A group of Non Governmental Organisations investigati ng Dutch oil exploration giant, Shell has petitioned The Netherlands over some grievances in connection with a case of corruption and injustice against the Nigerian host communities of the Dutch owned oil company.
In a lengthy petition directed to the Minister in charge in Amsterdam and dated 9th January, the group said it was writing collectively as a group of non-governmental organisations.
“We write collectively as non-governmental organisations who, for the last six years, have been investigating Shell’s acquisition of the OPL 245 oil and gas field in Nigeria,” it petitioned.
According to the petition, the Royal Dutch Shell Plc is on trial in Milan, Italy.
“Royal Dutch Shell Plc (“RDS”) is currently on trial in Milan, charged with international corruption in
relation to the OPL 245 deal. The prosecution is the outcome of an investigation by the Milan
Prosecutor’s Office, which was initiated as a result of a complaint submitted by three of our
organisations.
“In Nigeria, complaints also lodged by our organisations have resulted in charges being brought against Shell Nigeria Exploration and Production Company (“SNEPCO”) and Nigerian Agip Exploration (“NAE”).
“In September 2017, we submitted a complaint to the Prosecutor’s Office in The Netherlands
requesting a criminal investigation of RDS, Shell Petroleum N.V. (“Shell Petroleum”) and Shell executives for offences under Dutch law relating to the deal.
“1 As plaintiffs, we consider ourselves to
be stakeholders in the case. We are still waiting for a formal response from the Prosecutor’s Office on our complaint.
We are aware of the recent out-of-court settlement (high transaction) of a major Dutch money
laundering case involving ING Bank N.V. 2
For reasons detailed below, we are concerned that a similar
approach may be taken with RDS and Shell Petroleum. We hold that this would not be in the public interest unless stringent conditions are attached,” the group said.
Stating its unwillingness to settle out of court, the group stated its concern.
“Our Concerns, we are, in principle, not opposed to out-of-court settlements in cases where the defendant is ineligible
for a custodial sentence.
“However, any settlement that does not produce a remedy proportionate to
the alleged crime could not be seen as just. In this case, RDS and Eni are accused of paying over a billion dollars into a vast bribery scheme to pay off Nigerian officials in exchange for extremely favourable access to one of Nigeria’s most promising oil blocks.
”The cost to Nigerians of this ‘smash and-grab raid’ on the Nigerian Government (to use the phrase of the UK Crown Prosecution Service)3
is vast.
Indeed, for reasons set out below, we would contend that there are strong grounds for rejecting a
settlement with Shell.
Firstly, as far as we are aware, neither RDS nor Shell Petroleum appear to have done anything to “earn” an out-of-court settlement. In the recent settlement with ING Bank N.V., ING co-operated with the Prosecutor’s Office.
“By contrast, neither RDS nor Shell Petroleum has ‘self-reported’ any crimes that they view as related to the OPL 245 deal.
Similarly, there are no public reports of their having cooperated with the criminal investigation into OPL 245. On the contrary, they have vigorously denied
any criminality. As a consequence, the Prosecutor’s Office has had to undertake a wide-ranging investigation, presumably at considerable cost to the Dutch taxpayer. Should the companies now
belatedly acknowledge criminality – a necessary part of any settlement – it would in our view be
perverse to reward them by agreeing terms that would allow them to avoid a criminal conviction by
the courts.
“Secondly, a settlement with Shell would establish an undesirable precedent by signalling that the
Dutch justice system is prepared to tolerate corporate recidivism. At the time that the OPL 245 deal
was negotiated and bribes were allegedly paid, RDS was a party to a Deferred Prosecution Agreement
with the US Department of Justice following an earlier Nigerian bribery scandal.
“In the agreement the
company represented that ‘it has implemented and will continue to implement’ a compliance and ethics programme designed to “prevent and detect” corruption “throughout RDS’ operations”.
“RDS also undertook that it had ‘undertaken, and will continue to undertake in the future . . . a review of
the existing internal controls’, where necessary adopting new or modified procedures designed to
ensure “a rigorous anti-corruption compliance code designed to detect and deter violations of the FCPA
and other applicable anti-corruption laws.”
“Were RDS to acknowledge corruption in the OPL 245 deal,
as a necessary pre-requisite for a settlement, it would in effect also be acknowledging that it broke its
legally-binding undertakings to the US Department of Justice.
