Presentation to Committee on Foreign Trade and Development Cooperation House of Representatives of the States General The Netherlands 17 June 2019 OPL 245 oil field, Nigeria: What leaked Shell emails reveal I would like to start by thanking the Committee on Foreign Trade and Development Cooperation for agreeing to meet us. It is a great honour. To introduce ourselves, we represent four organisations – The Corner House, HEDA, Re:Common and Global Witness – that, for the past six years, have been investigating alleged bribery by Shell in Nigeria relating to the acquisition of the massive OPL 245 oil field. SLIDE : Background To give some background: OPL 245 is a 2,000 square kilometre oil field located offshore from the Niger Delta in Nigeria. In 1998, the exploration licence was granted by the then oil Minister, Chief Dan Etete, to a company called Malabu Oil and Gas, a company set up just five days previously and which had no experience of oil sector operations. The award was illegal because Malabu was a company in which Dan Etete had a major interest. In 2001, Shell entered into an agreement with Malabu to operate the block. The same year, the Nigerian Government revoked Malabu's licence, later awarding it in 2002 to Shell's Nigerian subsidiary on a production sharing basis with the government-owned Nigerian National Petroleum Corporation. In 2006 the government revoked Shell's license and restored the block to Malabu, prompting Shell to take Nigeria to international Arbitration under a bilateral investment agreement between Nigeria and the Netherlands. In 2010, Etete sought to sell the block directly to Shell and Eni but negotiations were halted in December 2010 after Mohamed Abacha, the son of the former dictator, claimed he was part owner of Malabu and that Etete had fraudulently taken control of the company. Shell and Eni therefore sought a revised structure for the deal whereby they avoided acquiring the block directly from Malabu but instead used the Nigerian Government as an intermediary 1
SLIDE: SHELL on trial Some 1.1 billion dollars was alleged to have been paid in bribes to Nigerian officials, including former President Jonathan and the former Attorney General, to secure the deal. To put that into perspective, 1 billion dollars is roughly the entire annual health budget of Nigeria. A number of prosecutions and investigations are now under way: Shell, together with a number of senior managers, is currently being prosecuted for corruption in Italy 1 and Nigeria 2 . These prosecutions were all triggered by complaints made by our organisations. Two intermediaries in the deal have already been convicted in Italy for bribery relating to the case. An investigation is under way in The Netherlands. The company has disclosed that it has been told that the Dutch investigation has revealed prosecutable offenses. A civil action in Nigeria by HEDA is seeking to have the licence revoked on the grounds that it was corruptly awarded. We should stress that Shell itself denies any wrongdoing relating to the deal. SLIDE: Importance of Shell It is, of course, for the courts to decide the guilt or innocence of Shell: and we will steer well clear from making any comments in that regard. We would, however, like to draw your attention to the wider implications of the case, which has been described as the biggest corporate corruption trial in history. Shell is one of the biggest companies in The Netherlands, employing some 82,000 people worldwide 3 , including thousands in the Netherlands 4 Many Dutch pensioners who are not employees of Shell also have an interest in the company since their pensions are invested in Shell. So the outcome of the case is of critical interest to them. Their livelihoods could well be affected. SLIDE: Implications for Shell A conviction for corruption could have severe consequences for the company: Shell could face possible debarment in the EU 5 and US from bidding for public contracts. In 2018, Shell had contracts worth $937 million with the US Department of Defense. 6 These could be lost in the future, at least for a period. 2
The company could also see its licence to operate OPL 245 revoked. This could be a severely blow to its business in Nigeria. In internal documents, Shell has described OPL 245 as “a key building block in Shell's aspiration in Offshore Nigeria” with “significant strategic 'hub' value”. 7 The company could face major fines and damages claims. There is already a civil claim against Shell in London for some $3billion: and damages would also be sought in Milan if the courts find against Shell. All this would hit the company's bottom line and reputation. SLIDE: Wider concerns Internationally, the reputation of The Netherlands as a country is also at stake. If it fails to prosecute the company where there is the evidence to do so, it will lose credibility abroad – and Dutch companies could find themselves disadvantaged when doing business in countries that take the fight against corruption seriously. So what might seem like a case of alleged corruption in a country that is a long way away from Holland has the potential to come home to roost. Indeed, the crippling damage that corruption has already wrought in countries like Nigeria already affects your constituents. By fuelling injustice and poverty, corruption also fuels forced migration: and many migrants have made their way here. For all these reasons, we would hope and expect that Dutch policy makers would be giving their full attention to the case. The more so since, on the evidence we have seen, Shell was the primary architect of this deal. Moreover, the way that the deal was constructed and executed is emblematic of the way that Shell operates in Nigeria. We are therefore greatly heartened by the interest shown by this committee. In our view, the case has great relevance to the committee’s oversight remit on foreign trade and path-breaking work in conditioning support for Dutch companies on compliance with the OECD Guidelines on Multinational Enterprises. Indeed, we believe that the case raises questions about Shell’s compliance with these Guidelines, which we would request you to investigate further. SLIDE: The OECD Guidelines The Guidelines are important in laying down the minimum ground rules for good corporate governance. 3
Chapter VII of the Guidelines specifically address “Combating Bribery, Bribe, Solicitations and Extortion”. 8 The Guidance specifically recommends that “enterprises carry out risk-based due diligence to identify, prevent and mitigate actual and potential adverse impacts related to ... bribery and corruption.” 9 We would therefore expect Shell to have robust and effective anti-corruption due diligence procedures in place. But our investigations have revealed a massive mismatch between the rhetoric and the reality. What we have learned is that, despite its public claims to excellence, its adherence to anti-bribery due diligence procedures fell far short in the company’s dealings on OPL 245. We know this because, in April 2017, a massive cache of internal Shell emails and other documents was leaked to the press internationally. SLIDE: What the emails reveal We would like to give just three examples of what the leaked documents reveal that are of concern: The decisions were made by the most Senior Management here in The Hague not in Nigeria Shell Senior Management knew that bribes would be paid Senior Management knew that Nigeria would lose out from the deal – in our estimate to the tune of nearly $6 billion. SLIDE: The decisions were made in Hague Royal Dutch Shell insists that it is just a holding company and that operational decisions are made by its autonomous subsidiaries. 10 The emails reveal this to be untrue. The deal was brokered at the highest level of Shell here in The Hague by Shell's most senior executives. Malcolm Brinded, the Executive Director for Upstream International, was charged with heading the negotiations. Formal approval was specifically sought from RDS’ then Chief Executive Officer, Peter Voser. 4
Recommend
More recommend
