Malabu $1.1 billion Scandal: Court to decide Shell, Eni’s request March 13

The Abuja Division of the Federal High Court will on March 13 decide on an application for the retraction of a January 26 order withdrawing control of an oil block, OPL 245, from two multinational oil companies.

The oil firms, Shell and Eni, through their Nigerian subsidiaries, challenged the propriety of the Nigerian government withdrawing the oil block from them, pending the determination of a criminal matter.

The order was sought ex-Parte by the Economic and Financial Crimes Commission, EFCC, which said it was investigating the corruption surrounding the block.

OPL245 is considered one of Nigeria’s richest oil blocks and estimated to contain over 9 billion barrels of crude.

Apart from Shell and Eni, who want the block back, Malabu, the firm to which the block was originally assigned by the Nigerian government in 1998 under controversial circumstances, also sought to retake possession of the block.

At the opening g of session on Monday, the counsel representing Malabu, Abdullahi Haruna, asked the court to accept a fresh application, seeking the variation of the court order made on January 26.

The presiding judge, John Tsoho, however refused the application, stressing that the court was not initially aware of it and could not just suspend other matters to officially recognize the fresh application.

“It is not just bringing up the application that matters but what could be achieved by bringing up the material. An application seeking variation of the order cannot be properly entertained. I hold that Malabu’s application for variation of the court order shall stand in abeyance”, Mr. Tsoho said.

When the court resumed hearing on the application by Shell and Eni, the counsel representing Eni, Babatunde Fagbohunlu, questioned the action of the EFCC on the forfeiture order.

“Is it possible for the EFCC to attach and subsequently forfeit an asset on a motion that was completely filed on an ex-parte basis? I respectively submit that the answer that my Lord should give to that motion is an authentic no,” said Mr. Fagbohunlu, Senior Advocate of Nigeria.

Mr. Fagbohunlu added that the manner of application that preceded the January 26 order offends his clients right to fair hearing and should therefore not be allowed.

“Section 28 allows the EFCC to seize an asset, but it must immediately follow such seizure with a motion on notice; that application has to be on notice, because the (EFCC) statute does not authorise it to be ex-Parte,” said Mr. Fagbohunlu.

He further said the Supreme Court had in previous rulings ordered that an ex-parte motion cannot be given in such a manner as to remain ex-parte till the end of the case.

“According to section 28, the interim order should be accompanied with an inter-party motion.

“The exercise of a power has a condition precedent. The condition precedent is that there must be precise rules. If the regulatory framework is missing, your lordship must dismiss this action,” Mr. Fagbohunlu said.

The counsel representing Shell, Ajayi Oyinsola, also asked the court to dismiss the order on the grounds that the EFCC act only allows it to carry out such an action on movable asset.

“What we have here is a mere licence and a tangible right that is incapable of destruction or incapable of being moved. It is a license over some thousands of square miles of the ocean. The ocean cannot be destroyed, or taken away. There is nothing there can be put on the seal of the EFCC,” he said.

“I urge that your lordship dismiss or strike out this case because it is an abuse of process; it is patently hopeless and an attempt at directing the court to do that which it ought not to do,” he added.

“The condition precedent to approaching the court is the doing of certain things,” Mr. Oyinsola said, adding that the condition for securing the court order was not duly followed.

He therefore called for the dismissal for the January 26 court order.

The counsel representing the EFCC, Johnson Ojogbane, however said the argument of counsel that the application should have been filed by the EFCC and not its chairman, does not hold water. He contended that the commission’s chairman acted in his capacity as a representative of the entire commission and therefore such an argument should not be considered.

He further said the application for dismissal of the January 26 order cannot be entertained after the matter had been determined.

Mr. Ojogbane added that the matter is criminal in nature and that the action of the commission has been in tandem with a criminal matter.

Speaking further, Mr. Ojogbane said the OPL 245 is a tangible asset, whose control had the capacity of being moved. The action of the EFCC therefore was in line with its decision to suspend the control of the block.

After hearing all the arguments, the court adjourned its ruling till March 13.

