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Shell and EnisMisadventuresin NigeriaSHELL AND ENI AT RISK OF LOSING ENORMOUSOIL BLOCK ACQUIRED IN CORRUPT DEAL

November 2015

Cover photo Offshore oil rig CREDIT GRAFTON MARSHALL SMITH CORBIS

SHELL AND ENIS MISADVENTURES IN NIGERIA SHELL AND ENI AT RISK OF LOSING ENORMOUS OIL BLOCK ACQUIRED IN CORRUPT DEAL 3

EXECUTIVE SUMMARY

In 2011 Shell and Eni paid US$11bn forone of West Africas largest oil fields OPL245 situated off the coast of Nigeria Thepayment was equivalent to more than 80of Nigerias proposed health budget for 2015but the money did not benefit the countryscitizens Instead it went to a companycalled Malabu Oil and Gas which wassecretly owned by the former oil ministerwho had granted his company rights to theoil field in 1998

Shell and Eni denied paying anyone other than theNigerian government but there is clear evidence thatthey knew their payment would be diverted intoprivate pockets Police in the UK Italy and Nigeria arecurrently investigating the case and the currentand former CEOsof Eni are under suspicion forinternational corruption offences Around US$190min proceeds of the deal has been frozen in the UK andSwitzerland

In 2014 the Nigerian House of Representativescalled on the Nigerian government to cancel the dealdescribing it as contrary to the laws of NigeriaNothing happened but in early 2015 a new reform-minded President Muhammadu Buhari was electedwith a massive mandate to crack down on corruptionespecially in the oil sector

The new governments intentions regarding the OPL245 deal may become clearer at a court hearing dueto take place in London in late November at whichMalabu will appeal the freezing of the funds Thiscould be a watershed moment for the companies tolearn their fate

OPL 245 is crucial to Shell and Enis plans to replenishtheir oil reserves The oil block holds an estimated

923 billion barrels of crude oil according to the findingsof the Nigerian House of Representatives If the

estimates turn out to be correct the estimatedreserves in OPL when proved would increase Shellsproven global oil reserves by a third and add twothirds to Enis

And yet as more details of their complicity come tolight Shell and Eni are in serious danger of losing oneof their most promising assets because of the waythe deal was done Investigations already underwayagainst Enis senior executives suggest this may beone occasion when the problems dont just go away

Like many others this deal for a massive state assetwas conducted behind closed doors without theknowledge of the public or investors This has tochange Extractive companies must disclose theirpayments to governments so that they cannot gomissing

The laws to make this disclosure happen are in placein the EU USCanada and Norway covering 84 ofworlds largest 100 oil and gas companies But theUS is only now determining how to implement itslaw and is under pressure from big oil companiesincluding Shell to water down the disclosurerequirements The US must resist this pressureand follow through with rules requiring meaningfultransparency

This case also proves how critical it is that the publiccan find out who the real owners of companies areso that criminals - including corrupt officials - cannotdisguise their identities to carry out corrupt dealingsThe UK Norway and Ukraine have committed tocreating public registries of beneficial ownershipother countries should follow suit The ExtractiveIndustries Transparency Initiative should also makeownership transparency a condition of compliance

4 SHELL AND ENIS MISADVENTURES IN NIGERIA SHELL AND ENI AT RISK OF LOSING ENORMOUS OIL BLOCK ACQUIRED IN CORRUPT DEAL

A slum on the water in the Nigerian city of Lagos where poverty abuts wealth

THE BACKGROUND

The reign of late Nigerian military dictator SaniAbacha was notorious for its brutal human rightsabuses and corruption The November 1995 judicialmurder of playwright and Ogoni rights activistKen Saro Wiwa together with eight other Ogoniactivists who had opposed Shells oil extraction putthe spotlight on the Abacha regime However it wasonly after Abachas death that detailed evidence

indicating the sheer scale of corruption during hisrule came to light Abachas widow Maryam wascaught trying to flee the country with 38 suitcasesstuffed with cash In total Abacha and his sons stolean estimated $43bn which authorities are still tryingto recover mostly from European banks

In May 1998 the then Nigerian oil minister DanEtete awarded a series of oil licenses to Nigeriancompanies whose owners identities werequestioned One of these licenses Oil ProspectingLicense 245 (OPL 245) was allocated to Malabu Oiland GasThis company had only been established forfive days before it received the license and had no

employees or assets The upfront price for the blockwas a signature bonus of $20m a small amount for

such a potentially valuable asset although Malabuactually only paid $2m long after the money was due

It was soon rumoured that the oil minister himselfDan Etete was an owner of Malabu Oil and Gasalongwith one of Abachas sons Mohammed While Eteteused an alias to hold his shares it was later proventhat he was indeed a beneficial owner of the company

