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FCPA Blog Daily News

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Thursday
Oct192017

Italian prosecutor charges Shell and former execs with overseas bribery

The Milan Public Prosecutor’s Office has charged Royal Dutch Shell and four former executives for an alleged plot to pay massive bribes to win oil exploration rights in Nigeria.

One of those charged is Malcolm Brinded, 64, the former executive director for Upstream International when the alleged bribery happened.

Brinded retired from Shell after a 38-year career with the company. He was Shell’s UK chairman from 1999 to 2002.

It isn't certain the defendants will face trial.

Italian law requires investigating magistrates to request a trial. A judge then holds a preliminary hearing to decide whether to approve the request.

The prosecutor also charged Shell itself, along with Peter Robinson, the former vice president for Shell’s sub-Saharan Africa operations.

Two other former Shell employees, Guy Colegate and John Copleston, were charged. Both are ex-agents of the UK foreign intelligence service MI6, according to Global Witness.

Shell initially denied bribing officials in Nigeria to win access in 2011 to an offshore block known as OPL 246.

The company claimed it only made legal payments directly to the Nigerian government.

But emails leaked to Global Witness that had been uncovered in a raid by Dutch prosecutors at Shell’s corporate offices revealed more about the deal.

Global Witness alleged that Shell and Italian oil giant Eni paid $1.1 billion for the license for OPL 246. Half of that payment went to the former license holder, an entity called Malabu Oil and Gas Limited, which was owned by a Nigerian government official, Dan Etete.

Etete had been awarded the rights to the block when he was Nigeria's oil minister.

In December 2016, the Milan Public Prosecutor alleged that $520 million from the deal was converted into cash for payment to other Nigerian government officials.

Eni has denied being involved in any bribery related to OPL 246. But its FCPA-related investigation is ongoing.

Global Witness said the Shell emails showed that executives at the company knew about the payments.

Barnaby Pace of Global Witness said this week: “This could be the biggest corporate bribery trial in history and a watershed moment for the oil industry.” 

Dan Etete, the former oil minister, has said Malabu Oil was legitimately granted the right to OPL 246 because it met the Nigerian government's requirements.

He said the government didn't invest in Malabu and therefore wasn't entitled to any proceeds from the sale of the block.

*     *     *

In 2010, Shell paid $48.1 million to settle FCPA offenses.

Shell was one of seven companies that resolved enforcement actions for violations related to Swiss logistics firm Panalpina.

A Shell subsidiary in Nigeria, SNEPCO, paid $2 million to Panalpina or an agent, knowing that some or all of the money would be used to bribe Nigerian customs officials.

Shell entered into a deferred prosecution agreement with the DOJ and paid a $30 million criminal penalty.

In their SEC settlement, Shell and a U.S. subsidiary, Shell International Exploration and Production Inc., disgorged $18.1 million. The SEC charged them with conspiring to violate the anti-bribery and books and records provisions of the FCPA, and with aiding and abetting a violation of the books and records provisions.

*     *     *

In 2010, Rome-based Eni and its Dutch subsidiary Snamprogetti Netherlands B.V. paid $365 million to resolve FCPA-related charges for Snamprogetti's role in the TSKJ-Nigeria joint venture.

Snamprogetti, Kellogg Brown & Root Inc. (KBR), Technip S.A., and JGC of Japan were the four partners in TSKJ. It won contracts from Nigeria's state gas company between 1995 and 2004 to build LNG facilities on Bonny Island. The contracts were worth more than $6 billion.

Snamprogetti authorized the joint venture to pay about $180 million in bribes to Nigerian government officials to help win the contracts, according to the DOJ.

The Italian government controls about a third of Eni. The company, considered an oil and gas "super major," operates in 73 countries with about 81,000 employees.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.