Anti-corruption groups are calling for an urgent inquiry into what would appear to be highly misleading statements made by Shell in evidence to an investigation by the 2012 Ad Hoc Committee of the House of Representatives into the corrupt OPL 245 oil bloc deal.
In evidence to the Committee, Shell stated that that neither Shell Petroleum Development Company (SPDC) nor Royal Dutch Shell (RDS) “is or was at any point in the past involved in OPL 245”.
But a cache of leaked internal Shell emails tells a very different story. Far from being “uninvolved”, RDS — the London-registered company at the pinnacle of the Shell group — appears to have the controlling mind behind the important decisions relating to Shell’s involvement in OPL 245.
Currently only Shell’s Nigerian subsidiary SNEPCO has been charged in Nigeria for alleged corruption in relation to the deal. However, RDS’s involvement would widen the net, rendering it liable for prosecution.
Shell and OPL 245
OPL 245 has a complex history, going back to 1998 when the then oil Minister Dan Etete corruptly awarded the licence to Malabu Oil & Gas, a company he controlled.
Shell’s involvement dates from March 2001, when Shell Nigeria Ultra Deep (SNUD) entered into an agreement with Malabu, taking a 40% equity interest in the field. SNUD is a special purpose vehicle set up by SPDC.
But in July 2011, the Federal Government of Nigeria (FGN) revoked Malabu’s licence and therefore SNUD’s interest.
Subsequently, in December 2003, SNUD entered into a Production Sharing Contract with the Nigerian National Petroleum Company, under which SNUD obtained a 30-year exclusive right to operate the field.
However, in 2006, the FGN reinstated Malabu’s licence. Between 2006 and 2011, Shell sought to settle the dispute, leading, ultimately, to a multiparty agreement in 2011 in which Malabu surrendered its rights, SNUD withdrew its litigation against the FGN, and SNEPCo (together with NAE) acquired the field.
What the leaked documents reveal
The leaked documents, which emerged as a result of an investigation by the Italian authorities into corruption surrounding the deal, span the decade between 2001 and 2011 and relate to Shell’s interests in OPL 245 over that period.
On the evidence of the leaked documents, RDS was the controlling mind behind the OPL 245 negotiations throughout this period, exerting real, practical, executive control over SNEPCo and SNUD.
The chain of command went up from Nigeria to RDS
The emails show a clear chain of command with RDS at the top.
In 2009, for example, discussions were held with Dan Etete, the principal of Malabu, over a possible partnership to operate the field.
In an email to Ednan Agaev, an intermediary for Malabu, John Copleston, a Shell advisor, was explicit that “Peter” would need to “talk to The Hague” before an opening offer price could be agreed.
The Peter referred to was Peter Robinson, at the time Shell Vice President for Commercial Sub-Saharan Africa. Robinson was based in The Hague and reported to Malcolm Brinded, the then Executive Director for Upstream International and a member of RDS’s Executive Committee.
In effect, the chain of command was upwards to RDS.
This appears to have been confirmed by Peter Robinson himself, who was interviewed in 2013, as part what would appear to have been an internal Shell investigation, about the decision-making for the deal. A note of the telephone conversation records Robinson as stating that there was “absolute transparency in terms of the rest of the deal team and up to the line to IC, ECMB and, ultimately, to ECPV and ECSH”.
IC stands for Iain Craig, Shell’s then Head of Exploration for Sub-Saharan Africa; ECMB stands for Executive Committee Malcolm Brinded; ECPV for Executive Committee Peter Voser, the then Chief Executive of RDS; and ECSH for Executive Committee Simon Henry, then Chief Financial Officer for RDS.
RDS initiated the negotiations
Other leaked documents appear to show that it was RDS — not SNUD — that initiated the negotiations to settle Shell’s dispute over the OPL 245 field in 2010.
In February 2010, a further opportunity to settle the dispute over OPL 245 was identified by Ann Pickard, Shell's Regional Executive Vice President for Sub Sahara Africa.
In an email dated February 27, 2010, Malcolm Brinded (using an email address that identified him as a member of RDS’ Executive Committee) wrote to Peter Voser and Beat Hess (another member of the RDS’ Executive Committee) seeking their support to commence negotiations. The email, copied to senior Shell executives (Maarten Wetselaar, Guy Outen and Keith Ruddock), stated:
“At a risk of yet again crying wolf, there may be a window to settle 245 which Ann [Ann Pickard] recommends we should take, and Maarten [Wetselaar], Guy [Outen] and I agree . . .
. . . Appropriate PCN [Proposal to Commence Negotiations] documentation is being prepared internally but I'd like your support to progress this asap. The window may be short.”
RDS’s Chief Executive signs off
Formal approval for the Proposal to Commence Negotiation (PCN) was specifically sought from RDS’ then Chief Executive Officer, Peter Voser.
