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Malabu $1.1bn scam: Global Witness alleges that Shell and Eni lied; had “iced champagne” with Etete in Milan

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Malabu $1.1bn scam: Global Witness alleges that Shell and Eni lied; had “iced champagne” with Etete in Milan

by Ayobami Olopade

A London-based organisation, Global Witness, has published a statement revealing how secrecy and dealings with anonymous shell companies led to the diversion of millions of dollars away from Nigerians into the hands of former Oil Minister, Chief Dan Etete, who was convicted of money laundering in France in 2007. This is coming less than two weeks after another organisation, Berne Declaration, indicted the NNPC and some foreign companies in shady oil deals.

READ: Berne Declaration Indicts NNPC, Swiss Traders In $6.8 Bn Oil Scam

Global Witness revealed that an investigation conducted by it in May 2012 on court documents and other evidence revealed how Nigerian subsidiaries of Royal Dutch Shell and Italian oil giant, Eni agreed to pay US$1.092 billion for one of Nigeria’s most lucrative oil blocks, OPL 245.

READ: BudgIT: How Dan Etete & Friends Got $1.1bn And What You Can Do… In One Infographic

READ: Obasanjo Wanted His Own Share In Malabu $1.1bn Scam – Dan Etete Tells British Court

The press release, titled “Nigeria: The Scandal of Nigerian Oil Block OPL 245” and  published on November 25, 2013 revealed that Shell and Eni made the payment to the Nigerian government who had a separate agreement to pay the same amount to Malabu Oil and Gas, a company widely believed to be controlled at the time of payment by Chief Dan Etete; a belief which was confirmed by the ruling of a British High Court in July 2013 that Etete was indeed the owner of Malabu Oil and Gas. Consequently the award of the oil block to Malabu Oil and Gas by Etete during his tenure as Oil Minister under General Sani Abacha was greatly beneficial to him.

Although Shell and Eni rejected claims that they paid money to Malabu Oil and Gas, Global Witness investigations through High proceedings and other evidence reveal that not only were they aware and in agreement that the deal was for Malabu’s benefit, they had met with Etete on several occasions including negotiations over “iced champagne” with a shell official and a luxurious dinner with Eni officials in Milan.

Global witness believes that the deal was deliberately structured to hide the facts.

“In making these payments, Shell and Eni effectively bought the block from Etete for over a billion dollars therefore ‘monetising’ an asset that was acquired by Malabu Oil and Gas in highly suspicious and possibly illegal circumstances. Documents seen by Global Witness indicate that over US$801 million of the money transferred to Malabu Oil and Gas was later transferred to a further five shell companies with hidden owners, raising concerns as to who truly benefitted from this deal,” the statement said.

The press release therefore advocated for “the need for citizen oversight of payments to governments for their natural resources. In order to prevent opaque deals like this, extractive companies must make all payments made to governments public.”

“Shell and Eni must also publicly disclose full details of all the arrangements they made with the Nigerian government with respect to these payments. Given the history of this block and Etete’s involvement, Shell and Eni should explain what steps they took to ensure their payments did not end up in the hands of Etete’s company, Malabu. It would be extremely unlikely that Etete’s history was not unknown to sophisticated international companies, who, in Shell’s case, have operated in Nigeria for more than half a century,” the statement said.

Global Witness emphasised the need for a global transparency standard in which extractive companies like Shell and Eni would be required to report payments they make to governments for natural resource deals on a country-by-country and project-by-project basis which would allow citizens of resource rich countries to identify what deals are being made on their behalf for their natural assets like the oil block OPL245.

“A deal like the one finally struck for OPL 245 would have been difficult to broker had the real owners of Malabu Oil and Gas been made public from the outset. However, the real owners of Malabu and the Shell companies that received millions of dollars as a result of the deal were kept secret. Hidden company ownership allows for the large scale looting and affords impunity to the perpetrators.”

Global Witness is therefore “pushing for the disclosure of the real owners of companies to be a prerequisite for participation in extractive deals.”

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