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Update: New evidence shows Shell was involved in corrupt practices in Nigeria

As reported by Facing Finance in February 2017, a Nigerian Court has ruled that Shell and Eni have to cede the license (Oil Prospecting License 245) for an oil block including more than nine billion barrel of crude reserves after an investigation by Nigeria’s Economic and Financial Crimes Commission into how they purchased the block.1

In 2011 Shell and Eni purchased the Oil Block from “Malabu Oil and Gas”, a company secretly owned by the corrupt former oil minister Dan Etete who transferred the rights of OPL 245 to his own company back in 1998. The Nigerian authorities state that this deal was illegal, because Malabu was only in possession of the license due to corruption, wheras Shell and Eni claim they thought they were doing business with the Nigerian Government.2

The NGO Global Witness has presented documents, which prove that with the help of the bank JP Morgan Chase, Shell and Eni were actually well informed as to whom they were transferring money. The license withdrawal may have some further consequences as it was already declared as an asset to investors.2 At the beginning of April this year, Global Witness and Finance Uncovered provided further evidence showing Shell’s deliberate involvement in corrupt practices. Internal emails show that Shell’s executives knew that they were depriving Nigeria and its people of $1.1 billion by bribing corrupt politicians such as former oil minister Dan Etete.3

This case emphasizes the importance of transparency laws, particularly in the oil and gas industry. After the financial crisis the Dodd-Frank Financial Reform and the Consumer Protection Act were introduced in 2010. Both include several regulations for financial institutions and higher consumer protection standards. Section 1504 of the Dodd-Frank Financial Reform obliged companies to disclose any payments to foreign governments for natural resources. This section was adopted in 20164 but had a three year phase in period. Unfortunately, before this adopted solution even gets off the ground, it is likely to be repealed by Republicans.5.

It is somewhat unsurprising that the repeal of Section 1504 in particular comes directly after the former ExxonMobil CEO Rex Tillerson joined Trump’s administration as Secretary of State. Transparency and control are crucial for ensuring sustainable and lawful governance. Consequences of corruption hit states like Nigeria hard as it is threatened by famines and expanding Boko Haram.

  1. Bloomberg: Nigeria Tells Shell, Eni to Temporarily Cede Oil Field Control, 27.01.2017: []
  2. Global Witness: Nigerian authorities seize billion dollar oil block from Shell and ENI following corruption probe, showing why US transparency law must be protected, 26.01.2017 [] []
  3. Global Witness: Shell knew, 13.04.2017: []
  4. []
  5. The Atlantic: The House Kills an Anti-Corruption Measure, 01.02.2017 []