N155billion scandal: How Shell connived with corrupt officials, and subverted Nigerian laws

By Idris Akinbajo

In its bid to take control of one of the most lucrative oil fields in Nigeria, OPL 245, oil giant, Shell, ably assisted by senior Nigerian officials, condoned illegalities, subverted laid down rules and then lied repeatedly to cover its track, an ongoing PREMIUM TIMES investigation has shown.

This newspaper had reported how Shell lied about not knowing in advance that the $1.1billion it (along with AGIP) wired to the Nigerian government would eventually be passed to Malabu Oil & Gas, a controversial firm largely owned by former petroleum minister, Dan Etete, who was convicted for money laundering in France.

The Nigerian attorney general, Mohammed Adoke, faulted Shell’s claim when he said, in his only official reaction yet to the 155bn naira scandal, “In furtherance of the Resolution Agreement, SNUD (Shell) and ENI agreed to pay Malabu through the Federal Government acting as an obligor, the sum of US$ 1,092,040,000 Billion.” In order words the multinational oil firm knew clearly it was only using the federal government as a conduit to funnel funds to Malabu, a firm with an established criminal history.

Further investigations by PREMIUM TIMES have however shown that 10 years before Shell made the controversial payment in 2011, the oil giant had tolerated illegalities committed by Malabu and colluded with the company in compromising Nigerian officials and subverting the regulations and guidelines under which the oil block was awarded.

The juicy OPL 245

Estimated to hold nine billion barrels of crude oil, OPL 245, with plan number TH/97/411, is located on the submarine area of Nigerian territorial waters, according to an official government survey.  Located offshore in the Niger Delta, it has an approximate size of 1,958sq. Km.

Fully aware of the huge reserve OPL 245 holds, Mr. Etete and Mohammed Sani (Abacha) used executive fiat to discretionally award the block to themselves, through Malabu, a company they hurriedly cobbled together. Mr. Etete was petroleum minister at the time while General Sani Abacha, Mohammed’s father, was Nigeria’s head of state.

To conceal the fact that he awarded the block to himself and shield himself from public scrutiny, Mr. Etete designed an ingenious scheme. He created a fictional character, Kweku Amafegha, and made him one of the three shareholders of Malabu, the others being Mr. Abacha and Hassan Hindu (wife of Hassan Adamu, former Nigerian Ambassador to the UK, who is popularly known as Wakili Adamawa).

“While Abacha’s son (who represented his father on Malabu’s board) did not mind being associated with the block, with his father being the country’s maximum ruler, Etete did not want to be accused of allocating an oil block to himself,” a source with full knowledge of the deal told PREMIUM TIMES.

Creating a fictional character

Knowledgeable sources about the deal say Mr. Amafegha does not exist, and that in fact it was a pseudonym used by Mr. Etete.

“If you check the passport issued to Mr. Amafegha then, you will see that it was Dan Etete himself,” a source said.

Jeffery Tesler, a Briton, who distributed the infamous $180 million Halliburton bribes to senior government officials, also told a French court that Mr. Etete tricked him into believing that Mr. Amafegha was a real person and how he had paid millions of dollars into Mr. Amafegha’s account.

“I thought I was paying these sums into Mr. Amafegha’s account, and that was confirmed when I learned later that Amafegha was listed as a shareholder of Malabu,” Mr. Tesler told a French court.

“As I said – and I have tried to be as clear as possible – my belief was that Mr. Amafegha was not the same person as Etete. I paid the money into Amafegha’s account, but the account details were supplied to me by Etete,” Mr. Tesler, who was jailed in the United States, stated.

Despite owning OPL 245, Malabu could not operate it. To do so, a technical partner was needed.

How Shell got involved

The technical partner Malabu secured in 2001 was Shell. In 2001, Malabu signed an agreement with Shell Nigeria Ultra Deep Limited (SNUD), a subsidiary of Shell.

“Records indicate that SNUD took 40% participating interests in the venture in a farm-in- agreement and also signed agreement with Malabu as its technical partner for the venture,” Mr. Adoke stated in a statement he widely circulated in response to our earlier stories.

Insiders in Shell said before partnering with Malabu, the Dutch firm did an extensive due diligence on the Nigerian company and was aware that a fictional character was on the board of the company.

Our sources, who are extensively familiar with the transaction but do no want to be named for fear of being victimized, said Shell decided to ignore the red flags about Malabu because “it was desperate to take over the block.” Yet the company has a robust code of ethics which include acting “in accordance with the highest standards of honesty, integrity and fairness … while maintaining a work and business climate fostering such standards.”

We were also able to determine that Shell’s decision to partner with Malabu over OPL 245 was in gross violation of the conditions upon which Malabu was issued the block.

Conditions for oil block

We are in possession of an approval letter titled “Application for discretionary allocation of OPLS 214 and 245,” dated April 29, 1998 and written to Malabu by W.F. Dublin-Green, the then director of petroleum resources (DPR), on behalf of Petroleum Minister Etete, enumerated seven conditions for the allocation of OPL 245.

