Federal Government Demands $3.5bn From Shell, Eni

The Federal Government is seeking compensatory damages in the sum of $1, 092, 040, 000 from oil giants, Shell and Eni, over the controversial Malabu oil deal.

It is also seeking compensatory damages in the sum of $3.5 billion for the under-value at which OPL 245 rights were sold.

The $1.1 billion constitutes the consideration (contract sum) which allegedly was fraudulently paid out to Malabu Oil and Gas Ltd for its surrender and transfer of rights in respect to OPL 245 to the consortium of Shell and Eni.

According to court papers obtained by Daily Independent from London-based Finance Uncovered, the payment, which ought to go to the Federal Republic of Nigeria, was fraudulently diverted to Malabu in what the government now describes as a string of corrupt dealings involving government officials during the President Goodluck Jonathan’s administration and representatives of the oil giants.

And although a final value has yet to be assessed of OPL 245, the government contends that its true value stands at $3.5 billion, as against the value of $1, 092, 040, 000 assigned to it in the Malabu deal. The government is thus claiming against the defendants compensatory damages in that sum.

The government is also seeking “an account of all past and future profits (or a declaration that the FRN is entitled to all future profits) made by each of Shell, Eni and/or Malabu out of their unlawful exploitation of the OPL 245 rights, including the amounts by which they benefitted from favourable terms they would not have received had bribes not been paid.”

The Federal Government’s case is to the effect that Malabu’s 1998 acquisition of OPL 245 rode on the back of corruption, abuse of office, fraud and sundry underhand dealings for which the Nigerian state was brought to monumental loss since its interest was not taken into account.

“The 1998 grant was corrupt, not in the interests of the FRN and in breach of Nigerian law,” the court papers read in part.

“Malabu was a company without any legitimate offices or staff on its payroll, which was incorporated only five days before the grant of the OPL 245 licence.

“The grant was not made in accordance with the usual application process required by Nigerian law, including a formal letter of application stating willingness to comply with provisions and conditions that would be imposed and giving information about the proposed methods for developing the block.

“The grant was subject to an obligation to make payment to the FRN within 30 days of the award in the sum of $20 million, with which Malabu did not comply.

“In the circumstances, Malabu acquired no legitimate holding right to OPL 245, as would have been apparent to anyone with knowledge of Etete’s interests in Malabu.

“The licence could and should have been permanently revoked by the FRN/FGN.”

In March 2001, Malabu assigned to Shell 40 percent participation stake in the exploitation of OPL 245 on the understanding that it would pay $18 million, being the balance of the signature bonus for the asset. Malabu had earlier paid $2 million.

But in July 2001, the President Olusegun Obasanjo-led Federal Government revoked Malabu’s rights to OPL 245, following which it awarded right to the asset to Shell subject to its payment of a signature bonus of $210 million.

This action led to Malabu instituting court action against the government and bringing a petition against it before the National Assembly.

In 2006, however, the dispute was settled out of court and the right to OPL 245 was re-awarded to Malabu in a “settlement agreement”.

The government now claims, however, that the said “settlement” was procured through payment of bribes and sundry fraudulent dealings involving the then Attorney General of the Federation, Chief Bayo Ojo (SAN).

“It is the FRN’s case that the 2006 settlement agreement was procured by corrupt means, with an understanding that Ojo would personally receive a substantial payment from Malabu and/or Etete (and that Ojo was thereby in breach of his obligation under paragraphs 1 and 6 of Schedule 5 of the 1999 constitution),” the government claims in the latest case.

In 2008, a series of negotiations took place in respect to OPL245 which ultimately led to its purchase from Malabu by Shell and Eni.

According to the government, the trio of Mohammed Adoke (SAN), the former Attorney General of the Federation; Mrs. Diezani Allison-Madueke, former Petroleum Minister, and Olusegun Aganga, former Industry and Trades Minister, were involved in what it now describes as a “fraudulent scheme” that led to the transfer of interest.

This scheme witnessed the payment of the above sum of $1.1 billion not to the Federal Government (as it should) but Malabu in an agreement that would engender the fraudulent redistribution of the amount as bribes to government officials at the time.

The government’s case against Shell and Eni is thus that they were fully involved in the corruption and underhand dealings involving large payment of bribes to government officials in their bid to gain control of the oil asset.

Specifically, the government accused Eni, Shell, Malabu and other defendants of “fraud or/and bribery, dishonest assistance and unlawful means of conspiracy.”

At the centre of the scandal is the transfer of the said $1.1 billion by Shell and Eni to Etete as beneficial owner of Malabu and the eventual redistribution of the sum through accounts controlled by the Federal Government to government officials as bribes.

The court papers indicate that about half the money ($520 million) went to the accounts of companies jointly controlled by Abubakar Aliyu, popularly known in Nigeria as the owner of AA Oil, and Etete.

Anti-corruption investigators and activists suspect that Aliyu fronted for top officials of the Jonathan administration, as well as for officials of Shell and Eni.

Shell would, however, later admit it did not know the money would go to Etete.

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

Former president, Jonathan, who is not under any probe in the matter, has denied wrongdoing.

The new claim, dated April 8 and signed by Jonathan Cary, was filed against 14 defendants, including Shell, Eni, Malabu, and their respective subsidiaries.

source:Independent