London, UK | — Royal Dutch Shell Plc said it knew some of the $1.1billion paid to the Nigerian government in 2011 for an exploration licence would go to a company linked to the country’s former oil minister, changing its previous stance on a deal that’s under investigation for alleged corruption.
The Anglo-Dutch oil company reiterated that its joint purchase of the licence with Eni was “fully legal” and that it paid no money to Dan Etete or his company Malabu Oil and Gas Ltd.
Following the publication of internal e-mails showing staff discussed the risk that funds from the transaction could ultimately be used to pay off officials, on Tuesday Shell acknowledged that it was aware of the former minister’s involvement. “We knew that the Federal Government of Nigeria would compensate Malabu to settle its claim on the block,” Shell said in a statement. “Over time it became clear to us that Etete was involved in Malabu and that the only way to resolve the impasse through a negotiated settlement was to engage with Etete and Malabu, whether we liked it or not.”
Shell and Eni’s joint purchase of Nigeria’s Oil Prospecting License 245 — estimated to hold about 9-billion barrels of crude — is being investigated in three countries. Nigeria’s anti-graft agency filed charges against the companies last month, alleging they used the deal to “corruptly” pay $801m to Malabu, Etete and others.
The two oil producers say they put money exclusively into an account controlled by the Nigerian government and had no knowledge of or control over any subsequent transfers. Etete couldn’t be reached for comment.
Eni reiterated in a statement that it hasn’t been involved in any wrongdoing and did not make payments to Malabu, Etete or any public official.
Dutch authorities are investigating Shell’s role in the deal. A Milan judge is also considering whether to accept a prosecutors’ request that Eni CEO, Claudio Descalzi, be indicted for his involvement in the deal. A preliminary hearing is scheduled for April 20.
The change in Shell’s stance since the internal e-mails were first published by Buzzfeed on April 9 runs counter to previous comments about the deal, according to Global Witness. “This is a huge U-turn,” Simon Taylor, founder of the anti-corruption campaign group, said by e-mail. “Now its private e-mails have come to light, Shell has admitted it dealt with Etete.”
Lagos-based Malabu was awarded the prospecting licence in 1998 by former military leader, general Abdulsalami Abubakar, at a time when Etete was serving as oil minister. The government of President Olusegun Obasanjo, which took office in May 1999, cancelled the licence in 2001 and awarded it to Shell a year later.
Malabu was awarded the field again in 2006 and Shell contested the rights until 2011 when, along with Eni, it paid the government to settle the dispute. The state subsequently transferred funds to Malabu to resolve its claim on the licence.