“In our view, this should render RDS
ineligible for a settlement agreement.
Thirdly, any settlement without a full and clear statement of facts and admission of guilt would be contrary to the interests of open justice.
“An admission of criminality by RDS and Shell Petroleum in
this case would be an admission to participation in one of the most egregious bribery schemes in
history, a scheme that defrauded Nigeria of billions of dollars. The beneficiaries were two of the richest
companies in the world. The victims were some of the poorest people on Earth: Nigerians, the vast
majority of whom live on less than $2 a day, and whose future access to health and other services has been severely compromised by the deal. Those victims are entitled to a transparent sentencing
process through a public trial where representations can be made by third parties.
“Such a process is
even more necessary given the prominence of RDS and Shell Petroleum within the political and
economic life of The Netherlands. Justice will not be served if there is the remotest suspicion that Shell was able to negotiate lenient treatment through a settlement reached behind closed doors.
“Particularly if that settlement appears to reflect the economic interests of Shell and the Dutch
authorities over and above those of the victims and justice. This principle is also critical for Nigeria,
given RDS’ continued dominant role in the country. If the administration of justice is seen to favour
Shell how can Nigerians have faith that companies operating in their country and exploiting their
resources will not continue to operate in such a predatory manner?
“In our experience – and as clearly demonstrated by the circumstances at play during the lead up to the deal for OPL 245 – settlement agreements result all too often in little more than a “cost-of-doing
business” fine. No-one is sanctioned, and the company concerned proceeds to the next corrupt deal.
“Addressing grand corruption in this way is clearly not a deterrent. The public process of a court appearance and the independence of the courts in setting fines, are essential to preventing corruption
in the future.
The group however demanded some conditions.
“If, notwithstanding the above concerns, you deem a settlement to be in the public interest, then we would expect the following minimum conditions to apply:
1. An admission of guilt
We understand that there is no legal requirement for a defendant to plead guilty as part of the
settlement. We therefore warmly welcome your recent statement that defendants in future
settlement agreements “will have to admit the facts as found by the public prosecution services”.
“We would expect nothing less.
We note that RDS is currently being prosecuted in Milan on charges for international corruption
relating to the OPL 245 deal. RDS denies the charges. It is critical that any OPL 245 settlement in The Netherlands should not undermine or jeopardise these court proceedings, meaning that attention should be paid to the following elements:
• any settlement should be agreed with the Milan Prosecutor;
• any acknowledgement by RDS of the facts that underpin the prosecutor’s case must be
accompanied by an admission of guilt to the charges being prosecuted in Milan; and
• Shell’s admission – and all underlining evidence – will be handed over to the Italian
prosecutors to form part of the evidence against other defendants in the Milan trial.
“Any settlement must also protect prosecutions in Nigeria and be agreed with the Nigerian prosecutors.”
Although RDS and Shell Petroleum have not been charged with OPL 245-related
offenses, Shell’s Nigerian subsidiary SNEPCO is being prosecuted for official corruption in relation to the deal, nine
charges which it denies according to the group.
Stating further, the group said, “It is essential that any settlement reached in The Netherlands does not apply to SNEPCO and that the prosecution in Nigeria is allowed to run its course.
“A settlement with RDS and Shell Petroleum in The Netherlands should also not preclude
the possibility of both companies being prosecuted in Nigeria.
“Executives must be prosecuted if there is sufficient evidence
We also noted that in the recent money laundering case involving ING Bank N.V., no individuals
were prosecuted. As reported, it was deemed that the acknowledged offenses could not be
attributed to specific persons, or even the management of ING. Instead, the crimes were said to have resulted from “a structural lack of attention” to anti-money laundering compliance and, consequently, were only attributed to ING Bank N.V. as a legal entity.10 Even if, in the case of OPL
245, it is demonstrated that both RDS and Shell Petroleum suffered structural failures that could
have played a role in enabling the alleged criminality, we believe there are strong grounds for
prosecuting a number of former Shell managers and high-level executives. Should the Dutch
Prosecutor have sufficient evidence, we would expect those prosecutions to go to trial, even if a
settlement option were available.
“White collar crime cannot, and should not, be treated more
leniently than other crime if future wrongdoing by company managers is to be deterred.