Aside from paying some money, including a signature bonus of $20 million, Malabu was to fulfill other conditions including that “your company is not allowed to enter into any joint venture agreement with any foreign company which is currently engaged in exploration and production activities in the country.”

In other words, even if Malabu were to partner with a foreign company, the company must be one not operating in Nigeria as at then.

Shell had been operating in Nigeria for more than 40 years before that directive and was in no way qualified to partner with Malabu. The Nigerian Government had put those clauses in place in order to ensure indigenous participation in oil exploration.

Buying OPL 245

Apart from the illegality in partnering with Malabu, the outright purchase of OPL 245 license from Malabu (through the Nigerian government) was also an illegal act by Shell and ENI as it contravened condition 4b of the approval letter for the oil block given to Malabu.

Condition 4b states that “foreign participation interest in the blocks (OPL 245 and 214) shall not exceed 40%, i.e. 60/40 indigenous to foreign.”

Sources say the Department of Petroleum Resources (DPR), the Nigerian agency overseeing the licensing of and regulation of companies operating in the upstream and downstream sectors of the country’s oil and gas industry, would not have approved the sale of OPL 245 had President Goodluck Jonathan not suddenly “restructured” the agency to plant favourite officials with specific instruction to subvert the law and due process in the Malabu-Shell deal.

Appointing a new DPR boss

Established in the early fifties, the DPR regulates the activities of oil companies that operate in the oil and gas sector. One of its functions, according to the agency’s website is responsibility for “processing all applications for licenses so as to ensure compliance with laid-down guidelines before making recommendations to the Honourable Minister of Petroleum Resources.”

To legalise Shell and ENI’s purchase of OPL 245, the DPR would have to approve, and to do so, the head of the agency must be willing to play ball.

On November 15, 2011, Reuben Abati, spokesperson to Nigeria’s President, issued a statement announcing the appointment of Oluyemisi Olorunsola as Director of the DPR.

Mr. Olorunsola had before his appointment worked for several years at Shell including becoming the Vice-President (Gas) at Shell Upstream International, a position he held until his appointment by President Jonathan.

No explanation was given for the removal of Andrew Obaje, the man who held the position of Director of DPR before Mr. Olorunsola. Sources in the oil industry however believe he was brought in to smoothen the way for an express approval of the contentious Shell-Malabu deal, in violation of the guidelines for the oil block.

“There was pressure on Obaje to approve the sale, but he did not. That is why they brought the new Director, who is a Shell man all through,” an industry source said. “Do you think it is a coincidence that a Shell VP was brought in as head of DPR at a time when Shell and the FG wanted the DPR to approve the sale of one of Nigeria’s richest oil blocks,” the source queried.

Industry experts say with Mr. Olorunsola’s appointment, Shell had now effectively taken over Nigeria’s oil and gas industry, with the Minister of Petroleum, Diezani Alison-Madueke, being a former Shell employee herself.

Mr. Adoke, who has assumed the role of government spokesperson on this matter, could not be reached for comments.

Carrying out due diligence

Experts in the oil industry insist Shell acted fraudulently in all its roles in the OPL 245 saga as the oil company, like all others, are supposed to carry out due diligence checks on companies it is partnering or doing business with.

“Shell cannot say it was not aware that Etete gave the oil block to himself, they cannot say that they were not aware that the guideline on the block prevented them from partnering or buying it from Malabu,” an oil industry source with links to the multinational company stated.

Shell evasive on questions

Shell declined to respond to all our questions on its role in the purchase of OPL 245.  Instead of responding to specific questions sent to its spokesperson by email, the company simply resent to us an official statement it released last week in which it declined further comment on OPL 245 saying, “in line with Shell’s information policy, we cannot reveal commercially sensitive information.”

The Department of Petroleum Resources (DPR), which issued the guidelines and approved OPL 245 to Malabu, was also not forthcoming with information. After a telephone conversation with our reporter, Belema Osibodu, its deputy director in charge of public affairs, requested that questions be sent to her via SMS.

Three days after the questions were sent and after repeated telephone calls, Ms. Osibodu responded via SMS, saying “DPR acted in consonance with the ruling of the Supreme Court judgment and that of the International Court of Arbitration in the Hague regarding OPL 245 sale to SNEPCO (Shell)/ Nigeria Agip Exploration.”

Mrs. Osibodu could however not give details of the Supreme Court ruling or the judgment at The Hague. Our checks indicate there are no such judgments.

The DPR spokesperson was silent on our other questions including those which sought to know why the department allowed Malabu to partner with Shell in 2001 in contravention of its laid down rules , and why it did not carry out the requisite checks to detect the fraud in the registration of Malabu.

“I’m still waiting for the other responses, as soon as I get them, I will send them to you,” she said.



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