Nigeria loses $1.092bn claim as Italian court acquits Eni, Shell

Nigeria’s request for a court order compelling Eni and Royal Dutch Shell to pay $1.092bn as an immediate advance payment for damages in one of the oil industry’s biggest-ever corruption trials has failed.

This followed the acquittal on Wednesday by an Italian court of Shell, Eni and their managers in the controversial Malabu scandal.

The Malabu scandal involved the transfer of about $1.1 billion by Shell and Eni through the Nigerian government to accounts controlled by a former Nigerian petroleum minister, Dan Etete.

The sentence, read out in court by Judge Marco Tremolada, came more than three years after the trial first began and after a total of 74 hearings.

At a hearing into alleged corruption linked to Eni and Shell’s 2011 acquisition of the OPL 245 field, Lucio Lucia, lawyer for the Nigerian government, called for a guilty verdict and an advance payment, ahead of any broader damages package set by a court at a later date.

Lucia did not specify how much Nigeria was seeking in damages overall, but said the disputed deal had deprived Nigeria of “profit oil”, adding that “these are massive amounts”.

The lawyer said, calculated under two different scenarios, the profits that had been lost amounted to $4.5bn and $5.9bn respectively.

From accounts controlled by Mr Etete, about half the money ($520 million) went to accounts of companies controlled by Aliyu Abubakar, popularly known in Nigeria as the owner of AA oil.

Anti-corruption investigators and activists suspect he fronted for top officials of the Goodluck Jonathan administration as well of officials of Shell and ENI.

The transaction was authorised in 2011 by Mr Jonathan through some of his cabinet ministers and the money was payment for OPL 245, one of Nigeria’s richest oil blocks.

Although Shell and ENI initially claimed they did not know the money would end up with Mr Etete and his cronies, evidence later showed that the claim was false.

Shell, Eni, Mr Etete, Mr Aliyu and several officials of the oil firms are being prosecuted in Italy for their roles in the scandal.

Italian prosecutors had alleged corruption in the deal while campaigners said the Nigerian government was short-changed.

After years of trial, the court in Milan has now determined that Shell and Eni are not guilty of the charges.

On April 9, 1998, the Federal Military Government awarded OPL 245 to Malabu Oil and Gas Ltd, which was said to be owned mainly by Mohammed Abacha, son of the Sani Abacha, and Etete, who was the petroleum minister at the time.

On July 2, 2001, President Olusegun Obasanjo revoked Malabu’s licence and assigned the oil block to Shell — without a public bid.

Malabu went to court, but ownership was reverted to it in 2006 after it reached an out-of-court settlement with the federal government. Shell fought back and commenced arbitration against Nigeria, but when President Goodluck Jonathan came to power in 2010, the controversy appeared to have been resolved with Shell and Eni agreeing to buy the oil block from Malabu for $1.1 billion.

The oil companies also paid $210 million as signature bonus to the Federal Government of Nigeria.