Dutch Prosecutors Record Shell CEO and Ensnare Shell in Nigeria Bribery Scandal
A CEO never expects to be wiretapped. Let’s face it – a wiretap in the C-Suite is rare. Justice Department prosecutors have always looked for an opportunity. CEOs have loose lips and can suffer significant damage from recorded conversations.
Dutch prosecutors recorded Shell Oil Company’s CEO, Ben van Beurden and his CFO, Simon Henry, in a conversation that implicated Shell in the payment of a $1.1 million dollar bribe to secure an offshore oil block in Nigeria. Van Beurden spoke to Henry in the immediate aftermath of a raid by Dutch financial police on the corporation’s headquarters in The Hague.
In the call, Van Beurden warned Henry not to volunteer any information if approached by the police. The conversation occurred in February of last year. Italy and the Netherlands are investigating the $1.3 billion purchase of the oil block by Shell and Eni.
According to press reports, Van Beurden made various statements about the allegations that Shell and Eni paid bribes to a former Nigerian minister who had acquired the oil block while serving in the Nigerian government.
Shell knew that there was a risk that the former Nigerian government minister would receive a portion of the payment. The oil block was a highly-prized oil block and Shell’s reserves in Nigeria increased significantly after acquiring the oil block.
During the recorded conversation, Van Beurden alluded to “loose talk” in emails by two Shell employees who gathered intelligence in Nigeria about the oil block and its ownership. Apparently, the two Shell employees suggested in the emails that the former Nigerian minister was going to receive a portion of the purchase money.
Shell and Eni have denied any wrongdoing. In the conversation, Van Beurden told Henry that Shell’s own internal investigation had not uncovered any evidence of wrongdoing in connection with the transaction.
Interestingly, Van Beurden refers to notifying the UK SFO and the US DOJ about the raid, especially given the fact that Shell was under a deferred prosecution agreement when the raid occurred, stating that the deal “happened at a time we were of course under deferred prosecution agreement, so, we should have maybe at the time been a more open with the DOJ than we now find we have been.”
At the close of the conversation, Van Beurden reminded Henry, “You probably . . . know this, [but] don’t volunteer any information that is not requested.”
The suspect transaction surrounding the purchase of the oil tract had a long and tortuous history, including related civil litigation concerning ownership of the tract. The former Nigerian minister claimed to have an ownership interest in the tract. To settle the litigation and the ownership controversy, Shell and Eni settled the case, making a payment part of which ultimately landed in the former Nigerian minister’s pockets.
Dutch and Italian prosecutors have focused on this transaction. While the recorded conversation is not a smoking gun relating to bribery, it has certainly enflamed the matter, giving ammunition for both sides to claim and deny corrupt intent.
No matter how this plays out, it is extraordinary to have law enforcement secure a wiretap of a CEO, especially one of the size of Shell Company. We often write about the increase in global anti-corruption enforcement, and this recent controversy underscores the reality that law enforcement agencies around the world are investigating corruption and employing aggressive tactics to do so.