* Deal concerns multi-billion barrel oil block OPL 245
* Shell, ENI say they bought from government for $1.3
* Gov't then paid $1.09 bln to firm linked to former oil
* Etete had awarded block to the same firm for $2 mln in
* Court documents show ENI, Shell both negotiated with Etete
By Tim Cocks
LAGOS, July 24 British police are investigating
a money-laundering allegation related to a big oil field bought
by Shell and ENI from Nigeria for $1.3
billion, after most of the cash they paid ended up in a company
linked to a former Nigerian oil minister.
The probe concerns offshore block OPL 245, which industry
sources say contains up to 9.23 billion barrels of crude - more
than enough to keep China running for two and a half years - the
ownership of which had been in dispute for more than a decade.
"The proceeds of crime unit is investigating a
money-laundering allegation in the UK in connection with OPL
245. The investigation is at an early stage," a UK spokesman
Transparency campaigners, who asked the UK to look into the
matter, assert that Shell and ENI used the Nigerian government
as a go-between to obscure the fact that they were dealing with
former oil minister Dan Etete, who also has a 2007
money-laundering conviction in France related to bribes he was
alleged to have taken when in government.
In his capacity as oil minister, Etete awarded block OPL 245
in 1998 for a payment of just $2 million to Malabu Oil and Gas,
a company in which he played a prominent role.
The critics claim that Shell and ENI, which haven't been
accused of any legal wrongdoing, wanted to distance themselves
from Etete given his reputation and his involvement in the
original award of the oil block to Malabu.
A Shell spokesman told Reuters it had purchased the block
from the government, making no payment to Malabu, and that it
acted transparently and in accordance with Nigerian law.
ENI declined to comment to Reuters, but it told shareholders
in May that the transaction was with the government, not Malabu.
Reuters was not able to locate Etete for comment. His lawyer
did not immediately respond to a request for comment.
While Shell and ENI say they bought the block from the
Nigerian government, for which they paid it $1.3 billion in
2011, Nigeria says it was helping resolve an ownership dispute
over the block between Shell and Malabu and immediately
transferred $1.09 billion from the sale to Malabu. The
government retained the remainder.
Etete had awarded the block to Malabu during the rule of
military dictator Sani Abacha, whose son Mohammed and other
close allies were shareholders in the company. That deal was
later annulled after the death of Abacha by a new government
that judged the award improper.
In a UK court case brought by Emeka Obi against Malabu for
unpaid fees relating to his help in brokering the Shell/ENI
deal, the judge in that case, Justice Elizabeth Gloster,
concluded in her ruling last week that "From its incorporation
and at all material times ... Etete had a substantial beneficial
interest in Malabu."
Etete said he was only a consultant to the company, but
he represented the company in the court case and in all
negotiations with the oil majors, and he told the court he was
the sole signatory to its accounts.
Documents relating to Obi's London case show that both Shell
and ENI met several times with Etete to negotiate the deal. An
email from a Shell employee to another middleman recounts how he
met Etete for face-to-face negotiations over "lots of iced
Obi said in court he approached ENI on Malabu's behalf on
Dec. 24, 2009, and introduced Etete to an ENI representative to
discuss the deal.
Global Witness campaigner Tom Mayne said: "It's obvious from
the meetings Shell and ENI both had with Dan Etete that they
knew he was the person to speak to and then agreed that the deal
be structured in such a way that it went through the
Babatunde Oluajo, national secretary of Zero Corruption
Coalition, told Reuters his Nigerian campaign group had asked
the UK government to look into the matter.
"In regard to our ... commitment to the fight against
corruption in Nigeria ... we wish to ... formally request for a
full investigation into the activities of ... companies and
individuals in the procurement of the OPL 245 in Nigeria," reads
a letter the group sent to the UK High Commissioner on July 5.
Nigerian lawmakers also began investigating the deal last
week to ascertain if Attorney General Mohammed Aboke, who helped
finalise the deal with Eni and Shell, had acted properly, as his
involvement only came to light in the London court case.
Aboke said he was acting in the interests of all parties to
facilitate a deal and end the long-running ownership dispute
over the oil block. He also said in a press report last week
that resolving the dispute would help the government attract
investment into the oil and gas sector.
The investigations highlight the regulatory risks faced by
oil companies doing business in African countries with a history
of weak governance and endemic corruption.
In the five years Abacha was in power, he liberally dished
out oil blocks to political allies and is suspected of having
enriched himself to the tune of about $4 billion before he died.
Malabu had been registered on April 24th, 1998, five days
before Etete awarded it block OPL 245. Three months later,
Though Malabu's original shareholders had been Abacha's son
and allies - and Etete himself, according to the British judge
in Obi's court case - the company secretary Rasky Gbinigie told
the court he had lost all the documents showing who owned it
The ownership of OPL 245 had also been unclear ever since
the government annulled the initial award to Malabu in 2001, and
then awarded it first to Shell and then back to Malabu after a
series of court cases.
Shell was still pursuing action to recover the block when it
finally struck the deal to buy it with ENI in 2011.