Royal Dutch Shell Plc said it knew some of the $1.1 billion paid to the Nigerian government in 2011 for an exploration license would go to a company linked to the country’s former oil minister, changing its previous stance on a deal that’s under investigation for alleged corruption.
The Anglo-Dutch oil company reiterated that its joint purchase with Eni SpA of the license was “fully legal” and it paid no money to Dan Etete or his company Malabu Oil and Gas Ltd. Following the publication of internal emails showing staff discussed the risk that funds from the transaction could ultimately be used to pay off officials, Shell acknowledged on Tuesday that it was aware of the former minister’s involvement.
“We knew that the Federal Government of Nigeria would compensate Malabu to settle its claim on the block,” Shell said in a statement. “Over time it became clear to us that Etete was involved in Malabu and that the only way to resolve the impasse through a negotiated settlement was to engage with Etete and Malabu, whether we liked it or not.”
Shell and Eni SpA’s joint purchase of Nigeria’s Oil Prospecting License 245 — estimated to hold about 9 Bbbl of crude — is being investigated in three countries. Nigeria’s anti-graft agency filed charges against the companies last month, alleging they used the deal to “ corruptly” pay $801 million to Malabu, Etete and others. The two oil producers say they put money exclusively into an account controlled by the Nigerian government and had no knowledge of or control over any subsequent transfers.
Eni reiterated in a statement that it hasn’t been involved in any wrongdoing and did not make payments to Malabu, Etete or any public official.
Dutch authorities are investigating Shell’s role in the deal. A Milan judge is also considering whether to accept a prosecutors’ request that Eni Chief Executive Officer Claudio Descalzi be indicted for his involvement in the deal. A preliminary hearing is scheduled for April 20.
The change in Shell’s stance since the internal emails were first published by Buzzfeed on April 9 runs counter to previous comments about the deal, according to Global Witness.
“This is a huge U-turn,” Simon Taylor, founder of the anti-corruption campaign group, said by email. “Now its private emails have come to light, Shell has admitted it dealt with Etete.”
Lagos-based Malabu was awarded the prospecting license in 1998 by former military leader General Abdulsalami Abubakar, at a time when Etete was serving as oil minister. The government of President Olusegun Obasanjo, which took office in May 1999, canceled the license in 2001 and awarded it to Shell a year later.
Malabu was awarded the field again in 2006 and Shell contested the rights until 2011, when along with Eni it paid the government to settle the dispute. The state subsequently transferred funds to Malabu to resolve its claim on the license.