“We also note that four former Shell employees, including a former RDS executive, are already
being prosecuted in Italy for international corruption. It is therefore critical that any settlement
reached in The Netherlands does not undermine that prosecution.
“Crime must not pay
It is axiomatic that crime should not pay. Any settlement with RDS and Shell Petroleum must
therefore remove any advantage gained by Shell through offenses for which the Prosecutors have
sufficient evidence to prosecute.
“What advantage did Shell and Eni gain? Most obviously, they obtained an investment oil and gas field that Shell, in its internal documents at the time of the deal, valued at $3.2 billion (excluding
the value of the gas) at an oil price of $80 a barrel,11 a valuation that would need to be
independently assessed.
“But the companies also obtained fiscal terms governing the block that were hugely beneficial. A study which we recently commissioned from oil experts at Resources for Development12 found
that pursuant to these fiscal terms agreed over 2011/2012, the block would only generate $9,8
in government revenue over the lifespan of the project.
“In comparison, according to the report
by Resources for Development, previous fiscal terms agreed in 2003 and 2005 would generate
$14,3 and $15.6 billion respectively.
“It would be unacceptable if a settlement agreement was reached with RDS and Shell Petroleum
that allowed the companies to continue to profit from the alleged corruption in the OPL 245 deal at the expense of Nigeria and its peoples. Crime simply must not pay.
“Any settlement agreement
should therefore require Shell to surrender the OPL 245 license.
In addition, financial penalties should be imposed that reflect the scale of the advantages that Shell gained through its participation in the alleged OPL 245 bribery scheme and the harm done to the people of Nigeria.
“We would suggest that, in order to establish an appropriate level of
financial penalty, the Prosecutor should seek an independent valuation of the block (including
the value of its gas), as well as an evaluation of the advantages to Shell of the fiscal terms agreed under the 2012 “PSA” in addition to an evaluation of the impact of corruption on the Nigerian
people.
“Based on our own research, we would expect the total penalty to amount to many
billions of dollars.
Monitoring
Settlement agreements in corruption cases typically require defendants to commit to implementing improvements to their internal anti-corruption controls. We would expect such a
condition to be part of any settlement reached with RDS and Shell Petroleum.
“However, as noted
above, RDS has brazenly flouted previous legally-binding commitments to the US Department of
Justice to implement a compliance programme to prevent bribery. SNEPCO was party to the same
agreement.
“Given this history, RDS’s compliance should be strictly and independently monitored, with reports being made public. We would expect that the monitoring programme be no less rigorous than
any such programme that the Government of The Netherlands might seek to apply to the return of any funds to Nigeria.
“We also note that the Federal Government of Nigeria has expressed its openness to civil society organisations’ monitoring of returned funds.
“We would expect Shell to be similarly open to such monitoring of its compliance regime and would recommend that such civil society monitoring is made a condition of any settlement.
“If a settlement agreement with RDS requires improved anti-corruption controls also to be implemented in any of Shell’s Nigerian subsidiaries, clarification should be sought from RDS as to the extent to which it is in a position to ensure implementation of such a programme. We would
recall that RDS has repeatedly denied that it has any control over its subsidiaries.
“Given the above, any undertakings by RDS with regard to its Nigerian subsidiaries should be
accompanied by a public statement setting out RDS’ powers to control the operations of its
subsidiaries.
“Finally, any settlement agreement with RDS, mandating the implementation of revised anticorruption procedures, should ensure that executives are similarly held to account for the
implementation of such procedures. This should mean that the designated accountable
executives (we would suggest the CEO and the CFO) should, for each new deal struck by the
company and its subsidiaries, sign off that such procedures have been followed. Where it is later demonstrated that corruption has occurred, the designated signatories should be prosecuted on
the basis that they knew, or should have known, that their procedures were not being followed.
“We are copying this letter to the Prosecutor’s Office. We will also make this letter public as we believe that out-of-court-settlements should be subject to transparency and public scrutiny.
The lengthy document jointly signed by Nicholas Hildyard,
Olanrewaju Suraju, and witnessed by a Global Witness, Simon Taylor, concluded that
the group would welcome a meeting at the earliest opportunity to discuss concerns and to address any
queries that the defendants might have.
