s bookable reserves by about 30% and significantly shoot up the share value of the IOC.

There is a sense which Shell could argue that undervaluing the block and using strong-arm tactics to get the dispute resolved were within its business interests and there was nothing criminal about it.

But the allegations of sleaze bother on governance ethics for which the corporate world is eager to see the outcome of what Global Witness, the international anti-corruption organisation that has been pursuing the case since 2013, calls “the biggest corporate trial in history”.

SOURCE ARTICLE WITH SCEEEN SHOTS OF EMAIL EXTRACTS

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Leaked documents reveal how Shell blackmailed Nigeria in Malabu deal was first posted on December 29, 2017 at 12:15 pm.
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