Dan Etete former oil minister and owner of Malabu Oil and GasCREDIT REUTERS


Having been granted the rights to OPL 245 Malabubrought in Shell as a partner to help fund and conductall the operations on the block ln January 2001Shell agreed to pay the remaining $18m for thesignature bonus as well as pay Malabu $147m for a40 interest in the license

However in early July of the same year PresidentObasanjos administration revoked the license fromMalabu and Shell after a government panel reportedthat the awarding of OPL 245 to Malabu was irregularand that the block had been grossly undervalued The

Presidential spokesman said Etete and Abacha hadabusedtheir positions in the past while in office to awardthemselves the OPL 245 at a ridiculously low price

Initially Shell tried to work with Malabu to opposethe revocation of the license saying it did all it coulddo to assist Malabu to reverse the FGNs [FederalGovernment of Nigerias] decision However in 2002the block was put back out to bid between ShellChevron and ExxonMobil Shell won and agreedto pay US$210m as an upfront signature bonus asignificant increase on the U$20m Malabu had beenasked to paybut still not a lot for such a valuable block

Having been crowded out Malabu challenged thedecision to award the block to Shell They allegedthat Shell had received seismic data on the blockallowing it to assess how much oil was present andthat Chevron and ExxonMobil had not had access tothis data making the 2002 bidding process unfairIn 2006 after legal wrangling and parliamentarypressure Malabu and the Nigerian governmentagreed a settlement which returned the block to

OPL 245 The Vital Statistics

Etetes company on the condition it paid the fullUS$210m signature bonus within 12 months Shelllost its rights to the block

In spite of its victory Malabu once again found itselfin a position where it was unable to pay what it owedand was incapable of developing the oil block on itsown Having fallen out with Shell it set out to find

another international oil company to partner withShell meanwhile did its best to dissuade othercompanies from investing and embarked on morelegal cases to try to wrest the block back includingat the World Banks International Centre for theSettlement of Investment Disputes (lCSID)14

NIGERIA

Map showing block OPL 245 off the coast of Nigeria

OPL 245 is in the offshore waters of the Gulf of Guinea and covers 1958 square kilometresIt encompasses two deep water oil fields Zabazaba and Etan at depths of between 1500 and 2000metres respectivelvThe field holds an estimated 923 billion probable barrels of crude oil which if confirmed would beequivalent to nearly one quarter of Nigerias total proven oil reservesIf proven the estimated reserves in OPL 245 would increase Shells proven global oil reserves by athird and add two thirds to Enis


THE DEAL

In the end Malabu did find another company willingto deal with them the Italian oil giant Eni which ispartly state-owned and also listed on the USandMilan stock exchanges The negotiations spanneda number of years and took place both directly andthrough an intermediary Shell was brought back intothe negotiations as a possible joint partner with EniSeemingly having found a way to resolve theirdifferences senior Shell managers were againtalking to Etete and worked with others at Shellsheadquarters in the Hague to decide how much tooffer him In an email read out in court hearings theydescribe their meeting with Etete

Our initial response is that it will remain lIerv difficult tomeet Chiefs expectations in terms of the cosh Shell is ableto put up front on the table[JPeter has to talk to TheHague and we will come back with a figure [ J As alwavsthe issue will be the extent to which the Chief is readv tobe sensible Meanwhile we are getting along lIerv wellpersonallv - lunch and lots of iced champagne - and thistime round we are at least negotiating face to [ace

The Shell hierarchy seems to have been closelyinvolved Global Witness believes that Peter couldhave been Peter Robinson Shells Vice President forCommercial Sub Saharan Africa who took in part thenegotiations for Shell in this deal The figures abovePeter Robinson in Shells hierarchy at the time wereMalcolm Brinded Shells Head ofUpstream and then the executivecommittee together with theChairman and CEO21This raises

serious questions about theinvolvement of Shells seniormanagement in the OPL 245 dealShell has failed to answer questionsabout the involvement of its seniormanagement in the deal

Shells willingness to go back intopartnership with a company they hadbeen fighting in the courts and tonegotiate with a former oil Ministerwho had by this time had beenconvicted of money laundering

shows how key OPL 245 was to its plans It also

shows the lengths it was willing to go to to hold on

to the block in spite of the obvious risk to investorsof doing business this way

Due diligence reports commissioned by Eni during

the negotiation process prove that the company

knew about Etetes involvement from the early

stages A 2007 report states clearly that Malabu is

controlled by the former petroleum minister Dan

Etete The company was awarded OPL 245 by the

Abacha administration while Etete was still

petroleum minister while the 2010 report is even

more explicit whatever the formal ownership

structure of Malabu all of the sources to whom we

have spoken are united in the opinion that Dan Etete

is the owner of the cornpanv

Global Witness and our partners attended Enis

Annual General Meeting in 2014 as shareholders and

asked in a written question what did Eni understand

to be the involvementrole of Etete in Malabu In

its written answer Eni replied that no clear evidence

was found during the preliminary audits conducted by

the Eni legal department under the anti-corruption

procedures particularly in relation to his [Etetes]

connection with the cornpanv Global Witness put

it to Eni that they lied to their investors about their

knowledge of Etetes involvement in Malabu they didnot respond

Le Bristol a luxury Paris hotel where some of the negotiations to buy OPL 245 took placeCREDIT ELiE KHOURY FLlCKR


