Nigeria – The ENI/OPL 245 case

Last end of July, the Milan Public Prosecutor's Office and the Nigerian government appealed the full acquittal sentence of all the defendants in the Opl 245 affair pronounced by the seventh panel of the court on 17 March 2021. Between the end of 2021 and the beginning of 2022, therefore, an appeal trial will take place again in Milan.

While waiting for the proceedings in Nigeria and the Netherlands to also follow their course, we tried to bring some order to the complex affair of alleged corruption involving Eni, the Anglo-Dutch oil giant Shell and their top managers. Starting from the distant genesis of this story, let's line up the facts. it is the immense oil block acquired in 2011 by the oil majors Eni and Shell, a sort of offshore El Dorado of black gold.

OPL245 is Nigeria's largest oil block, located in the Gulf of Guinea, 150 kilometers off the coast. It consists of two oil fields, Etan and Zabazaba, with estimated and unproven reserves of up to 9 billion barrels of oil. According to the Anglo-Dutch multinational Shell, the proven reserves and associated gas condensates amount to less than one billion barrels equivalent, but exploration of the two fields has not yet been completed.

The license was awarded for the first time - without any tender - on 29 April 1998 by the then Nigerian Oil Minister, Dan Etete, a member of Colonel Sani Abacha's military junta, to the local company Malabu Oil and Gas, established five days before the award. The Nigerian government at the time had a policy of supporting the growth of the local oil sector by not leaving all operations solely to large foreign oil majors. The minister himself and one of the dictator's sons were included in the Malabu. After Abacha died that same year, Etete tried to involve Shell as a technical partner in the operation. In 2002, however, Malabu's license was withdrawn by the Obasanjo government and assigned through a tender to Shell, which in 2003 paid a signing bonus of 210 million dollars and invested several hundred million dollars in the exploration of the block.

OPL 245 is seen as highly strategic to move operations out of the Niger Delta marked by social conflict, security risks and declining revenues from exploited wells. After numerous legal cases brought by Etete in the Nigerian courts, in 2006 Justice Minister Bayo Ojo reassigned the block to Malabu. In response, in 2007 Shell filed an international arbitration against Nigeria at the International Center for Settlement of Investment Disputes of the World Bank to put pressure on it by requesting billions in damages and thus try to regain the disputed license. Also in 2007, in France, Etete was convicted of laundering the proceeds of the bribe from the Bonny Island deal also in Nigeria, but he didn't give up and started looking for a new buyer. So he also contacts Eni.

How Eni comes into play

Relations with the six-legged dog became closer at the end of 2009, when Eni communicated its interest in negotiating. In February 2010 the company signed an exclusivity and confidentiality agreement with the Nigerian mediator Emeka Obi, who claims to represent Malabu. In June 2010, a first offer for 40% of the license was not accepted. Meanwhile, Nigerian president Yar'Adua dies and his deputy, Goodluck Jonathan, takes over the leadership of the country. The new Oil Minister, Diezani Madueke, confirms Malabu's 100% control of the license. At the end of October 2010, Eni, in coordination with Shell, launched a new offer for the entire block, which however failed. At that point the new Minister of Justice Adoke Bello takes over the negotiations, ousting the alleged intermediaries who had acted in the direct negotiation. A tripartite scheme is thus drawn up with which the companies will pay the government, which will then settle Etete's Malabu, while Shell will withdraw the international arbitration. At the end of 2010, Abacha's son shows up again and brings a legal case against Etete who had ousted him some time ago. Despite objections raised by some government technical agencies, the agreement was reached on April 29, 2011 at a price of $1.3 billion, including the signing bonus already paid by Shell. Eni shells out almost a billion dollars. Shell the remaining amount.

In May 2021, the Government of Nigeria did not authorize the exploitation of the OPL 245 oil license following the forfeiture of rights and ongoing criminal trials in Italy and Nigeria to establish whether the entire operation was tainted by corruption. To be precise, the license for the block expired on May 11, 2021, ten years after Eni and Shell purchased it. The confirmation came from Eni itself, which responded to a question posed by ReCommon on the occasion of the multinational's 2021 shareholders' meeting.

OPL 245 was registered as one of Eni's 2020 assets, but the company acknowledges that it may need to reassess its position next year. Shell wrote down 50% of its assets in its 2020 balance sheet.

