HEDA, partners write Netherlands Justice, Security Minister over RDS trials in OPL 245 deal

By Peter Ejiofor

A coalition of NGOs, have written the Minister of Justice and Security in the Netherlands, Ferdinand Grapperhaus, expressing their concerns about the out-of-court settlements in cases involving the Royal Dutch Shell Plc (RDS).

RDS is currently standing trial in Milan, Italy, charged with international corruption in relation to the OPL 245 deal.

The NGOs said that they had for the last six years, been investigating Shell’s acquisition of the OPL 245 oil and gas field.

They said that the prosecution was 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 the Nigerian Agip Exploration (NAE), they added.

“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.

“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.

“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 NGOs said in a joint statement.

The statement signed the Chair of Human and Environmental Development Agenda (HEDA), Mr Olanrewaju Suraju, Mr Nicholas Hildyard of The Corner House, Mr Simon Taylor, Global Witness and Mr Luca Manes, Re:Common.

“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 U.K. Crown Prosecution Service) is vast.’’

Although Shell has reported former Shell manager Peter Robinson for allegedly taking kickbacks relating to the divestment of Shell’s interest in Nigeria’s OML 42 oil field, Shell maintains that this is separate from the OPL 245 case.

Indeed, for reasons set out below, we would contend that there were 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 co-operated 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.’’

The statement said Secondly, a settlement with Shell would establish an undesirable precedent by signalling that the Dutch justice system was 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 U.S. Department of Justice following an earlier Nigerian bribery scandal, it noted.

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’’.

“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 dollars 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,’’ it said.

The statement said that 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.

It noted particularly, if that settlement appeared 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,’’ said.

It set out minimum conditions for the resolution, noting: 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:

There should be admission of guilt, adding that “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 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 any settlement that 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, charges which it denies.

“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.’’

It also said that the Executives must be prosecuted if there was sufficient evidence.

“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.’’

It said that it was axiomatic that crime should not pay but that 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 dollars (excluding the value of the gas) at an oil price of 80 a barrel, 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 Development found that pursuant to these fiscal terms agreed over 2011/2012, the block would only generate 9.8 dollars 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 dollars 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 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.’’

It said that they expected 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 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,’’ it said.

The statement said that if a settlement agreement with RDS required 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.

Finally, any settlement agreement with RDS, mandating the implementation of revised anti-corruption procedures, should ensure that executives are similarly held to account for the implementation of such procedures, it said.

“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.

“We would welcome a meeting at the earliest opportunity to discuss our concerns and to address any queries that you might have,’’ the statement said. (NAN)

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