Pass the parcel The saga of Nigerias oil block OPL245

1998 Nigerian oil minister Dan Etete awards block to Malabu (of whichhe is allegedly owner) which pays only $20m signature bonus

1999 New government takes power

2001 Malabu agrees to sell 40 of block to Shell Government later revokesMalabus concession altogether Malabu launches court action

2002 Government awards 100 of block to Shell underproduction-sharing agreement for signature bonus of $210m

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

2006 Government reaches deal with Malabu restoringits ownership of block for $210m Shell launches

legal challenges

2007 Etete convicted for money-laundering by French court 12009 Etetes conviction upheld he has meetings with Shell officials

2011 New deal struck Shell amp Eni pay government $13bn for full control ofblock Government pays Malabu $11bn Malabu sued by two advisers

2012 Nigerias Economic and Financial Crimes Commission launches inquiry into Malabu

2013 UK Proceeds of Corruption Unit launches investigation into the case

2014 Nigerian House of Representatives votes to cancel the deal for OPL 245and calls the deal contrary to the laws of Nigeria Milan Public Prosecutor

launches a bribery investigation with CEOand former CEOof Eni assuspects and freezes $190m from the deal in UK and Switzerland

~ bull 2015 New Nigerian Government elected Dan Etete interviewed byEconomic and Financial Crime Commission

In October 2010 Eni offered to buy OPL 245 directlyfrom Malabu but Etete would not agree on theprice The final negotiations took place in late 2010and early 2011 in the office of Nigerias attorneygeneral Mohammed Adoke with over five days ofmeetings between Shell Eni Malabu and Nigerianofficials In April 2011 Shell and Eni agreed to pay$11 billion plus the much delayed signature bonus of$210 million in exchange for OPL 245

The deal was altered in the final stage of thenegotiations so that Eni and Shell would not payMalabu the money directly nor would they sign a

direct contract instead a series of back-to-back

resolution agreements were signed between theparties These arranged for Shell and Eni to pay the$11billion into an escrow account at JPMorgan inLondon set up by the Nigerian Government whowould then pass it on to Malabu Ednan Agaev one ofthe middlemen involved described this structure tothe Economist magazine as a safe-sex transaction

The deal diverted $11billion equivalent to 80 of the2015 Nigerian health budget to a private companyowned by a former Minister who had illicitly given avaluable state asset to himself and his cronies


THE EXPOSE

In 2011 Emeka Obi a middleman who had actedfor Malabu in negotiations with Eni sued Malabuthrough the UK commercial court for fees he claimedhe was owed for his cut of the sale of OPL 245 Thecourt froze $215 million from the proceeds of thesale in London pending the outcome of the case Asecond middleman Ednan Agaev also sued Malabufor unpaid fees first in New York then in Londonscourt of arbitration

These courts were in effect asked to divvy up theloot from the corrupt deal for OPL 245 One judge inLondon raised some concerns about the case sayingGiven the large sums of money involved that areeffectively to be paid to a former minister to a bankaccount in the middle east [sic] and the whole exerciseis backed by murky instructions [l I have seen someodd cases in this Court over the years but even bythose standards this is a striking one I am troubledas to who I am involved with Nevertheless in2014 the UK Commercial Court awarded Emeka Obi$11 OSm for his role in the OPL 245 deal which wasthen transferred to Switzerland

When asked about OPL 245 Shell and Eni havealways stressed that they only paid the Nigeriangovernment However the evidence brought forwardin the court cases proved that the companies seniormanagers negotiated with Etete and his cronies tobuy the block from Malabu

Etete alleged in the UK court case that Enis seniormanagers inflated their payment to Malabu somoney could be siphoned off into kickbacks for themand their associates It should be noted that thisallegation has been denied by Eni who were not partof the UKHigh Court proceedings In those proceedingsthe allegation was emphatically rejected by thejudge for lack of evidence and the unreliability of thesource

However in October 2014 the Italian newspaper LaRepubblica published an article on an interview givenby Vicenzo Armanna a former senior manager of Eniwho was involved in the negotiations for the dealfor OPL 245 La Repubblica reported that Armannaclaimed that it became public knowledge in Abujathat the arranged US$200m commission for themiddleman Emeka Obi was bribes for the Italians

