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In the Courts
Royal Dutch Shell and Eni Head to Trial over Nigeria Corruption Allegations
Since 2014, oil and gas companies Royal Dutch Shell Plc and Eni SpA have been investigated by authorities in Italy, the Netherlands, and Nigeria regarding alleged significant payments to secure a billion-dollar deal involving one of Nigeria's largest untapped oil fields. On Dec. 20, 2017, a judge in Milan, Italy, accepted charges both for Shell and Eni, as well as Eni's CEO and a number of current and former employees of both companies, to stand trial beginning March 5, 2018. While anti-corruption investigations are not uncommon in the oil and gas industry, such a trial is rare and could be precedent-setting.
Italian prosecutors have been working to build a case related to the acquisition of a deepwater oil-prospecting license by the companies in 2011. Prosecutors allege that Eni and Shell paid almost $1.1 billion into a Nigerian government escrow account, part of which was later said to be distributed amongst Nigerian officials as payoffs for the deal. In December 2017, the Milan prosecutor alleged that at least $520 million was converted to cash and intended to be paid to the then Nigerian president, a former oil minister, and other Nigerian officials.
Shell and Eni will face charges in relation to certain Italian administrative bribery offenses, unless the companies can prove they had adequate anti-corruption compliance procedures in place. Both companies have consistently denied any wrongdoing in connection with the deal. Shell has indicated that it has cooperated with “relevant authorities,” and reports indicate that the company had provided authorities with the findings from an internal investigation carried out by Debevoise & Plimpton.
Individuals who will also stand trial include Eni's current CEO Claudio Descalzi, former CEO Paolo Scaroni, former Shell executives Malcom Brinded and Peterson Robinson, and former Shell employee Guy Colegate. Charges against these individuals were first announced in October 2017. All individuals have denied the charges, and Eni has expressed that it has “full confidence” that its CEO Descalzi was not involved in the conduct alleged by prosecutors.
Shell has also expressed support for its former employees, stating, “We are disappointed by the outcome of the preliminary hearing and the decision to indict Shell and its former employees. We believe the trial judges will conclude that there is no case against Shell or its former employees.”
The average trial length in Italy is over a year — stretching 460 days in 2016, according to the Italian Ministry of Justice. A final court ruling in this case may take years, according to media reports and Italian legal observers. Shell and Eni's ongoing legal exposure also extends beyond Italy to the Netherlands and Nigeria. A related Dutch investigation is also continuing, and Dutch authorities have reportedly provided assistance to the Italian investigation — including conducting an earlier raid on Shell in The Hague in response to a request from Italian authorities. In Nigeria, where the companies are also facing criminal charges, authorities allege that Shell and Eni paid $801 million USD to certain officials to obtain a license for the oil field.
— Michael Stanek, Mayer Brown
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