Malabu Oil Deal: Fear grips Nigerian politicians as Italy prosecutors begin probe

Dan Etete

As 2015 general election approaches, it is more worries for some Nigerian big men as Italian prosecutors have opened a probe into alleged corruption relating to the 2011 acquisition of a big oil field in Nigeria by Italian oil group Eni and Shell, judicial sources with direct knowledge of the matter told Reuters at the weekend. Former Petroleum minister, Dan Etete, was implicated in the messy deal but it is believed he did not act alone.
Some prominent Nigerians including two former heads of state were said to have had their fingers soiled in the deal which has attracted global attention with UK police and Interpol getting involved in the investigation.
A Presidency source told our correspondent that President Goodluck Jonathan is mulling using the Malabu case to checkmate some powerful politicians who have contrived to oppose his rerun bid.

Eni confirmed the investigation and said in response to a Reuters’ request for comment: “Eni declares the absolute properness of its handling of the dealings in question and assures its full cooperation with Italian prosecutors.”
The probe relates to the purchase of offshore oil block OPL 245 in Nigeria. Last year, British police began investigating a money-laundering allegation in connection with the same field.
Italian daily Il Fatto Quotidiano said on Friday police had visited Eni offices last Wednesday to notify the company it was being investigated and to ask for documents.
In response to Il Fatto’s article, Eni confirmed it had received notice of the probe and said it had done no wrongdoing.
The concession for OPL 245, which industry sources have said could contain up to 9.23 billion barrels of crude, was awarded to Eni and Shell by the Nigerian government in 2011 for $1.3 billion.
At that time, Nigeria said it was helping to resolve an ownership dispute over the block between Shell and Malabu Oil and Gas company and immediately transferred $1.09 billion from the sale to Malabu.
“No commercial agreement was reached by Eni with the Malabu company that previously owned the block in question,” Eni said, adding it had paid the amount into a current account of the Nigerian government.
The judicial sources said Shell was not under investigation by the Italian authorities because the company is in a different jurisdiction.
Shell declined to comment on the Italian investigation. A Shell spokesman said of the OPL 245 deal: “Shell companies have acted at all times in accordance with both Nigerian law and the terms of the OPL 245 resolution agreement with FGN (Nigerian government). We are open and transparent about all payments made by Shell companies to the FGN and how much they were.”

Barely a year ago, the government of the United Kingdom obviously facing embarrassment over the sticky Malabu oil deal contacted Interpol to unravel the level of involvement  of  Shell and Eni officials in the scam in which a former Nigeria oil  minister, Dan Etete, was fingered as chief suspect. Shell is incorporated in the UK and headquartered in the Netherlands while ENI, based in Rome, is Italy’s largest industrial company.
Shell and ENI paid $1.3 billion in 2011 to the Nigerian government for block OPL 245, but $1.09 billion went to Malabu Oil and Gas, a company with close ties to former oil minister Dan Etete, Reuters said. The government retained the remainder.
Etete awarded block OPL 245 to Malabu for just $2 million when he was oil minister in 1998.
Zero Corruption Coalition, a Nigeria NGO, complained about the transaction to the UK government, Reuters said.
Etete was convicted in France in 2007 of money laundering for ‘bribes he was alleged to have taken when in government,’ Reuters said.
Malabu Oil and Gas was registered just five days before Etete awarded it block OPL 245, Reuters said.
Transparency campaigners alleged that Shell and ENI used the Nigerian government as a go-between for the payment to Malabu.
‘The proceeds of crime unit is investigating a money-laundering allegation in the UK in connection with OPL 245. The investigation is at an early stage’, a UK spokesman said.
Block OPL 245 contains up to 9.23 billion barrels of crude, ‘more than enough to keep China running for two and a half years,’ Reuters said.
In 2010, a Nigerian subsidiary of Shell was charged with conspiring to violate the Foreign Corrupt Practices Act and aiding and abetting an FCPA violation.
U.S. prosecutors said the Shell subsidiary paid $2 million to subcontractors knowing some or all of the money would be paid as bribes to Nigerian customs officials.
Shell paid $48.1 million to settle the charges.
Also in 2010, ENI and its Dutch subsidiary, Snamprogetti Netherlands B.V., paid $365 million to resolve FCPA-related charges for Snamprogetti’s role in the TSKJ-Nigeria joint venture.
The joint venture paid more than $130 million in bribes to Nigerian officials, U.S. prosecutors said.