- implying Eni executives their intermediaries andtheir associates In the La Repubblica article MrArmanna describes the actions of the AttorneyGeneral during negotiations in autumn 2010 in thedeal for OPL 245 He threatened to arrest us allAnd he told me he knew that the $200 million forObis mediation was nothing but bribes kickbacksand a way of blackmailing Etete La Repubblica alsoreported that Mr Armanna has claimed that US$50mof the funds transferred to Etete part of theUS$11bn paid by Shell and Eni for OPL 245 that wasdiverted to Malabu has ended up with Italians Eniresponded saying [unofficial translation] We takenote of the assertions by Vincenzo Armanna that areobviously defamatory and obviously will follow up alllegalaction to protect the image of Eniand its managersWe wish to emphasize that Vicenzo Armanna wasfired by Eni because of personal and serious violationsof the ethics code

At the request of Italian prosecutors the US$11OSm

awarded to Emeka Obi has been frozen it has beenreported that Italian prosecutors do believe thesefunds were intended as kickbacks to Eni executivesand their associates

The New Yorkjudge who ruled on the Agaev case foundthat the Nigerian government was the proverbialstraw man [l holding $11billion for ultimate paymentto Malabu while the Nigerian Attorney Generalwho brokered the deal for OPL 245 described thegovernments role as that of a facilitator or obligor

A Nigerian 500 Naira note with a picture of an oil rig on it showing theimportance of oil to the economy


These cases put previously secret information intothe public domain revealing how Eni and Shell hadacquired OPL 245 from Malabu and Etete and alsoconfirmed that Etete was a beneficial owner of MalabuIf it hadnt been for the disgruntled middlemen theworld might never have known about the dirtydealings that had occurred

The remaining $800m that had not been frozen as aresult of the middlemens court cases was transferredto Malabu It was then passed on to five other Nigeriancompanies whose ultimate beneficial owners are notknown Among the listed owners of three of therecipient companies is Alhaji Abubakar Aliyu who wasfound in a UK money laundering trial to have paidbribes to DiepreyeAlamieyeseigha the former governorof Bayelsa state At this time Goodluck JonathanNigerias President between 2009 and 2015 wasAlamieyeseighas deputv Etete told the UK courtthat he received $250m in total for his role in thedealv The ultimate recipients of the rest of themoney are not yet known

What is a beneficial owner

A beneficial owner is a natural person - thatis a real live human being not another companyor trust - who directly or indirectly exercisessubstantial control over a company or receivessubstantial economic benefits from a company

THE INVESTIGATIONS

The OPL 245 deal is now being investigated byauthorities in three countries In early 2013 Global

Witness together with its partners Corner House

ReCommon and Nigerian activist Dotun Oloko

wrote to UK police documenting corruption concerns

over the deal and by June that year the police had

launched a formal investigation Operation Zafod

into the deal

Global Witness and its partners also wrote to the

authorities in Italy where Eni its current and former

CEOsand other senior managers have all been

named as suspects in a corruption investigation

carried out by the Milan Public Prosecutor The Italian

authorities have stated their belief that over half a

billion dollars from the deal was intended as bribes

for Nigerian public officials At their request around

US$190m of the proceeds of the $11bn payment

made by Shell and Eni has been frozen in UK and

Switzerland

In 2014 the Nigerian House of Representatives

called on the Nigerian government to cancel the deal

describing it as contrary to the laws of Nigeria

Nigerias Economic and Financial Crime Commission

is also investigating and in June 2015 questionedDan Etete42

Nigerias new President Buhari campaigned on an anti-corruption platform CREDIT AFP PHOTO PIUS UTOMI EKPEI


In May 2015 a new Nigerian President MuhammaduBuhari was elected on a strong anti-corruptionplatform Given President Buharis pledge to prioritiserecovery of stolen funds there are strong groundsfor hope that the House of Representativesrecommendation to cancel the OPL 245 deal will befollowed up

In sum these investigations - and the potentialfuture ones - demonstrate a clear risk that Shell andEni will have their exploration rights revoked becauseof the way the block was acquired

Eni has commissioned an external audit of the casefrom a US law firm which it has shared withinvestigators and it claims did not find evidenceof illegal conduct However when asked by GlobalWitness it would not say which law firm was usedor reveal the terms of reference or findings of theinvestigation Enis senior managers have deniedwrongdoing Shell has said it does not agree with thepremise behind various public statements made byGlobal Witness about Shell companies in relation toOPL 245 but has not answered specific questions oridentified where it disagrees

WHAT NEXT

Malabu is currently appealing the freezing of itsmoney in London and a hearing is expected to takeplace at Southwark Crown Court on the 23rd ofNovember If reporting restrictions are not applied -which they shouldnt be given the clear publicinterest in this case - further relevant informationmay come to light about the progress of the caseThe hearing also offers the new Nigerian authoritiesthe chance to state their position on the deal

