U.S. Lawmakers Want Malabu Oil Deal Probe Reopened

...alleged Jonathan, Bayo Ojo, Others Got Bribe

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The United States (U.S.) House of Representatives has called on the Department of Justice (DOJ) to reopen a Foreign Corrupt Practices Act (FCPA) investigation into Shell and Eni’s activities regarding their 2011 purchase of the rights to Oil Prospecting License (OPL) 245, one of Nigeria’s most lucrative oilfields.

 

The Chamber placed the demand in a Letter dated May 08, 2024, by the United States House of Representatives Committee on Finance Services and signed by two ranking committee members. It was signed by Maxine Waters and Joyce Beatty and directed to the Attorney General of Justice, U.S., Honorable Merrick Garland.

 

The development to reopen the investigation comes after an Italian court earlier acquitted Shell and Eni in 2021 and 2022, respectively, on the case, a decision that had since been widely scrutinised due to concerns of impropriety and political interference,

A review conducted by U.S. and German representatives to the Organization for Economic Co-operation and Development (OECD) Working Group on Bribery found Italy non-compliant with the Convention’s legal obligations.

 

“We write to urge the Department of Justice (DOJ) to reopen a Foreign Corrupt Practices Act (FCPA) investigation into Shell and Eni regarding their 2011 purchase of the rights to Oil Prospecting License (OPL) 245, one of Nigeria’s most lucrative oilfields,” the House Committee members wrote in the letter of the House Committee on Financial Services, that attempt to revisit the issue for justice.

 

According to the Committee, available evidence implicates both companies in a scheme that paid $1.1 billion in bribes to Nigerian government officials, including then-President Goodluck Jonathan.

 

The Committee stated in the letter sighted by InsideBusiness that “Shell and Eni, both registered with the U.S. Securities and Exchange Commission (SEC), continue to profit from the deal in violation of the FCPA.”

 

Premising the context of the background of the alleged corruption, the Committee mentioned that “allegations of corruption surrounding the OPL 245 began in 1998, when Dan Etete, a convicted money launderer and Nigeria’s former oil minister during the military dictatorship of General Sani Abacha, awarded the OPL 245 licence to Malabu Oil & Gas, a company whose principal shareholders were revealed to be Etete himself and the sons of General Abacha.

 

“The rights to OPL 245 continued to be marred with corruption, and in 2000, Malabu’s share registry was changed to reflect a 50 per cent shareholding by Pecos Energy, a company secretly controlled by then-President Obasanjo and his Vice President.”

 

It noted that Malabu’s license was revoked in 2001 but restored in 2006, with evidence alleging that bribes paid to then-Attorney General Bayo Ojo played a vital role in that decision.

 

The Committee stated that Shell and Eni purchased the license from Malabu in 2011 for $1.3 billion, knowing that a portion of the proceeds would be used to bribe numerous Nigerian officials, including then-President Goodluck Jonathan.

 

“Hundreds of millions of dollars passed through various Nigerian shell companies linked to Aliyu Abubakar, a businessman known in his country as “Mr. Corruption. ” Then-President Goodluck Jonathan was said to have pocketed some $200 million from the sale, and the former Attorney General involved in the 2006 reinstatement of Malabu’s license also purportedly received a sizable payment,” the Committee alleged.

 

It said further that “other funds would later be traced to the purchase of real estate in the U.S., Dubai, Brazil, and Switzerland, as well as luxury vehicles and gems.”

 

The Committee decried that the harm of the corruption to the Nigerian people, “however, would continue to be felt beyond the immediate payment of bribes.”

 

Experts have stated that the country lost about $60 billion in estimated future revenue – double the size of Nigeria’s annual health and education budget.

 

On the antecedents of the trials over the case, the Committee stated, “In 2013, there was sufficient evidence for the Federal Bureau of Investigation (FBI) and the DOJ to open a money laundering investigation into the deal, which was followed by an FCPA investigation. In 2019, the DOJ notified Eni that the U. S. had closed the inquiries in light of Italy’s prosecution of the case, yet it noted that the file could be reopened if circumstances change.

 

“In a decision that had since been widely scrutinised due to concerns of impropriety and political interference, an Italian court subsequently acquitted Shell and Eni in 2021 and 2022, respectively. Soon after, a review by U. S. and German representatives to the Organization for Economic Co-operation and Development (OECD) Working Group in Bribery found Italy non-compliant with the Convention’s legal obligations. The Working Group cited this case, in particular, in the judgment, expressing “extreme concern” over the court’s “systemic rejection” of evidence.”

 

It decried that “Shell and Eni continue to profit from their exploitation of the OPL 245 deal, and Eni has contested the Nigerian government’s decision to delay the conversion of their Oil Prospecting License to an Oil Mining License for OPL 245.”

 

“Eni’s legal challenge, filed at the International Centre for Settlement of Investor Disputes (ICSID) and based upon the corruptly acquired prospecting license and related Resolution Agreement, as well as the use of the original contract in arbitration proceedings, constitutes a further violation of the FCPA. The ICSID proceedings are suspended until May 23, 2024, with the parties’ agreement suggesting a settlement is being negotiated. Allegations have been made in the Nigerian press of further corruption relating to a settlement,” the Committee added.

 

Giving justification for the move to revisit the case for probe, the Committee explained that “The United States has consistently demonstrated global leadership in the fight against foreign bribery, with the FCPA serving as model legislation for countries around the world. The reopening of this case would further illustrate the U.S. commitment to “aggressively pursue foreign bribery cases, ” as stated in the U. S. Strategy on Countering Corruption and reaffirming its pledge to implement the OECD Anti-Bribery Convention fully.”

 

It urged the Attorney General, U. S. “to leverage this potent anti-corruption law to address the issues in this case and to send a powerful message that the United States stands vigilant in its pursuit of corporate crime around the globe.”