One of the biggest corruption cases faced by the oil industry in recent years is due to resume in Milan on Wednesday as two of the worldโs biggest oil companies Royal Dutch Shell and Italian firm Eni are facingย trial.
Prosecutors are bringing criminal charges against Shell and Eni executives over allegations of corruption regarding a $1.3 billion oil deal in Nigeria.
This is the first time an oil company as large as Shell or senior executives of a major oil company have ever stood trial for briberyย offences.
The case, which has been repeatedly delayed, involves the 2011 purchase by Shell and Eni of Nigeriaโs OPL 245 offshore oilfield โ one of Africaโs most valuable oilย blocks.
Prosecutors in Milan have accused Shell and Eni of paying bribes to win the licence to explore the field which has never entered intoย production.
They allege that Shell and Eni paid $1.1 billion into an account for the Nigeria government of which $800 million was later transferred to Malabu Oil and Gas, a company secretly owned by former Nigerian petroleum minister and convicted money launderer Dan Etete, to be distributed asย payoffs.
The $800 million payment was wired through London by bank JP Morgan Chase. A lawsuit accusing JP Morgan of negligence against the transfer has been filed against the bank inย Nigeria.
According to court documents seen by Reuters, the bank admitted it knew Etete would benefit from the $800 million payment. It also argued the UKโs Serious Organised Crime Agency (now the National Crime Agency) approved theย payment.
JP Morgan denied negligence and previously said it ย โconsiders the allegations made in the claim to be unsubstantiated and without meritโ.ย ย
Prosecutors in Milan have also alleged that $520 million from the deal was converted into cash and intended to be paid to the then Nigerian President Goodluck Jonathan, members of the government and other Nigerian governmentย officials.
They claimed $50 million in cash was also delivered to the home of Eni executive Robertoย Casula.
Charges have been brought against Eniโs chief executive Claudio Descalzi and former chief of exploration and production for Shell Malcolm Brinded. No current Shell officials are facing charges in theย case.
Both Shell and Eni have repeatedly deniedย wrongdoing.
In a statement, Shell said: โWe believe the trial judges will conclude that there is no case against Shell or its former employees. There is no place for bribery or corruption in ourย company.โ
On its website, Eni said: โEniโs Board of Directors has reaffirmed its confidence that the company was not involved in alleged corrupt activities in relation to the transaction.The board of directors also confirmed its full confidence that chief executive Claudio Descalzi was not involved in the alleged illegal conduct and, more broadly, in his role as head of theย company.โ
The case is likely to shed some light on the murky dealings of international oil companies to access resources, including paying governments large sums of money in exchange of securing licensingย rights.
Barnaby Pace, from NGO Global Witness, said the trial could be โa turning pointโ for the oilย industry.
He said: โSome of the most senior executives of two of the biggest companies in the world could face prison sentences for a deal struck under their watch. Shell has recently accused one of these former executives of taking kickbacks in a separate Nigerian deal. How long before Shell cracks over this caseย too?โ
The case also highlights the role played by London in facilitating the transfer of money from oil companies to governmentย officials.
Earlier this year, a special investigation by DeSmog UK revealed how small oil and gas companies are using Londonโs junior stock market, the Alternative Investment Market (AIM), to finance sometimes unsavoury business activities in frontier markets acrossย Africa.
DeSmog UKโs Empire Oil investigation used the example of Sirius Petroleum, a small oil investment company listed on AIM and operating in the Niger Delta to shed some light on the exchangeโs regulatory flaws and the Cityโs enablingย role.
Talking about the Shell and Eni trial, Chairman of Nigerian NGO Human and Environmental Development Agenda, Lanre Suraju, said: โIt is a clear signal that it is no longer business as usual for oil companies in Nigeria. Itโs time justice wasย served.โ
โThis case heralds the dawning of the age of accountability, a world where even the most powerful corporations can no longer hide their wrongdoing and avoid justice,โ said Antonio Tricarico, from Italian anti-corruption NGOย Re:Common.
DeSmog UK previously revealed how UK ministers agreed to lobby the Nigerian Government to protect Shellโs oil interests in the Niger Delta despite the companyโs poor human rights and environmental record in theย region.
Image Credit: Lommer/Wikimedia Commons/CC BY–SAย 3.0ย
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