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Billion-Dollar Bribery Scandal Sweeps Through Oil -2-

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02/14/2018 | 08:48 am

The deal was made on the basis that $200 million would be kept by the Nigerian government and that $1.1 billion would be passed on to Malabu in exchange for its dropping all claims to the oil field, court documents say.

The two sides completed the deal in April 2011, but within months, it began to unravel. Initial efforts to transfer the $1.1 billion from a Nigerian government bank account at JPMorgan Chase & Co. in London to an account in Switzerland was blocked by bank authorities for reasons of "compliance," marking an early red flag. A second attempt to transfer money to a bank in Lebanon was also blocked. The transfer was eventually completed to two Malabu accounts in Nigeria, according to nonpublic Italian court documents.

In the U.S., the Federal Bureau of Investigation traced the flow of dollars from the deal, millions of which made it to the U.S., court documents show. Mr. Etete splashed out nearly $57 million to buy a private jet in Oklahoma in 2011 and another $670,000 for three armored cars in the U.S., according to court documents. He even was able to pay off $7.4 million in fines for the money-laundering conviction in France.

The FBI turned over much of its evidence to authorities in Italy, where Fabio De Pasquale, a high-profile prosecutor in Milan, had begun probing the deal in 2014. Mr. De Pasquale had made a name for himself in the 1990s as a dogged investigator willing to take on powerful forces in Italy, including former Italian Prime Minister Silvio Berlusconi. He presided over separate corruption investigations against Eni that have forced it to overhaul its compliance practices and restructure its former oil services subsidiary.

Italian investigators turned up the heat on executives who might provide useful evidence. One was Vincenzo Armanna, a senior executive in Eni's sub-Saharan Africa business at the time of the deal. Prosecutors allege he received a kickback of more than $1 million when the deal closed, according to Italian court documents.

Mr. Armanna acknowledged he discussed the final destination of Eni's money with his bosses. "We were aware that most of it would go to the political sponsors of the deal," he told prosecutors in 2014, according to the court documents. Mr. Armanna didn't respond to requests for comment.

Another Eni executive received a delivery of $50 million in cash to his house in Abuja, according to Italian prosecutors. By that time, the Italian investigation was zeroing in on the top levels of Eni's management.

"It's believed that Scaroni and Descalzi organized and managed the illegal activities," Milan prosecutors wrote in a 2014 document saying they had put the two under investigation.

In 2016, Shell's offices in The Hague were raided by Dutch police, who spent hours combing top executives' rooms for information on the deal. A cache of internal emails widely leaked to the media revealed details about the company's yearslong negotiation for the oil field.

Dutch investigators also tapped the phone of the company's current CEO, Ben van Beurden, even though he wasn't running the company when the Nigeria deal was struck and faces no charges.

"There was apparently some loose chatter between people from the team," said Mr. Van Beurden on a wiretapped call to his chief financial officer at the time of the raid. He said on the call that discussions of the deal included comments such as, "I wonder who gets a payoff here."

Mr. Van Beurden declined to comment. A Shell spokesman said the company was cooperating fully with regulatory authorities.

The executive was on vacation in France with his children when police were rummaging through his office. "I don't think they have found anything that was clearly incriminating or that sort of suggested that we were colluding or doing anything inappropriate," he said on the tapped call. But referring to the chatter, he said, "Nevertheless, it's there."

--Gbenga Akingbule and Aruna Viswanatha contributed to this article.

Write to Sarah Kent at sarah.kent@wsj.com and Eric Sylvers at eric.sylvers@wsj.com

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