Even by Nigerian standards, the alleged siphoning off of $1 billion (£750 million) from a $1.3 billion international investment in a lucrative oil block through “fees” to a former oil minister’s company and assorted middlemen has been shocking.
Jonathan Fisher QC called it “grand corruption”. High Court Judge Mr Justice Edis declared: “Given the large sums of money involved that are effectively paid to a former minister to a bank account in the Middle East, the whole exercise is backed by murky instructions.”
The saga of OPL245 — a huge Nigerian oilfield containing an estimated nine billion barrels of crude — began in 1998 when the then petroleum minister, Dan Etete, awarded the licence to Malabu Oil & Gas, a Nigerian company with no assets and no employees, for $20 million, seemingly a tiny fraction of its real value.
Over the next decade, there were a number of legal wranglings between Shell and Malabu over ownership of the field.
Eventually, in 2011, the field was sold by the Nigerian government to Eni and Shell.
The two oil giants paid the government but $1.09 billion was subsequently sent to Malabu.
Shell and Eni insist they did not know this would happen. The arrangement — memorably described by a middlemen as a “safe-sex transaction” — was controversial enough.
But then it was claimed in High Court proceedings that the beneficial owner of Malabu was none other than Etete, the former oil minister who awarded the oil block to Malabu in the first place. Etete denied this, saying he was just a consultant.
So, the Nigerian state only retained $208 million — the signature bonus paid by Shell.
The remaining $1 billion-plus was channelled to bank accounts in London, Switzerland and offshore locations allegedly controlled by Malabu, Etete and five other Nigerian companies whose beneficial owners were not known.
Anti-corruption campaigner Global Witness’s Barnaby Pace says: “The $1 billion that went missing was equivalent to 80% of Nigeria’s health budget but the money did not benefit the country’s citizens. The deal proves how critical it is that the public can find out who the real owners of companies are so that criminals cannot disguise their identities.” ENI and Shell deny wrongdoing.
The case also highlights the dangers faced by oil corporations operating in Nigeria.
For Shell, the OPL 245 block is crucial because it could replenish its proven global oil reserves by a third. It is adamant it only paid the government and not Malabu or Etete. But investigations into the OPL245 affair continue in the UK, Italy and Nigeria.
“Shell is co-operating with the authorities and is looking into the allegations, which it takes seriously”, the company said. “Shell attaches the greatest importance to business integrity.”
For Italy’s ENI, the saga has taken a far more bizarre twist. According to reports in the Italian press, extraordinary allegations have now been circulating that ENI chief executive Claudio Descalzi and Italian Prime Minister Matteo Renzi are linked to Mossad, the Israeli intelligence agency.
Other claims have also been circulated in what Italian prosecutors regard as a conspiracy to topple the two men, with Renzi being targeted because of his support for Descalzi.
The reports claim prominent Nigerians who lost out in the OPL 245 sale are involved in the plot. They allegedly include former ministers, an attorney general and members of former Nigerian president Sani Abacha’s family.
In Nigeria, the OPL245 affair is a major challenge for President Muhammadu Buhari, who was elected last year on an anti-corruption ticket. “We shall strongly battle another form of evil that is even worse than terrorism — the evil of corruption”, he declared.
His track record so far is unimpressive. His Economic Financial Crime Commission (EFCC) is said to be under-resourced and incompetent.
Multiple case files have been opened but are often incomplete or missing, it is claimed.
Sources say this is frustrating for investigators at Britain’s National Crime Agency, who are trying to probe the alleged laundering of OPL245 money through London banks and properties.
Last week, the two governments agreed criminal assets stolen in Nigeria and seized in Britain can be returned to the West African country, but such breakthroughs are rare.
Buhari’s governing style is also a source of frustration. Critics say he is slow in his decision-making, which allows the EFCC to wallow in indecision.
In the OPL245 case, a legal dispute over $85 million frozen in a NatWest bank account in London belonging to Etete is meandering through the UK courts, yet the Nigerian government has not even sent a proceeds-of-crime submission to the judge. The funds remain frozen and the case languishes.
Buhari’s critics say his approach means that much-needed funds from corruption cases are not bringing in revenue for an ailing economy ravaged by low oil prices, and the oil blocks themselves are not being developed.
Meanwhile, as the scandal drags on, other western firms can be forgiven for shying away from investing in Buhari’s Nigeria.
By Mark Hollingsworth, this report was first published in the Evening Standard