In 2018, Eni requested the Abuja government to convert the exploration rights into a new mining license to begin extracting crude oil. President Muhammadu Buhari had rejected the request and declared that no further correspondence would be considered until criminal and civil court proceedings in Milan and London relating to the 2011 affair were concluded.

A legal case that arose by chance

Soon after the agreement was signed in April 2011, Russian broker Ednan Agaev went to a New York court to demand payment of a $65 million commission from Malabu for his brokerage. The judge sends him back to the London Court, but the summons is published. So the Nigerian mediator Emeka Obi in London also sues Malabu asking for 215 million dollars, which a judge freezes in the Nigerian government's trust account at JPMorgan in London, where Eni had paid 1.1 billion dollars. After two failed attempts to move the money paid for the license in Switzerland and then in Lebanon to an account of a company other than Malabu, but linked to the Italian consul in Nigeria Gianfranco Falcioni, in the end 801 million dollars still free were transferred to Malabu in Nigeria.

At the end of 2012, the lawsuit between Obi's Energy Venture Partners and Etete's Malabu takes place and the minutes of the trial are made public. In 2013, ReCommon and some of its English partners presented a complaint to the Milan Prosecutor's Office, the London Metropolitan Police, the Department of Justice and the Security and Exchange Commission in the USA. Various investigations start from these reports. Obi wins the case definitively and surprisingly is awarded 110 million dollars in commission, money which he immediately moves to Switzerland. In 2014, the Milan Prosecutor's Office managed to seize the balance in the London account and also the money in Switzerland. The investigations continue and the FBI manages to trace all movements of money in dollars. In 2015, the English authorities closed the case, but in Nigeria the government changed and thus a valid cooperation with Italy on the case began. All the movements of the 801 million dollars that arrived in the country are traced: more than half a billion ended up in the companies of the entrepreneur Aliyu Abubakar, close to the Jonathan government. The rest goes to Etete, who embarks on excessive spending and pays off past debts. In 2015, again from a complaint by ReCommon and its partners, an investigation was born into Shell and its managers also in the Netherlands. In February 2016, a joint raid by the Dutch police and the Italian financial police on the company's headquarters in The Hague led to the seizure of numerous pieces of evidence. At the same time, the Nigerian government brought a civil asset recovery action against Malabu in London and managed to obtain the seized 85 million dollars. In 2017 Adoke Bello sues the new minister of justice to stop the criminal investigation in Nigeria, which however continues. In December 2017 the indictment materialized on charges of international corruption by the Milan Public Prosecutor's Office. International corruption is a different type of crime from "domestic" corruption, as it emanates from the provisions of the OECD Convention against the corruption of foreign public officials, transposed into our penal code.

In December 2017, Judge Giuseppina Barbara of the Court of Milan signed the decree of indictment for Eni and Shell, for their administrative criminal liability, for 5 Eni managers - Paolo Scaroni, CEO of Eni at the time of the contested crime, Claudio Descalzi, now CEO of Eni, then number two, Roberto Casula number three of Eni, Vincenzo Armanna, project leader for OPL245, and Ciro Pagano, head of the subsidiary Nigeria NAE – 4 Shell managers – Malcolm Brinded, then number two of the company, Peter Robinson, manager for Nigeria, John Copleston and Guy Colegate – the former Nigerian oil minister Dan Etete, the intermediaries Luigi Bisignani, already convicted in Mani Pulite and for the P4 investigation, Gianfranco Falcioni, Italian honorary consul in Port Harcourt in Nigeria, and Ednan Agaev, former Russian ambassador to Colombia.

With regard to the Nigerian politicians in office at the time of the alleged crime and who would have benefited from the alleged bribe, according to the OECD Convention, alleged corrupt public officials cannot be prosecuted in Italy, but only alleged corruptors. At the same time, the former Justice Minister Adobe Bello is on trial in Nigeria on charges of corruption, fraud and money laundering, together with some managers of the local subsidiaries of Eni and Shell, the former Oil Minister Dan Etete and the intermediary Aliyu Abubakar, popularly known as Mr. Corruption.

Prosecutors Fabio de Pasquale and Sergio Spadaro focused their attention on the massive amount of internal communications seized during various searches or made available by the companies themselves, as well as on the documentation acquired from the USA, the United Kingdom, Switzerland and Nigeria with numerous international letters rogatory. According to the public prosecution, these documents prove the collaboration between all the defendants in reaching a corrupt agreement, sealed with a high-level meeting in Abuja in mid-November 2010 and then implemented for the acquisition of the OPL245 license in exchange for the payment of the alleged maxi-bribe of 1 billion and 100 million dollars.

