April 11, 2017 / 11:26 AM / 5 months ago

Shell says it knew some payments for Nigeria oilfield would go to Malabu

Staff members work at the booth of Royal Dutch Shell at Gastech, the world's biggest expo for the gas industry, in Chiba, Japan, April 4, 2017. REUTERS/Toru Hanai

LONDON (Reuters) - Royal Dutch Shell (RDSa.L) was aware that some of the payments it made to Nigeria for rights to an oilfield under a 2011 deal would go to a company associated with former Nigerian oil minister and convicted money launderer Dan Etete, it said in a statement to Reuters.

Shell spokesman Andy Norman said the group “always knew” the Nigerian government would compensate the company, Malabu Oil and Gas, “to settle its claim on the block”.

The admission came as the deal and what Shell and its partner on the block, Eni (ENI.MI), knew about the payments made to secure it, are being investigated by courts in Milan and Nigeria.

The licence had been awarded to Malabu in 1998 under then-President Sani Abacha, though a successive government revoked the licence. Malabu appealed that decision, and the status of the licence was uncertain at the time Shell finalised the deal with the Nigerian government in 2011.

Shell’s acknowledgement that it always knew that the Nigerian government would pay some of the money to Malabu also follows a report released this week by campaign group Global Witness, which said it had proof that Shell executives were told payments would go not only to Malabu but also to a string of Nigerian business people. Reuters could not independently confirm these claims.

Shell had previously said in statements to Reuters only that its payments from the deal went to the Nigerian government.

“Over time it became clear to us that Etete was involved in Malabu and that the only way to resolve the impasse (over disputed ownership claims) through a negotiated settlement was to engage with Etete and Malabu, whether we liked it or not,” Norman said.

Etete was convicted of money laundering in a 2007 French case related to his time in the Nigerian government.

Reuters has been unable to contact Etete to seek comment after Shell’s statement admitting it knew that part of its payment would go to Malabu.

Norman added that the company believes the settlement was a fully legal transaction with the Nigerian government but did not provide further detail.

Courts in Nigeria and Italy are investigating the purchase of the offshore block, known as OPL 245. Shell and Italy’s Eni paid $1.3 billion for the rights to the block, which industry estimates say could hold more than 9 billion barrels of oil.

Italian prosecutors have asked for Eni chief Claudio Descalzi to be sent to trial over alleged corruption related to the purchase of the block. Eni has said that neither the company nor Descalzi were involved in any illicit conduct.

A Nigerian court ordered the block temporarily seized in January at the request of the country’s Economic and Financial Crimes Commission, but the move was overturned.

An Eni spokesman on Tuesday again denied any wrongdoing by the company or its personnel.

Additional reporting by Alexis Akwagyiram in Lagos, Stephen Jewkes in Milan and Karolin Schaps in London; Editing by Dale Hudson and David Goodman

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