Shell, Eni preempt any U.S. probe over Nigeria with filings

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LONDON (Reuters) – Oil giants Royal Dutch Shell and Eni have voluntarily filed to U.S. authorities internal probes into how they acquired a giant field in Nigeria as the companies seek to fight corruption allegations in Europe and Africa.

The filings, to the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), do not mean U.S. authorities are investigating Shell or Eni.  The move shows the companies are trying to preempt questions from the United States as they face one of the oil industry’s biggest-ever graft trials in Italy, to begin in May in Milan, a pending trial in Nigeria and an investigation in the Netherlands.

The case revolves around the purchase of a huge block off oil-rich Nigeria, known as OPL 245, which holds an estimated 9 billion barrels in reserves.

Italian prosecutors allege that bribes were paid in an effort to secure rights to the block in 2011. A number of top executives from both companies – including Eni Chief Executive Claudio Descalzi and former Shell Foundation Chairman Malcolm Brinded – will face trial.

Under Italian law a company can be held responsible if it is deemed to have failed to prevent, or attempt to prevent, a crime by an employee that benefited the company.

Both companies’ shares are traded on U.S. stock exchanges, putting their foreign dealings in the scope of U.S. authorities.

Shell and Eni, on behalf of subsidiaries, in 2010 entered deferred prosecution agreements with the DOJ over separate Nigerian corruption allegations.

Those pacts dismissed charges after a certain period in exchange for fines and an agreement to fulfil a number of requirements. They concluded in 2013 and 2012, respectively.

“A company’s disclosure of alleged foreign corruption to both the SEC and the DOJ in the U.S. typically means the company believed U.S. authorities needed to be made aware of this, and both agencies have the authority to prosecute under the (Foreign Corrupt Practices Act, or FCPA),” said Pablo Quiñones, executive director of the New York University School of Law program on corporate compliance and enforcement.

Quiñones previously worked as chief of strategy, policy and training at the DOJ’s criminal fraud section, a role that included helping to develop FCPA enforcement policy.

The SEC and the DOJ declined to comment on the company disclosures or whether they were looking into any allegations surrounding the block.

Eni noted its disclosure in an SEC filing, in which it said “no evidence of wrongdoing on Eni side were detected”. Shell has said publicly that it submitted the investigation to U.S. authorities and to Britain’s Serious Fraud Office.

Shell and Eni deny any wrongdoing. They say their payments for the block, a total of $1.3 billion, were transparent, legal and went directly into an escrow account controlled by the Nigerian government.

The companies and legal experts say the trial will last more than a year, with potential appeals stretching several years beyond that.

“The risk for companies is of a prolonged period of exposure to open court allegations from a state prosecutor of impropriety,” Anthony Goldman of Nigeria-focused PM Consulting said. “That will be painful and damaging.”

The Milan prosecutor charges that roughly $1 billion of the payments were funnelled to a Nigerian company called Malabu Oil and Gas, which had a disputed claim on the block, and former oil minister Dan Etete, who British and U.S. courts have said controlled Malabu. Reuters has been unable to reach Etete or Malabu for comment.

Shell has since said it knew some of the money would go to Malabu to settle its claim, though its own due diligence could not confirm who controlled the company. Eni said it never dealt with Etete or knew he controlled the company, but that the government promised to settle all other claims on the block as part of their deal.

“If the evidence ultimately proves that improper payments were made by Malabu or others to then current government officials in exchange for improper conduct relating to the 2011 settlement of the long standing legal disputes, it is Shell’s position that none of those payments were made with its knowledge, authorisation or on its behalf,” Shell said in a statement.



The proceedings have also brought together investigators in several countries, with authorities in Nigeria and the Netherlands sending information to Milan.

A Dutch anti-fraud team in 2016 raided Shell offices as part of the investigation, and a Dutch law firm has asked prosecutors to consider launching a criminal case in the Netherlands.

“I’m not aware of many cases where this many jurisdictions have been at work for so long helping each other out. The amount of cooperation is very unusual,” said Aaron Sayne of the Natural Resource Governance Institute, a non-profit group that advises countries on how to manage oil, gas and mineral resources.

A case by Nigeria’s financial watchdog, the Economic and Financial Crimes Commission, against defendants including the former attorney general, ex-ministers of justice and oil and various senior managers, current and former, from Shell and Eni, will continue in June.

There has also been at least one effort to take away the asset. Experts say it is worth billions, and Shell has spent millions developing it. Eni intends to make a final investment decision this year on developing the block and said in corporate filings that the asset has a book value of 1.2 billion euros ($1.5 billion).

The Italian court does not have the ability to rescind rights to the block, and Nigerian oil minister Emmanuel Ibe Kachikwu has said the companies should continue to develop it.

But in a lawsuit filed by the Nigerian government against JPMorgan in London for the U.S. bank’s role in transferring money from the deal, it called the agreement that facilitated Shell and Eni’s purchase “unlawful and void”.

A JPMorgan spokeswoman previously said the firm “considers the allegations made in the claim to be unsubstantiated and without merit”.

Additionally, a Nigerian court last year briefly ordered the seizure of the block.