An email from Brinded (2010b) to Peter Voser; states:
“Please find attached the proposed PCN which sets out in detail the summary l gave recently. This is one where your formal endorsement is appropriate given the history and the political/business principles issues involved”.
Peter Voser (2010a) approved the proposal in an email dated 23 March 2010 (“Support from my side as we need to get this one out of our way”), with Henry Simon (2010), RDS’s Chief Financial Officer, also giving his support by email a day later ("Having noted general support, I confirm my support for the proposal”).
None of the emails above appears to have been copied to SNUD, even though SNUD is named as the “business unit or company” to which the proposal applies. The proposal also states that the Shell Group’s equity interest would be vested 100% in SNUD.
Tellingly, the proposal is not signed by SNUD but by Malcolm Brinded, explicitly in his capacity as a member of RDS' Executive Committee, and Maarten Wetselaar of Shell International. There is no signature from a SNUD executive, board member or, indeed, any SNUD representative.
RDS executive headed negotiations
The leaked documents establish that key negotiations relating to the deal were headed by Malcolm Brinded, acting in his capacity as a member of RDS' Executive Committee.
In April 2010, for example, Eni revealed to Shell that it had been approached by Malabu as a potential partner for operating OPL 245. Eni reached out to Shell to learn its reactions.
A note of a telephone call between Brinded and Claudio Descalzi of ENI, dated 21 April 2010, records that a contact group was agreed: “We agreed that further contacts should be at 2 levels and in the very strictest confidence: Ian Craig, Peter Robinson with ENI's Roberto Casula; Keith Ruddock with Marco Bellini, their General Counsel in Milan”.
All of those named are senior Shell, not SNUD nor SNEPCO, executives.
Subsequently Eni and Shell agreed to act together to purchase OPL 245. Shell’s chief negotiator with Eni was Brinded, acting (to repeat) as a member of RDS’ Executive Committee. Again, neither SNUD nor SNEPCo appear to have been part of the negotiating team.
On 11 October 2010, Brinded emailed senior Shell executives (but not, it would appear, SNUD or SNEPCo) to announce that he had agreed a deal with Claudio Descalzi and that it had been approved by Peter Voser, Chief Executive of RDS:
“I have agreed with Claudio and then cleared with Peter (and confirmed back to Caudio) the following deal: Headline $1.3 bln offer, Eni put in $980 min, Shell put in $210 signature bonus and $25 min interest from sig bonus and $85 min cash. Shell keep 100% of the cost recovery. Eni are operator. We have not agreed anything for if the necessary amount goes above $1.3 bln...."
The Group Investment Proposal
In late October 2010, a new Group Investment Proposal (GIP) was drafted. It was explicitly envisaged that a multiparty settlement would be sought between SNUD, SNEPCo, Malabu, Eni’s subsidiary NAE, the Nigerian National Petroleum Corporation and the Federal Government of Nigeria; and that SNEPCo would acquire the OPL 245 licence jointly with NAE.
On 25 October 2010, Ian Craig emailed a draft of the GIP to Malcolm Brinded.
The GIP describes “Ian Craig – SEPA-UIG” (Shell Exploration and Production Africa), not SNUD nor SNEPCo, as the “business initiator” for the proposed deal.
The “source and form of financing” for the proposed investment was envisaged as an “$85mln cash contribution” to be funded “from SNEPCo’s internally generated cash flow”. However, should SNUD ultimately end up as the license holder, the cash contribution would come from Shell Petroleum N.V.
Despite their clear interest in the deal, neither SNUD nor SNEPCo nor Shell International was named among the signatories to the GIP. Instead, those designated are all from RDS — Peter Voser as Chief Executive, Simon Henry as Chief Financial Officer and Malcolm Brinded as Executive Director Upstream international.
RDS sign off
Formal approval for the deal was specifically sought from RDS’ then Chief Executive Officer, Peter Voser, and others in RDS.
Following a hiccup in the negotiations, when the son of Sani Abacha, the former military ruler of Nigeria, emerged as a possible shareholder of Malabu, a new deal structure was proposed by the negotiating team in January 2011.
Peter Voser’s views and support were again sought, as would be expected given Brinded’s previous decision that this was a deal that required Voser’s formal approval “given the history and the political/business principles issues involved”.
In email to Brinded, Voser replied: “We are where we are and without taking some risks we will not get to a solution. Support.”
Call for Inquiry
Commenting on the leaked emails, Lanre Suraju, Chairman of HEDA, has called for an urgent inquiry into Shell’s statements to the 2012 House of Representatives Committee.
“Shell should immediately be called before the Committee to explain how RDS was “uninvolved” in OPL 245 when internal emails clearly appear to show otherwise. It cannot be allowed to hide behind the corporate veil to evade accountability for its actions.”