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UK investigates money laundering allegations relating to Nigerian oil block

 

LONDON -- U.K. authorities are investigating allegations of money laundering linked to a Nigerian oil block currently owned by subsidiaries of Royal Dutch Shell and Eni, a spokeswoman for London' s Metropolitan Police said Thursday.

No charges and no arrests have been made, and the investigation is at a very early stage, the spokeswoman said. Royal Dutch Shell and Eni have not been accused of wrongdoing in relation to the investigation.

The details surrounding how the offshore block OPL 245 changed hands have drawn scrutiny from anti-corruption campaigners, who are pushing for greater transparency from resource companies in their dealings with foreign governments.

Shell declined to comment on the U.K.' s investigation. Eni said it didn' t behave improperly in any way and reiterated previous statements that the deal it struck over the OPL 245 block was only with the Nigerian government.

OPL 245 is an ultra-deepwater block off Nigeria. Two discoveries in that block during the second half of the last decade suggested the area contains large oil reserves.

In 1998 , Nigeria' s then-oil minister Dan Etete awarded Nigerian oil company Malabu the rights to explore the block.

The U.K. High Court of Justice Queen' s Bench Division Commercial Court in London published a judgment last week that suggested Mr. Etete stood to benefit from handing Malabu the exploration rights. The judgment said, "From its incorporation and at all material times...Etete had a substantial beneficial interest in Malabu."

Attempts to contact Mr. Etete were unsuccessful. His law firm in the London case did not comment on his behalf and declined to pass on messages to him. Nigerian officials and anti-corruption campaigners didn' t know how to contact him.

The Metropolitan Police' s Proceeds of Corruption Unit is investigating allegations of money laundering related to the oil block, said the police spokeswoman, who declined to be named. The unit is responsible for investigating allegations of foreign politicians or officials laundering money through the U.K.

The police spokeswoman said the unit' s inquiries were at an early stage and declined to give further details. She didn' t disclose who had made the allegations of money laundering or name any targets of the investigation

Officials in Nigeria' s Oil Ministry didn' t respond to requests for comment.

A spokesman for Nigeria' s Attorney General and Justice Minister Mohammed Adoke, who helped broker a resolution to an ownership dispute over the oil block that resulted in the 2011 acquisition of OPL 245 by subsidiaries of Shell and Eni, declined to directly comment.

The spokesman referred to a statement Mr. Adoke made last week in a Nigerian press report. The statement said Mr. Adoke played a role in facilitating the settlement of the dispute between Malabu and a subsidiary of Shell in 2011. According to the report in the News Agency of Nigeria referenced by Mr. Adoke' s spokesman, Mr. Adoke said that resolving the dispute was part of the Nigerian government' s commitment to attract investment in the oil and gas sector.

The judgment relating to a dispute between Malabu and a middleman in the 2011 OPL 245 deal that was filed in a London court last week made several references to the Attorney General' s role in brokering a settlement in 2011. The judgment said the settlement was reached after the intervention of the Attorney General and relates meetings and correspondence between the Attorney General and representatives of Malabu as well as the subsidiaries of Eni and Shell. It was not directly concerned with the part played by the Attorney General in the deal and did not make any judgment on his part in the settlement.

The dispute between Shell' s Nigerian subsidiary and Malabu arose after the Nigerian federal government revoked Malabu' s licence to the block in 2001, following the death in 1998 of military dictator Sani Abacha, and in 2002 awarded the exploration rights for the oil block to the Shell subsidiary.

This sparked an ownership dispute that lasted nearly a decade, leading in 2011 to a two-tiered deal. According to the account of the transaction published in last week' s judgment, Shell and its by-then-partner Eni paid the Nigerian government $1.3 billion, including a $207 million signature bonus paid into a government account, in return for the right to operate OPL 245. A Shell subsidiary paid the signature bonus, and an Eni subsidiary paid the $1.1 billion balance.

The $1.1 billion was deposited in a London escrow account operated by J.P Morgan Chase & Co.

Separately, the Nigerian government agreed to pay Malabu $1.1 billion to waive all rights to the block.

Since then, payment disputes litigated between Mr. Etete and two middlemen have revealed many details of the deals that otherwise would have remained private, generating interest from anti-corruption groups.

The U.K. High Court of Justice published the judgment in the second case between Nigerian businessman Emeka Obi and Mr. Etete Wednesday in London.

The case revolved around Mr. Obi' s claim that Mr. Etete owed his company hundreds of millions of dollars in fees for its role in the sale of OPL 245 in 2011. The court awarded Mr. Obi $111 million, or 8.5% of the final transaction value, which the judgment said reflected a reasonable fee for his services in bringing about the deal.

Anti-corruption campaign group Global Witness criticized the verdict as failing to address the oil deal' s legitimacy in a statement published Wednesday. Simon Taylor, director at Global Witness, said in the statement that unanswered questions remain and that the U.K. authorities should investigate whether the deal was conducted legitimately in the first place.

Anti-corruption and transparency campaigners also continue to push in Italy, the Netherlands and the European Union for further investigation of the deal.

Dow Jones Newswires

07/22/2013

 

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