That decision was later overturned, and Shell and Eni say they are not worried about losing the asset. But the ruling and the language in the government’s suit against JPMorgan underscore the risk.

“It’s a nice, stable asset that could produce a lot of oil for a long time,” Sayne said.

($1 = 0.8127 euros)


(Reporting by Libby George; Additional reporting by Stephen Jewkes and Emilio Parodi in Milan and Ron Bousso in London; Editing by Dale Hudson)

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South Africa’s rand at 2-week low as global headwinds, Fed jitters kick-in

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JOHANNESBURG (Reuters) – South Africa’s rand slipped to its lowest in two weeks on Thursday, succumbing to month end demand for dollars by local firms as the increasing chances of higher interest rates in the United States lured bulls back into long-dollar positions.

At 0640 GMT the rand was 0.4 percent weaker at 11.8350 per dollar, its softest level since February 14, compared to an overnight close of 11.7875.

It was the first time in more than two weeks the rand closed above technical support around 11.80, after weakening for three consecutive sessions, prompting some technical selling as well as portfolio rebalancing by corporates offloading excess rands.

Analysts said the “Ramaphosa effect”, named for the rise in investor confidence and rally in local assets after new president Cyril Ramaphosa took over as chief of the ruling African National Congress (ANC) in December, was now giving way to global headwinds.

“With the cabinet reshuffle out of the way, our local assets will continue to reprice in line with the global macro environment,” said fixed income trader at Rand Merchant Bank Gordon Kerr in a note.

The dollar index remained near 5-week highs early on Thursday, still drawing support after the Federal Reserve’s new chief Jerome Powell struck an optimistic tone on the U.S. economy, raising bets of at least four rate hikes by the bank in 2018.

Stocks opened softer with the benchmark Top-40 index down 0.13 percent.

Bonds were also softer, with the yield on the benchmark paper due in 2026 up 4 basis points to 8.165 percent.


(Reporting by Mfuneko Toyana; Editing by Ed Stoddard)


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Dow Chemical seeks to triple Africa revenue in five years

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NAIROBI (Reuters) – Dow Chemical Co plans to triple its revenue from sub-Saharan Africa in the next five years and is investing in offices, local staff and manufacturing plants on the continent to meet that target, its head of the region said.

The company sees opportunities in agriculture, where it supplies crop protection chemicals, infrastructure, where it offers water treatment chemicals, as well as in mining and manufacturing.

“We expect to triple our revenue from Africa over the next five years. That is our objective and we are on track to do that,” Ross McLean, president for sub-Saharan Africa, told Reuters in an interview in Nairobi, without saying what revenue the company already achieves there.

“Dow is absolutely betting on Africa’s growth,”

Dow, whose group sales reached $12.9 billion in the second quarter, has opened hub offices in Kenya, to serve East Africa, and another in Ghana, serving West Africa. It is also opening offices in Ethiopia, Nigeria and Angola, as well as in other markets.

“Most multi-nationals, that are driving a growth strategy in Africa, are starting from a very low base, and currently they may be at 1 or 2 percent of the global revenue of the company,” he said, putting Dow’s revenue breakdown in line with that level.

Dow is also investing in a production plant in Egypt, and another in Saudi Arabia, where it has partnered with Saudi Aramco, in order to be consistent with supply of its products to African markets, McLean said.

He said challenges the company faced included weaker currencies in the region, and declines in prices of commodities and oil.

The World Bank cut its 2015 growth forecast for the region last week to 3.7 percent, the slowest since 2009.

McLean said that did not affect Dow Chemical’s ambitions.

“We are here for the long term and we are not scared by the bumps in the road. Africa is a place where you have to be pretty resilient and determined,” he said.

(By Duncan Miriri, Reuters)

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Kellogg to spend $450 mil to expand in Africa

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(Reuters) – Kellogg Co is setting up a joint venture with the African arm of Singapore’s Tolaram Group to bolster its breakfast and snack food offerings in West Africa.

Kellogg will also pay $450 million for a 50 percent stake in Lagos, Nigeria-based Multipro, a food sales and distribution company owned by Tolaram, with an option to buy a stake in Tolaram’s African unit.

Tolaram Africa Foods owns 49 percent of Dufil Prima Foods Plc, the maker of Indomie noodles, Minimie snacks, Power oil and Power pasta.

Kellogg said it intends to develop snacks and breakfast items for the West African market through the joint venture.

The world’s largest cereal maker will also get access to Multipro’s distribution network in Nigeria and Ghana, and potentially in the Dominican Republic of Congo, Ivory Coast, Cameroon and Ethiopia.

U.S. packaged food companies are increasingly looking to expand in emerging markets as customers in their biggest markets such as North America increasingly prefer cheaper private-label foods and cook more at home.

Kellogg acquired a majority stake in Egyptian biscuit maker Bisco Misr for $125 million in January.

Kellogg said it expects costs associated with the Tolaram deal to lower third-quarter earnings by 1 cent per share.

The company’s shares were down slightly in early trading on the New York Stock Exchange. Up to Monday’s close of $66.73, they had fallen 4.4 percent over the past 12 months.

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