Nigeria demands $1.1bn damages from Eni, Shell in graft case
The Federal Government of Nigeria on Wednesday asked a Milan court in Italy to order international oil firms, Eni and Royal Dutch Shell, to pay it $1.092 billion as damages for the corrupt purchase of one of Africa’s most valuable oil blocs worth about $1.3 billion.
The Nigerian government is demanding $1.092 billion, an amount close to the alleged bribes of $1.1 billion paid to win the licence to explore
the field, which, because of disputes, has never entered into production.
The case involves the 2011 acquisition of oil bloc prospecting licence by Eni and Shell, following the payment of $1.3 billion to the Nigerian government for the OPL 245 offshore field. However, it was alleged that about $1.1 billion of that amount ended up in the account of Malabu Oil and Gas, which was owned by a former petroleum minister, Dan Etete, and was used to pay political bribes.
According to the lawyer for the Nigerian government, Lucio Lucia, Shell and Eni’s illicit profits from the OPL 245 deal are certainly higher than the $1.1 billion they paid and the harm to Nigeria is also certainly higher. Lucia narrated to the court how Eni and Shell took a huge reputational risk in dealing with Dan Etete, a convicted money launderer, and his company, Malabu Oil and Gas, a company whose record could not be found and who they never completed due diligence on.
“Hence there is a need to define the damages that Nigeria should therefore receive,” said Lucia, who was quoted by Barnaby Pace, an international investigator with Global Witness. Lucia said the lack of any tender denied Nigeria the opportunity to find the value of the licence.
Nigeria’s lawyers accused the trio of former President Goodluck Jonathan, former petroleum minister Diezani Alison-madueke and former attorney general of Nigeria and minister of Justice Mohammed Bello Adoke of having personal interests in the $1.3 billion deal.
Lucia outlined that Adoke and Alison Madueke were the signatories to the final contracts, but Adoke’s role was crucial as he agreed on key clauses in the contracts and pushed back on objections from civil servants at the Nigerian National Petroleum Company (NNPC) and the Department for Petroleum
Resources (DPR).
Nigeria’s lawyers further narrated to the court how Adoke pushed back on Nigeria’s technical experts rather than protect Nigeria’s national interests.
According to Lucia, “Adoke managed all the meetings with the companies and even when the NNPC raised some issues in negotiations in February 2011, Shell emails say that Etete spoke with Goodluck Jonathan and the NNPC issue was solved.”
Despite an initial valuation of $4.5 billion and $3.5 billion, Lucia said Shell’s expert questionably used third-party data to assess the value of the bloc, whereas Nigeria’s expert used Shell’s own data that was disclosed in their email at the time of the deal. Shell’s internal assessment was also valuing the bloc at $3.5 billion.
Lucia argued that Shell and Eni’s illicit profits from the OPL 245 deal were certainly higher than the $1.1 billion they paid and the harm to Nigeria was also certainly higher.
Financial experts claim the Nigerian treasury could have lost more than $5 billion because of the poorly negotiated fiscal terms of the OPL 245 deal. That is on top of the $1.1 billion the Nigerian state already lost due to corrupt payments, according to the Italian prosecutors. Both Shell and Eni had strongly denied that they knew of any corruption linked to the deal, and said they did not think bribes were paid at all.
Shell said the 2011 agreement was a settlement of longstanding litigation, following the previous allocation of the bloc by the Nigerian government to Shell and Malabu.
Etete, Eni, Shell and the managers accused in the Milan court case, including Eni CEO Claudio Descalzi, have all denied any wrongdoing.
Eni said in a statement on Wednesday that the purchase price for OPL 245 was “congruous and reasonable” considering the value of the field and investment needed to bring it into production.