Regardless of the outcome of the hearing there areclear actions that need to be taken given the evidencethat has already come to light Shell Eni and theirmanagers must be fully investigated by the relevantlaw enforcement authorities and held accountableThe other recipients of payments for the OPL 245deal must also be fully investigated as should theactions of any decision makers who abused theirpower and allowed public money to be diverted intoprivate pockets

Global Witness and others have long campaigned forlaws requiring extractive companies to disclose theirpayments to governments Had such laws been inplace in the first decade of this century the OPL 245scandal would almost certainly not have happenedIn such circumstances we believe it is questionablewhether Shell and Eni knowing that their paymentwould be published would have gone ahead with thedeal as concluded If the Nigerian government hadknown their payment to Malabu would have been soeasy to track they too may have thought twice

In part because the OPL 245 case such laws havenow been passed in the EU USCanada and Norwaycovering 84 of worlds largest 100 oil and gascompanies Some companies are proactivelysupporting these laws and voluntarily disclosing theirpayments However a group of big oil companies areusing all possible means to try to block the legislationin the US or weaken it to the point of uselessnessShell has been one of the most forthright opponentsof increased transparency

The USfirst passed the Dodd Frank Act in 2010section 1504 of which requires companies to reportpayments to governments for oil gas and mineralsThe Securities and Exchange Commission (SEC)thenset about drafting a rule that would detail therequirements for companies and allow forimplementation of the law In 2013 the EU passedsimilar legislation the Transparency and AccountingDirectives which requires the disclosure of project-by-project payments to governments by extractivecompanies including logging companies All MemberStates are due to have now transposed these lawsinto their national legislative framework and the firstcompany reports are due in the UK next year

In 2012 the American Petroleum Institute whosemembers include Shell and a number of other big oilcompanies brought a case against the SECin the UScourts challenging the SECsregulations for 1504This delayed implementation of the US legislationand meant that the EU overtook the USas the leaderon extractive industries transparency The SECrecently announced it would finalise the ruleimplementing this long-delayed legislation by June2016 just one month short of 6 years from the datePresident Obama signed the Dodd-Frank Act into law44


When will Nigerias citizens get a fair share of their countrys resource wealth CREDIT GEORGE OSODI PANOS

It is vital that the SECagrees a strong rule which

requires companies to disclose all their payments at

the project level thus allowing the public investors

and law enforcement to spot if a corrupt deal is

carried out Just as importantly the requirement to

disclosed can have a deterrent effect making sure

companies no-longer pursue deals in which illicit

payments become part of the structure of the deal

- a factor that has enormous risk-reduction benefits

for investors Company arguments that the information

should be anonymized and aggregated are specious

and should be ignored by the implementing authorities

At the very least the USwhich was the original

leader on this issue must put in place a rule that is as

strong as the laws now in place in Europe

The OPL 245 deal also would not have taken place

had Etete and Abachas son not been able to hide

their ownership of Malabu The UK Norway and

Ukraine are creating the worlds first public registries

of beneficial ownership so that investors taxpayers

and other interested parties can see who really owns

and gains from companies and businesses The EU

has also recently agreed that all Member States willhave to create national registries and that membersof the public will have access providing that they canpass a legitimate interest test

The OPL 245 case demonstrates the need for thesimilar laws to be passed in other countries and formembership-based industry schemes such as theExtractive Industry Transparency Initiative to makeownership transparency a condition of compliance

RECOMMENDATIONS

Law Enforcement authorities should formallyinvestigate Shell and its past and present seniormanagers for their actions in the OPL 245 deal

Shell and Eni should make public their internalinvestigations into the deal the actions of theirstaff and their internal controls Such disclosuresshould also include publication of the termsof reference credentials of those undertaking

these investigations and all supporting materials


US lawmakers should finalize a strong ruleto implement Dodd Frank Section 1504 thatmatches the EU legislation in requiring projectby project payments that are not aggregated oranonymised so that corrupt payments can beidentified and deterred

The Nigerian Government should cancel thelicense for OPL 245 and reallocate it through afair and open bidding process

The Nigerian Government should seek to recoverthe $11bn that was diverted away from thestate budget through the deal for OPL 245Authorities in all jurisdictions where funds fromthis deal may have been transferred shouldcooperate to ensure seized assets are returnedfor the benefit of the Nigerian people and thatperpetrators are held accountable

Investors must require Shell and Eni to examinetheir anti-bribery and risk assessment systemsto prevent the company entering into corruptdeals that later harm the companys value

UK and EU governments must ensure that theEU accounting and transparency directivesare not undermined by business guidance thatencourages companies not to fully report theirpayments

All governments should commit to publicregistries of beneficial owners

The Extractive Industries Transparency Initiative(EITI)should make beneficial ownershiptransparency for extractive companies arequirement for membership


ENDNOTES

1 Publish What You Pay February 2015 Transparency on the Move Payment Disclosure by the Worlds Largest Oil Gas amp Mining Companies httpwwwpublishwhatyoupayorgwp-contentluploads20 151 OICompany _Coverage_ Fact_Sheet_ Finalpdf

