You know it is going to be a bad day when you company is featured on the front page of the Wall Street Journal for allegations of bribery and corruption. That is what Shell and the Italian energy company ENI recently faced when there was a report of their upcoming criminal trial for making a payment that may or may not have been a $1.3bn bribe for their joint rights to develop an oil field in Nigeria. The case turns on allegations that Claudio Descalzi, CEO of ENI, and high-level Shell officials approved an arrangement that allowed them to pay the government while knowing most of the money would be transferred to a company controlled by Dan Etete—a former Nigerian oil minister, who the executives knew “would pay off Nigerian officials and send kickbacks to Eni executives.”
The responses of both companies says quite a bit about their culture and ethos. Both Descalzi and then-CEO of ENI, Paolo Scaroni, have been criminally charged. Both have adamantly denied they did anything wrong, that the payment was made to the Nigerian government, and anything Nigeria did with the payment was Nigeria’s own business. Shell officially denied the charges as well, but internal company e-mails, obtained through raids of Shell’s offices in the Netherlands, clearly indicated the company suspected the money paid by the oil giants could well have been used to pay bribes to Nigerian government officials. Further, from a wire-tap at the home of Descalzi, who has not been individually charged, came the following “I wonder who gets the payoff here.”
It is rare that such high-level executives are individually prosecuted. This the first such prosecution in Italy. The legal question presented gave The Man From FCPA some pause. There does not appear to be much dispute that a payment was made to the Nigerian government. There is not much dispute that the money was then transferred to the former Nigerian energy minister Dan Etete. The U.S. government traced some of the monies, and it showed up in widely disparate locations, all of which may or may not indicate both corruption and money laundering. If monies paid to a foreign government itself are now subject to scrutiny, however, this could open an entirely different exposure to liability for international organizations.