The evidence acquired would demonstrate that the managers and internal structures of the two companies were well aware that Dan Etete was behind Malabu, as also reported by the external due diligence, with whom, since already condemned, it was problematic to proceed with a direct acquisition. Furthermore, prosecutors interpreted many internal communications and meeting reports as a clear sign that Obi and Agaev were intermediaries for Eni and Shell, respectively, rather than Etete's Malabu. According to the prosecution, the idea of ​​a scheme that sees the Jonathan government as an intermediary was born from Shell and therefore finds a linchpin in its implementation in Minister Adoke Bello. At the beginning of 2011, these were managed to be imposed on the government's technical agencies who had raised their opposition to the extremely favorable and unprecedented contractual conditions granted to foreign companies. As per the accusation, in the numerous negotiating meetings the representatives of Malabu were in reality the structural links with the government (Aliyu Abubakar) and with the two companies (Femi Akinmade and ABC Orjiako). The prosecution was able to trace the flow of money paid to Nigeria and the conversion from dollars to Nigerian naira through various exchange offices. The accusation showed how 10 million dollars ended up in Bayo Ojo, who in 2006 re-registered the license to Etete's Malabu, taking it away from Shell, and how Aliyu Abubakar had repaid the loan granted to Adoke to buy a house at half its real value through Abubakar's real estate company. Furthermore, the public prosecution brought evidence showing that approximately 12 million dollars managed by Aliyu Abubakar had been transferred to Nigerian Senator John Obiorah.

In summary, for the public prosecution, the Opl245 oil block was worth more than the billion and one hundred million paid, but above all it had been acquired with extremely advantageous contractual conditions, criticized by the Nigerian government's own technical agencies, but not listened to by the political leadership. And this would have been the benefit obtained by the companies with the payment of the alleged bribe.

For this reason, the maximum sentence was requested for Dan Etete - 10 years of imprisonment - and 8 years for Scaroni, Descalzi and Brinded and gradually scaled for the other managers and intermediaries, as well as the confiscation of one billion and 100 million dollars from the companies and the payment of a fine equal to the same amount of one billion and 100 million.

In Nigeria, the administration led by President Muhammadu Buhari has been in office since 2015, elected with great popular consensus with an electoral campaign centered on the fight against corruption. Since then the government of Nigeria and the local investigating authorities, starting from the national anti-corruption prosecutor's office Economic and Financial Crime Commission, have collaborated with the Milan prosecutor's office. At the beginning of the trial, in March 2018, Nigeria, as the offended party, successfully requested to be recognized as a civil party in the proceedings and immediately also cited the civil managers of Eni and Shell. Nigeria's intervention in the Milan proceedings constitutes an important precedent for a developing country.

In his conclusions, the lawyer Lucio Lucia, representing Nigeria, had asked for a provisional amount of 1.1 billion in damages, reserving the right to appeal to a civil judge for the full request for damages in the event of a final conviction, which according to the technical consultants involved in the trial could amount to 3.5 billion dollars. From the court documents it emerges that Shell itself valued the block at 3.2 billion dollars, even though the price paid was much lower given the risks associated with its exploitation.

At the same time, Nigeria has brought several civil asset recovery lawsuits to recover the billion and 100 million that did not end up in the state coffers. First she managed to get the 85 million dollars seized by the Milan Prosecutor's Office in London to be awarded by an English judge. He then sued JPMorgan bank for damages of $875 million. The case was accepted by the High Court of London and will take place at the end of 2021. Finally, again at the Court of London, the request for damages of one billion one hundred million to Eni and Shell was not accepted because proceedings are already underway in Milan with a similar compensation request.

For the defence, the line followed by the public prosecution is merely a theorem which is not supported by the evidence that emerged during the trial. The OPL245 had been a disputed asset for more than a decade and all the parties involved realized that it was necessary to find an agreement for the benefit of all, in order to cancel all pending legal proceedings and allow its exploitation. For Eni, the internal due diligence on the deal was very careful to evaluate all the doubts surrounding Dan Etete's Malabu. Furthermore, the first offers were conditional. But above all, Obi was Etete's intermediary and even if he was given a lot of credit, he had nothing to do with Eni.