2 Saturday Dobee Nordu Eawo Daniel Gbooko Paul Levera Felix Nuate Baribor Bera Barinem Kiobel and John Kpuine

3 Guardian 18 March 2015 David Smith Switzerland to return Sani Abacha loot money to Nigeria httpwwwtheguardiancomworldI2015marl 181sw itze rl and- to - retu rn - san i-ab acha-loot - mo ney - to - nige ria

4 Dan Etete has himself confirmed his role in awarding OPL 245 to Malabu stating in an August 2002 interview Oil blocs [sic] hod atwovs been awardedin accordance with the Petroleum Act of the Federal Republic of Nigeria on discretion of both Blocks 245 and 246 were properlv awarded bV me I have theconstitutional right to awardThis Day 31 August 2002 My Role Under Abacha - Etete httpwwwthisdayonlinecomarchiveI2002083120020831con01html Africa Energy 101042002 Dan Etetes Case in Us Court httpwwwafricaintelligencecomAEMspotlightl201510105dan-etete -s - case- in - us- cou rt 354 287 6 - EVE7LOG 1

5 Payment receipts for Malabu Oil and Gas Limited payment of US$2m and US$40000 for signature bonus on OPL 245 on 25 May 1999 appended toComprehensive Position Paper by Mohammed Bello Adoke Nigerian Attorney General and Minister of Justice 23 July 2013 House of Representativesreport p6 Letter from Nigerian Ministry of Petroleum Resources to Malabu Oil and Gas 29 April 1998 Application for discretionary allocation ofOPLs 214 and 245 p3

6 The News (Lagos) 3 May 1999 WhatThe Generals Grabbed

7 In the July 2013 UK High Court case of Energy Venture Partners Versus Malabu Oil and Gas Lady Justice Gloster of the Queens Bench DivisionCommercial Court ruled I find as a fact that from its incorporation and at all material times Chief Etete had a substantial beneficial interest inMalabu Approved Judgement Case 2011 FOLlO-792 17 July 2013 The Nigerian House of Representatives investigation into the case also foundDan Etete is the 30 owner of Malabu See also Global Witness 25 November 2013 The Scandal of Nigerian Oil Block OPL 245 httpsllwwwglob alw itn ess a rg I arch ive I scan dal- n ige rian - oi 1-bloc k- ap1-245 - 01

8 Shell was aware of Dan Etetes role in awarding OPL 245 to Malabu as evidenced by its claimants memorial in 2009 in arbitration before theInternational Centre for Settlement of Investment Disputes ICSID Case No ARB0718 In 1998 during the President Abacha regime OPL 245had been allocated to Malabu on behalf of the Ministry of Petroleum Resources by Mr Dan Etete in his capacity as the then Presidential Advisor onPetroleum and Energy

9 In the Matter of an arbitration before the International Centre for Settlement of Investment Disputes ICSID Case No ARB0718 Between ShellNigeria Ultra Deep Limited and Federal Government of Nigeria Claimants Memorial 30 April 2009

10 This Day 27 August 2002 Etete To Obasanjo Opl245 Not Undervalued httpallafricacomstories200208270376html

11 House of Representatives report p7 In the Matter of an arbitration before the international centre for settlement of investment disputes ICSIDCase No ARB0718 Between Shell Nigeria Ultra Deep Limited and Federal Government of Nigeria Claimants Memorial 30 April 2009 p13


13 Comprehensive Position Paper by Mohammed Bello Adoke Nigerian Attorney General and Minister of Justice 23 July 2013 p3-5

14 Approved Judgement Case 2011 FOLlO-792 17 July 2013 pp35-42

15 Letter from Ministry of Petroleum Resources to Malabu 29 April 1998

16 Africa Oil and Gas Report 5 January 2015 ENI to Take FID on Etan IZabazaba in 2015 httpafricaoilgasreportcom201501in-the-newseni-to- ta ke - fi d- an- etan -zabazaba - in- 2a 15 I

17 Nigerian House of Representatives Report by the Ad-Hoc Committee on the transaction involving the Federal Government and ShellAGIPcompanies and Malabu Oil and Gas Limited in respect of the sale of oil bloc OPL 245 9 July 2013 p64 Probable reserves are those which have a 50chance of being present

18 OPEC Nigeria httpwwwopecorgopec_webenabout_us167htm [37070bn barrelss raquo 93bn barrels] Proved oil and gas reserves are thosequantities of oil and gas which by analysis of geoscience and engineering data can be estimated with reasonable certainty (90) to be economicallyproducible-from a given date forward from known reservoirs and under existing economic conditions operating methods and government regulations

