The High Court in the United Kingdom has lifted a secrecy order imposed on a 2013 legal challenge by The Corner House of a decision by the Crown Prosecution Service (CPS) not to freeze some $215 million in alleged proceeds of crime from a corrupt Nigerian oil deal.
The funds arose from the sale of one of Nigeria’s largest offshore oil concessions, known as OPL 245, to subsidiaries of oil multinationals Royal Dutch Shell and ENI.
Police in the UK and magistrates in Italy are now formally investigating the deal. Both companies deny any illegal conduct.
The OPL 245 concession was originally awarded in 1998 by the then Nigerian oil minister, Dan Etete, to Malabu Oil and Gas, a company that he set up and owns – in effect Etete awarded one of Nigeria’s most lucrative oil blocks to himself.
In 2011, Shell and ENI paid $1.1 billion, plus a signature bonus of $200 million, to the Nigerian government for the concession. In a back-to-back deal negotiated by the Attorney General of Nigeria, the Nigerian government then undertook to transfer $1.1 billion to Etete’s company, Malabu.
The deal effectively converted into money an asset that had been acquired by Malabu Oil and Gas in highly suspicious, possibly illegal, circumstances. Shell and ENI deny paying any money to Malabu Oil and Gas. But they were aware and in agreement that the deal was for the benefit of Malabu.
In 2011, a middleman acting for Malabu sued the company in the UK Commercial Court for fees he claimed he was owed for services rendered to Malabu in the sale of OPL 245. Pending the outcome of the case, the Court froze some $215 million from the proceeds of the oil concession sale.
The Corner House, together with anti-corruption watchdog Global Witness and Re:Common, an Italian Non Government Organisation, and Dotun Oloko, a Nigerian anti-corruption campaigner, wrote to this Court raising concerns that the frozen funds were proceeds of crime. The group also requested the London Metropolitan Police’s Proceeds of Corruption Unit (POCU) and the Italian authorities to investigate.
Although the police sought action under the Proceeds of Crime Act, the Crown Prosecution Service (CPS) declined to initiate proceedings. The Corner House therefore sought a judicial review of the CPS’s decision, arguing that:
- the OPL 245 deal was corrupt and illegal under both Nigerian and UK law;
- it was likely, on the available evidence, that a substantial part of the monies paid to Malabu had been used to pay bribes; and
- the CPS’s failure to act was unlawful.
The application for permission to bring a judicial review of the CPS failure to act was held in secret, at the request of the CPS, because of the danger of “tipping off” those being investigated by the police.
In March 2014, the High Court refused permission to bring a judicial review because the CPS had assured the Court that it was still considering taking action.
In July 2014, however, following the commercial court ruling in favour of the middleman, more than $110 million of the suspect funds left the UK for Switzerland.
The CPS did nothing to prevent the movement of this money.
By contrast, at the request of the Italian authorities, the funds were frozen in Switzerland. Only following a mutual legal assistance request from Italy did the UK authorities freeze a further $80 million of the funds remaining in the UK.
Nicholas Hildyard of The Corner House says: “The CPS had ample opportunity to restrain the funds. It was invited, requested and challenged to do so but failed to act. The money was restrained only because of the actions of the Italian authorities. If Italy was able to get the funds frozen, what stopped the UK in the first place?”
Key figures in Italian oil multinational ENI are now under formal investigation by magistrates in Milan for alleged corruption relating to the OPL 245 deal. The corporation’s new CEO, Claudio Descalzi; his predecessor Paolo Scaroni; and its chief development, operations and technology officer, Roberto Casula, have all been named as suspects in the bribery investigation.
Jamie Beagent of law firm Leigh Day who acted for Corner House in the judicial review proceedings, said: “We are obviously pleased that the funds have finally been frozen and that an investigation is now taking place into this murky affair.
It is only a shame that the UK authorities ducked their responsibilities in this regard and that it was left to the Italian authorities to pursue this matter with the appropriate rigour.”
The Corner House, Global Witness and Re:Common are writing to the Chair of the UK Parliament’s Public Accounts Committee (PAC), Margaret Hodge MP, informing the Committee of their concerns and requesting that the Committee consider undertaking an inquiry into whether or not the existing UK legislation on restraining proceeds of crime is fit for purpose.
The PAC released in March 2014 a highly critical report on confiscation orders, highlighting the CPS failure to recover assets deemed proceeds of crime.6 A Home Office assessment of current legislation, undertaken by Michael Beloff QC, is widely understood to be critical of it.
The Home Office has refused to release Beloff’s report to The Corner House
No investigation in Nigeria
The Nigerian government appears unwilling to investigate the deal. Some of those who facilitated it and believed to have received parts of the bribe still work for the administration.
But it has since become clear that more than half of the N171.32 billion ($1.1 billion) paid to Malabu Oil and Gas by Shell and Eni for the procurement of the controversial block, which is one of Nigeria’s richest oil fields, was used to bribe Nigerian politicians and intermediaries who helped to secure the controversial deal.
According to a letter seeking the help of UK’s Crown Prosecution Service (CPS) to freeze the assets of those involved, Italian prosecutors said some of the N83 billion ($533 million) slush money was used to buy private jets and armoured vehicles.
“We are investigating many money transfers to many people in various countries who received sums that vary from millions of dollars to thousands of dollars,” Reuters claimed the letter reads.
British prosecutors acting on the request have already frozen two accounts with combined sum of N29.5 billion ($190 million) belonging to the chief intermediary, Emeka Obi.
Former oil minister, who was convicted for money laundering in France, Dan Etete, owns Malabu Oil and Gas. The company was incorporated five days before the oil block was awarded to it in 1998 during the regime of military dictator, Sani Abacha.
While trying to cover his link with the company, Mr. Etete registered the company with a fictitious director, Kweku Amafegha. The company also listed a fake address in registration documents.
Mr. Etete claimed in a British court in 2013 that former President, Olusegun Obasanjo, demanded a slice of the oil block as bribe.
The Federal Government acted as a conduit for the fund after Shell and Eni raised concerns over transferring the money directly to Malabu due to Mr Etete’s conviction.
PREMIUM TIMES investigation revealed that after the money was paid to the Federal Government account, it transferred N120 billion ($801 million) to Malabu’s account.
The Attorney General of the Federation, Mohammed Adoke, and Minister of State for Finance, Yerima Ngama, authorized the transfers.
The company subsequently transferred the money to shady companies with fake addresses.
Despite overwhelming evidences showing that Shell and Eni are aware that the money would be paid to a character with a shady background, officials of the companies have denied any wrong doing in the affair.
For instance prosecutors said that a senior official of Shell had a face-to-face meeting with Mr. Etete over expensive “lunch and lots of iced champagne” few moths before the money was transferred to the Nigerian government.
An email presented during the trial also mentioned that the Shell official who feted with Mr Etete would refer to someone in The Hague known as “Peter” over the terms of the deal. Curiously, Shell’s CEO is named Peter Voser.
The Italian prosecutors are investigating the role of Eni’s former CEO, Paola Scaroni and his successor Claudio Descalzi, for alleged international corruption over the scandal.