The $1.1 billion 2011 deal

After several political and judicial intrigues that ensured OPL 245 changed hands several times between Malabu, Shell, and the Nigerian government, Goodluck Jonathan emerged Nigeria’s president in 2010. On the prompting of his attorney general, Mohammed Adoke, one of Mr. Jonathan’s first directive upon assuming office was that the oil block be given to Malabu.

Persons close to Mr. Jonathan told PREMIUM TIMES the former president took the decision because of his closeness to Dan Etete who had helped him during his tenure as petroleum minister and because of the perception among persons from the oil producing Niger Delta that OPL 245 was one of the few oil blocks awarded to someone from the region.

By 2010, Mr. Etete had schemed out other owners of Malabu including by fraudulently altering Corporate Affairs Corporation, CAC, documents, investigations revealed.

The CAC recently said its official in charge of the Malabu documents was “brutally murdered”.

Despite Mr. Jonathan’s directive that Malabu be given OPL 245, the company really did not exist and had no staff or technical competence to manage the block. Based on advice from desperate businessmen including an Israeli, Ednan Agaev, Mr. Etete decided to cash in on the block. Through various middlemen, the former minister approached oil giants, Shell and ENI, to buy the block. Knowing Mr. Etete’s history including the fact that he had been convicted in France for money laundering, the oil firms would not do a direct deal.

For the transaction to continue, a legally recognised mediator would have to be found.

That mediator turned out to be the Nigerian government, represented by Mr. Adoke.

The agreements that were sealed led to Shell and ENI paying the $1.1 billion into a Nigerian government account in JP Morgan Chase in London. The money was to then be transferred to Malabu accounts controlled by Mr. Etete.

Although Shell and ENI have repeatedly claimed they did not know the money was going to end up with Malabu, investigations in Nigeria and Italy as well as leaked documents revealed that claim to be false. Mr. Adoke himself would later admit that he, on behalf of the federal government, only acted as a mediator for two willing parties – Malabu and the oil majors. Mr. Adoke was, however, aware of the various fraudulent manipulations of Malabu by Mr. Etete when he authorised the transaction, multiple sources have told PREMIUM TIMES.

THE TRANSFERS TO FRAUDULENT FIRMS

To ensure no one stopped the shady transfer of the $1.1 billion to Mr. Etete, the money had to be quickly transferred. More so, Ngozi Okonjo-Iweala was set to assume office as Nigeria’s Finance Minister and the officials involved were not sure she would play ball.

On August 16, 2011, a day before Mrs. Okonjo-Iweala was to assume office, Mr. Adoke and the then Minister of State for Finance, Yerima Ngama, authorised the transfer of the money to Malabu accounts in Nigeria controlled by Mr. Adoke.

However, all the $1.1 billion could not be transferred. Emeka Obi, a man who claimed he helped broker the deal between Malabu and the oil majors filed a suit in the UK, that ensured $215 million was frozen of the money. The remaining $801 million was subsequently transferred to Mr. Etete: $400 million was transferred to a Bank PHB account while $401 million was transferred to a First Bank account.

Immediately Mr. Etete received the money, curious transfers began. PREMIUM TIMES investigations, now confirmed by the EFCC, reveal that shady companies linked to Abubakar Aliyu received about $479 million dollars from Mr. Etete. Our investigations later showed that most of the companies were non-existent and used fake addresses in their registration documents.

The companies – Rocky Top Resource Ltd, Imperial Union Ltd, Novel Properties & Dev. Co. Ltd, A-Group Construction Ltd, and Megatech Engineering Ltd – were all charged in the suit filed by the EFCC.

While Mr. Etete later admitted that only $250 million of the money paid into his account was his, Mr. Aliyu is believed to have acted as a front for officials of the Goodluck Jonathan administration including Mr. Adoke.

It is based on its investigations of the corruption surrounding the transfer of the block that the EFCC asked the court that it be temporarily forfeited to the Nigerian government. The request, granted by the court, is what Shell and Eni are contesting and which will be decided on March 13.