19 Shell Annual Report 2014 - Proved reserves httpreportsshellcomannual-reportl2014strategic-reportlupstreamreservesphp EniOil and Natural Gas Reserves httpwwwenicomen_ITcompanyoperations-strategieslexploration-productionreservesoil-natural-gas-reservesshtml

20 Email from John Copleston of Shell to Ednan Ageav read out in court UK High Court Queens Bench Division Commercial Court Case 2011 FO-LlO-792 Energy Venture Partners Versus Malabu Oil and Gas Transcript of Hearing 28112012

21 Over 300 Shell VP appointments published on royaldutchshellplccom httproyaldutchshellplccom20090803over-300-shell-vp-appoint-ments-published-on-royaldutchshellplc-com Linkedln Peter Robinson httpsllwwwlinkedincompubpeter-robinsonaO475a96

22 This Day 19 March 2009 Nigeria French Court Fines Etete $105m httpallafricacomstories200903190202html

23 Risk Advisory Group March 2007 Due diligence report for Eni p2

24 Risk Advisory Group April 2010 Due diligence report for Eni p5


25 Enis shareholder meeting in 2014 the company claimed in a written answer to questions submitted by Global Witness that no clear evidence wasfound during the preliminary audits conducted by the Eni legal department under the anti-corruption procedures particularly in relation to his [Etetes]connection with the company And Paolo Scaroni the then CEO stated that in 2007 and 2010 preliminary due diligence has been conducted aboutthe corporation Malabu by the division EampP also through an external company of international level From in-depth research carried out on thesetwo occasions evidence did not emerge of the participation of Dan Etete in the shareholding capital of Malabu (Unofficial translation)

26 Energy Venture Partners Limited and Malabu Oil and Gas Limited Amended Particulars of Claim High Court of Justice Commercial Court Londonparas 37 and 38 5 November 2012

27 GradoZeroBlog 13912014 LENIe il miliardo della concessione petrolifera nigeriana OPL 245 httpgradozeroblogitlnewseni-Ia-maxi-tan-gente - pe r-Ia - con cessi on e- petro Iifer a- nigeri ana - op 1-245

28 Economist 15 June 2013 Safe Sex in Nigeria httpwwweconomistcomnewsbusiness21579469-court-documents-shed-light-manoeu-vri ngs -s hell-an d- eni-wi n- huge - nige rian - ai1-block

29 Premium Times 18 February 2015 Download Nigeria 2015 Budget Proposal the Jonathan govt does not want Nigerians to see httpwwwpre-miumtimesngcomnewsheadlines177004-download-nigeria-2015-budget-proposal-the-jonathan-govt-does-not-want-nigerians-to-seehtmlProposed Federal Budget for the Federal Ministry of Health 2015 is 257543773757 Naira equal to approximately US$13bn

30 Hearing of UK High Court Commercial Court 21 July 2011 Energy Venture Partners Ltd vs Malabu Oil and Gas Justice Steel presiding

31 II Fatto Quotidiano 7 October 2014 Eni Iex manager II ras nigeriano mi disse Descalzi e ai miei ordini httpwwwilfattoquotidianoitl20141 0107 leni-Iex- manager-il-ras-nigeriano- mi -disse-descalzi -e-ai-miei-ord in i11460991

32 Africa Confidential 10 October 2014 ENI in the cross-hairs httpwwwafrica-confidentialcomarticle-previewid5806ENI_in_the_cross-hairs lEspresso 2852015 II verbale choc Ecco la maxi tangente Eni in Nigeria httpespressorepubblicaitlarchivio20150528newsil-verbale-choc-ecco-Ia-maxi-tangente-eni- in -nigeria-1 214766

33 The Honorable Bernard J Fried described the Federal Government of Nigerias role in the deal as that of the proverbial straw man who washolding $11billion for ultimate payment to Malabu Order to Show Cause with temporary Restraining Order In the Matter of Arbitration betweenInternational Legal Consulting Limited and Malabu Oil and Gas Limited and JP Morgan Chase and Co and all of its subsidiaries and affiliates includingbut not limited to JP Morgan Chase Bank NA Supreme Court of the State of New York County of New York Index no 6517331201122 July 2011p10 Edwards Angell Plamer and Dodge on behalf of Malabu to Clifford Chance LLP 15 July 2011

34 Comprehensive Position Paper by Mr Mohammed Bello Adoke SAN CFR Han Attorney General of the Federation and Minister of Justice to House ofRepresentatives Ad Hoc Committee Investigative Hearing in Respect of The Transaction involving the Federal Government and ShellAgip companiesand Malabu Oil and Gas Limited in respect of oil bloc OPL 24519 July 2012

35 Economist 15 June 2013 Safe Sex in Nigeria httpwwweconomistcomnewsbusiness21579469-court-documents-shed-light-manoeu-vri ngs -s hell-an d- eni-wi n- huge - nige rian - oi 1-block

