Backlash over acquittal of energy giants

An Italian court has acquitted energy giants Eni and Shell of $1.1bn corruption charges related to a massive oil exploration deal in Nigeria. Legalbrief reports that the Milan judges cleared Eni, Shell and 13 defendants, including Eni's CEO Claudio Descalzi and his predecessor Paolo Scaroni. After dozens of hearings over three years, Justice Marco Tremolada said he had acquitted all 15 defendants because ‘a crime was not committed’. The trial began in 2018, five years after three anti-corruption NGOs brought a complaint before the Milan prosecutors office. The two companies in 2011 paid $1.3bn dollars for a licence on OPL 245, a giant offshore oilfield in Nigeria estimated to hold 9bn barrels of crude. The money was paid into a Nigerian Government bank account in London, but Italian prosecutors believe that $1.1bn ended up lining the pockets of Nigerian politicians and middlemen, including former Oil Minister Dan Etete. A report on the EWN site notes that prosecutors argued that Eni and Shell knew that most of the money would have gone into bribes, but the two companies strongly denied this. They argued that they would end up as losers from the OPL 245 deal since the Nigerian Government never gave them production rights to start extracting oil. ‘The benefits never materialised, Eni and Shell invested $2.5bn and their licence will expire in May. So the truth is that the two companies are the damaged parties in this affair,’ an Eni spokesman told AFP ahead of the verdict.

The ruling is the latest twist in one of the oil industry’s most notorious corruption cases, a saga that began in 1998 when Etete awarded OPL 245 to a company he allegedly controlled, Malabu. Shell agreed to acquire a 40% stake in the plot from Malabu in 2001, only for the government to revoke the Nigerian company’s licence months later. That set in motion years of legal wrangling over the plot’s ownership as successive governments awarded and revoked the block from one party to the other. The Financial Times reports that oil companies are coming under intense scrutiny from investors and activists over their environmental, social and governance credentials – and increasingly over their operations in foreign countries. Shell is embroiled in other legal challenges linked to its operations and environmental pollution in Nigeria. Milan prosecutors can appeal the acquittals.

Legalbrief reports that Nigeria, which has argued that it has been the victim of a serious fraud, said it was ‘disappointed’ in the ruling and that it would await the written judgment ‘before considering its position’. ‘Nigeria will continue to hold those responsible for the OPL 245 fraud accountable, not only to ensure the people of Nigeria benefit from this valuable resource, but also to make clear its commitment to rooting out corruption in all of its forms,’ the government said in a statement. Ben van Beurden, CEO of Royal Dutch Shell, welcomed the ruling, saying: ‘We have always maintained that the 2011 settlement was legal, designed to resolve a decade-long legal dispute and unlock the development of the OPL 245 block. At the same time, this has been a difficult learning experience for us. Shell is a company that operates with integrity and we work hard every day to ensure our actions not only follow the letter and spirit of the law but also live up to society's wider expectations of us.’

Meanwhile, environmental and social justice groups have condemned Italy's anti-corruption laws as ‘unfit for purpose’. ‘The judgment brings shame on Italy,’ said Lanre Suraju of HEDA, a Nigerian anti-corruption group that was among the first to expose the corruption allegations surrounding the deal. ‘One court has found the intermediaries of the OPL 245 deal guilty of international corruption, yet this court has found Shell and Eni not guilty. We await the full ruling of the Milan court to explain this bizarre outcome.’ The Premium Times reports that Barnaby Pace, a campaigner at Global Witness, said ‘the verdict is a disappointment, but it will not stop us in our unrelenting quest to ensure accountability in the fossil industry’.