Today it was reported that Italian financial police raided the headquarters of the oil company ENI, Italy's largest company. The raid is part of a fresh investigation into ENI's role in its acquisition of the Nigerian oil block OPL 245. The 2011 deal for the oil block saw subsidiaries of Eni and Royal Dutch Shell agree to pay US$1.1billion. The money was paid by Eni and Shell to the Nigerian government, which then paid the same amount to Malabu Oil and Gas, a company owned by former oil minister Chief Dan Etete.
Etete had awarded the oil block to his own company when he was oil minister under corrupt Nigerian dictator Sani Abacha. In effect, he gave himself one of the most valuable oil blocks in Nigeria and, with this deal was now cashing in.
"The Italian authorities decision to investigate Eni's role in the corrupt OPL 245 oil deal is excellent news for the people of Nigeria. They deserve to know how $1.1bn was diverted away from the public purse, and what role companies and individuals may have played in this heist. This case shows precisely why the US needs to establish a strong transparency rule that requires oil companies to publish these kinds of payments so that they don't go missing," said Simon Taylor, Global Witness Director.
Shell and Eni have denied paying money to Malabu, and it is true that they paid the money to the Nigerian government. However court evidence has revealed that Shell and Eni knew that the payment was going to Malabu and that Shell had negotiated directly with Etete over "iced champagne".
The details of the deal were undisclosed until middlemen who acted for Malabu, sued for unpaid fees in London and New York. Evidence in the court cases between the middlemen and Malabu revealed the exact payments and arrangements between the parties and showed that the Nigerian government effectively acted as a "straw man". The High Court in London made a finding of fact that Etete was a real owner of Malabu at all material times.
Over coming months, the US Securities and Exchange Commission (SEC) needs to write an amended rule to implement Provision 1504 of the Dodd-Frank Act, which requires oil, gas and mining companies to disclose payments down to a project level. Some oil companies and their lobby group, the American Petroleum Institute (API), have pushed for the SEC to aggregate these payments, an approach that would anonymise the companies and their payments from public view.
"This case shows why secrecy around payments is a massive risk for investors - the SEC should treat the API's demands for secrecy with the contempt they deserve," said Simon Taylor, Director, Global Witness. "We need transparency in payments to governments on a project by project basis, so that citizens can really follow the money and scandals like this don't happen," said Simon Taylor, Global Witness Director.
The OPL 245 deal has been investigated over the past few years by Global Witness together with Corner House, Re: Common and the Nigerian anti-corruption campaigner Dotun Oloko.