Investigations revealed the dark secrets and how unseen hands across the chessboard conspired to secure one of Nigeria’s most prized off-shore oil blocs for Shell for $1.3 billion
A joint investigation by the US-based online news portal, BuzzFeed; Italian newspaper Il Sole 24 Ore; the UK-based Observer newspaper and journalists from Finance Uncovered, an NGO based in London, has discovered that prosecutors in Milan, Italy believe two payments of $400m each were wired through JP Morgan in London as the spoils of the controversial Malabu oil deal to develop OPL 245, involving Shell, its joint venture partner the Italian oil giant Eni, and Nigerian government officials, including then President Goodluck Jonathan.
Oil giants from western countries, China and Russia have coveted OPL 245 for years. But Shell and Eni eventually “won” paying $1.3bn to the Nigerian government to secure the field in 2011. But ordinary Nigerians have not seen a kobo from the deal, which was partly negotiated by two British secret service ex-MI6 officers hired by Shell as “business and investment advisers”. Within days the bulk of the money was transferred through JP Morgan in London to former Nigerian Petroleum Minister Dan Etete, convicted of money laundering in France – a man with whom both Shell and Eni had been negotiating.
More than half the money was converted into bags of bribe cash via Bureaux de Change in Nigeria, while tens of millions was wired to buy a private jet and armored SUV cars in the US, according to documents compiled by Italian prosecutors.
These astonishing allegations have been made by the no-nonsense Italian prosecutor, Fabio de Pasquale, who prosecuted and jailed the former Italian leader Silvio Berlusconi. De Pasquale and his team have spent more than two years following the money trail surrounding the murky sale of OPL 245, which industry figures estimated to contain 9.3bn barrels of crude: enough to power the entire African continent for seven years.
De Pasquale has carried out raids on Eni offices in Italy and Shell’s headquarters in The Hague that have yielded tens of thousands of documents and emails. Last month he requested that an Italian court charge 10 individuals, including five high-ranking executives from Eni, with corruption-related offences. Shell, as a corporate entity, was also included in the request, which will be considered by a court in Milan next month. Shell, Eni and all the executives named by De Pasquale strongly deny the allegations.
De Pasquale has also formally warned four former Shell employees, who allegedly played significant roles in securing the deal, that they could be subject to separate proceedings. Among them are Guy Colegate and John Copleston, identified by De Pasquale in legal documents as having “previously worked for MI6” (British Intelligence Agency). Copleston was a “strategic investment adviser” at Shell who, as the UK’s former intelligence representative in Nigeria, had nurtured contacts at the highest levels of the country’s military and government. Colegate worked as a “business adviser”, compiling regular intelligence briefings on the main actors in the OPL 245 negotiations.
As Shell eyed OPL 245, both the CIA and the British Foreign Office were aware that Vladimir Putin and Russia were maneuvering to snatch the Nigerian oil bloc from the western oil majors. The OPL 245 license had proved very elusive. In 1998, Nigeria’s then oil minister, Dan Etete, awarded it to a shady new company, Malabu Oil and Gas, in which, it later emerged, he held a significant stake.
But after Musa Yar’Adua came to power after Olusegun Obasanjo, the allocation was cancelled in 2001 over alleged failure of Malabu to fully pay the signature bonus, and failure to develop the field. It was reallocated to Shell and Agip after a successful bid. Malabu challenged the 2001 reallocation of OPL 245 at the High Court in Abuja and lost, but appealed the court’s decision. Later the position reversed and Shell began legal proceedings against the Nigerian government. The federal government, the defendant in the case, decided in 2006 to settle the case out of court rather than contest Malabu’s appeal. But the Obasanjo and Yar’Adua administrations refused to compensate Malabu for the reallocation. Shell also initiated a suit in the Federal High Court, Abuja as well as arbitration proceedings at the International Centre for the Settlement of Investment Disputes in Washington DC to prevent the reallocation of OPL 245 to Malabu.
Etete was convicted in a Paris court in 2007 for his part in a separate money-laundering scandal. But this did not appear to deter Shell and Eni from continuing to court him at luxury hotels in Europe and Nigeria. After one lunch with Etete in 2009 to discuss his asking price for OPL 245, it is reported that Copleston copied Colegate on an email to say it had gone well, helped along by “lots of iced champagne” In 2010, negotiations swung Shell’s way when Goodluck Jonathan, an ally of Etete’s, became Nigeria’s acting president. Malabu asked the federal government to compensate it for the reallocation of OPL 245 and in exchange, it agreed to withdraw its appeal against the Federal High Court’s ruling. The Nigerian government then arranged for Shell and Agip to pay Malabu $1.3 billion in return for Malabu’s waiving all claims to any interest in the oil bloc. The following year, the $1.3bn deal was struck, with Malabu entitled to $1.1bn and the Nigerian government a $210m “signature fee”. Shell and Eni paid the money directly to the Nigerian government.
A fixer involved in the deal described this approach as putting a “condom” between the buyer and seller so that at no point would Shell or Eni make direct payments to Malabu or Etete, who was officially recognized as a criminal. But in May 2011, days after the Nigerian government received the money, its officials instructed JP Morgan to transfer the $1.1bn to an account in Switzerland. At this point red flags should have been raised in London. Under money-laundering regulations, banks are required to raise Suspicious Activity Reports (SARs) for highly unusual transactions, especially involving what are called “politically exposed persons” such as Etete. These reports are raised confidentially with the UK Financial Investigations Unit, which in 2011 was part of the Serious Organized Crime Agency (SOCA).
Banks are forbidden from confirming whether they have raised SARs, and both JP Morgan and the National Crime Agency – SOCA’s successor – have declined to comment on the matter. However, a source indicated that JP Morgan had raised an SAR as soon as it received the request from Nigeria. It is understood that the bank would not have proceeded without a green light from SOCA. Well-placed sources offer three possible explanations for why the UK authorities allowed the transfer to go through. Either they saw no problem with it; or they were aware of the money’s provenance but, because the Nigerian government itself saw no corruption, there was little that could be done to secure evidence for a freezing order; or they wanted to track how the funds were disbursed to help gain intelligence.
Whatever the explanation, the transfer immediately ran into difficulties. BSI Lugano, a Swiss bank, rejected the payment, citing Etete’s money-laundering conviction. In August, JP Morgan then made a second attempt via a Lebanese bank to pay the money to Malabu, but this too was rejected. However, a fortnight later the bank was able to transfer the money, in separate tranches of $400m to two Nigerian banks. Where all of it ended up will probably never be known. De Pasquale alleges that President Jonathan received some of the money, but he denies the claim. Colegate did not respond to requests for comment. Attempts to reach Copleston were unsuccessful. It was not possible to contact Etete, while Eni declined to comment. A spokeswoman for Shell said: “Based on our review of the prosecutor’s file and our understanding of the facts, we don’t believe a request for indictment is justified and we are confident that this will be determined in the next stages of the proceedings. We continue to take this matter seriously and cooperate with the authorities.”
Asked about its intelligence-gathering operations, Shell said: “Like most multinational organizations, Shell takes the duty to protect its people, assets and commercially sensitive information seriously and hires those with the most relevant experience to join its corporate security team, including on occasion former government personnel.” The Malabu scandal highlighted London’s failure to combat money laundering, something former British Prime Minister, David Cameron, had identified as a key priority and which development agencies say is vital if the assets of African countries are not to end up being lost to corruption.