36 The Federal Republic of Nigeria vs Santolina Investment Corp amp others[2007] EWHC 3053 (QB) The Federal Republic of Nigeria vs Joshua ChibiDariye amp others approved judgment of Mr Justice Morgan paras 46 and 49 For more details see Global Witness International ThiefThief Octo-ber 201 0 httpwwwglobalwitnessorgsitesdefaultlfilespdfs international_ th ief _thief _fi nalpdf

37 Energy Venture Partners Limited and Malabu Oil and Gas Limited Case No 2011 FOLIO 792 Transcript 13 December 2012 p 210

38 In The High Court Of Justice Queens Bench Division Administrative Court London Between The Queen (On The Application Of Abc) And director OfPublic Prosecutions Defendant 10 December 2013 Witness Statement of Nicholas Hildyard httpwwwthecornerhouseorguksitesthecorner-houseorgukfilesHildyard20Statementpdf

39 Reuters 3 October 2014 Italian Authorities accuse Eni of Bribery httpwwwiolcozabusinessinternationalitalian-authorities-accuse-eni-of-bribery-1175941411VdyY9 _IVhuA

40 Reuters 11 September 2014 Eni chief executive under investigation by prosecutors over Nigerian oil deal httpukreuterscomarti-cle20140911 leni-corruption-nigeria-idUKL5NORC17F20140911

41 On 18 February 2014 the Nigerian House of Representatives voted on the recommendation of an investigation into the deal calling for the dealscancellation and criticised the deal for being contrary to the laws of Nigeria committing the country to unacceptable indemnities and liabilities whileacting as an obligor ceding away the Nigerian national interest and censured and reprimanded Shell and Enis subsidiaries for their actions House ofRepresentatives Federal Government of Nigeria Votes and Proceedings 18 February 2014 p994

42 Premium Times 25 June 2015 EFCC grants ex-Minister Etete bail over $11 bn Malabu fraud httpwwwpremiumtimesngcomnewsheadli nes185631-efcc -grants-ex-mi nister-etete- bail-over-1-1-bn -malabu-fraudhtml

43 Global Witness 29 April 2013 Summary OfThe New EU Accounting And Transparency Directives httpsllwwwglobalwitnessorgarchivesum-mary-new-eu-accounting-and-transparency-directivesl

44 Publish What You Pay 5 October 2015 News United States Applauds Securities and Exchange Commissions Commitment to Swiftly Release OilTransparency Rule httpwwwpublishwhatyoupayorgpwyp-newsunited-states-applauds-securities-and-exchange-commissions-commit-men t_to _swift Iy_re Iease- oi 1_ tran sp aren cy- ru Ie


bullglobal witness

Global Witness investigatesand campaigns to changethe system by exposing theeconomic networks behindconflict corruption andenvironmental destruction

Global Witness is a companylimited by guaranteeand incorporated in England(Company No 2871809)

ISBN 978-0-9931067-6-7

Global WitnessLloyds Chambers1 Portsoken StreetLondon E1 8BTUnited Kingdom

mailglobalwitnessorgwwwglobalwitnessorg

copy Global Witness 2015

Cover photo Offshore oil rig CREDIT GRAFTON MARSHALL SMITH CORBIS


EXECUTIVE SUMMARY














THE BACKGROUND


















NIGERIA




THE DEAL







































1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


legal challenges














THE EXPOSE
















THE INVESTIGATIONS







into the deal











Switzerland











WHAT NEXT

































RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7





EXECUTIVE SUMMARY














THE BACKGROUND


















NIGERIA




THE DEAL







































1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


legal challenges














THE EXPOSE
















THE INVESTIGATIONS







into the deal











Switzerland











WHAT NEXT

































RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7






THE BACKGROUND


















NIGERIA




THE DEAL







































1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


legal challenges














THE EXPOSE
















THE INVESTIGATIONS







into the deal











Switzerland











WHAT NEXT

































RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7














NIGERIA




THE DEAL







































1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


legal challenges














THE EXPOSE
















THE INVESTIGATIONS







into the deal











Switzerland











WHAT NEXT

































RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7





THE DEAL







































1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


legal challenges














THE EXPOSE
















THE INVESTIGATIONS







into the deal











Switzerland











WHAT NEXT

































RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7










1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


legal challenges














THE EXPOSE
















THE INVESTIGATIONS







into the deal











Switzerland











WHAT NEXT

































RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7





THE EXPOSE
















THE INVESTIGATIONS







into the deal











Switzerland











WHAT NEXT

































RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7









THE INVESTIGATIONS







into the deal











Switzerland











WHAT NEXT

































RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7








WHAT NEXT

































RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7






























RECOMMENDATIONS













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7













ENDNOTES















































bullglobal witness



ISBN 978-0-9931067-6-7


























bullglobal witness



ISBN 978-0-9931067-6-7




global witness shell and eni's misadventures in nigeria...reserves in opl,when proved, would...

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