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Public Citizen, Global Witness FOIA Request Raises Questions about Effectiveness of Deferred Prosecution Agreements

May 10, 2017

Public Citizen and Global Witness

Public Citizen, Global Witness FOIA Request Raises Questions about Effectiveness of Deferred Prosecution Agreements

WASHINGTON, D.C. – Royal Dutch Shell may have violated the terms of its 2010 deferred prosecution agreement (DPA) with the U.S. Department of Justice (DOJ), according to a FOIA request submitted to DOJ by Public Citizen and Global Witness today. The move follows recent revelations from Global Witness and Finance Uncovered that Shell took part in a billion dollar bribery scheme in Nigeria in 2011. Shell has since admitted it knew it was dealing with a convicted money launderer – former Nigerian oil minister, Dan Etete – during this deal. Public Citizen and Global Witness are therefore seeking access to Shell’s corporate compliance reports, in which the company claimed it abstained from illegal conduct from 2010 through 2013.

The company entered into the deferred prosecution agreement – effectively a suspended sentence – after it admitted in 2010 to criminal violations of the Foreign Corrupt Practices Act (FCPA) for paying more than $2 million in bribes to Nigerian officials, in a separate case. If Shell broke the law while it was under the DPA, it can be charged with respect to these new allegations. However, the original criminal charges against Shell cannot be revived because the deferred prosecution agreement has expired.

“While Shell was supposed to be reporting and documenting its compliance with the law, it was actually engaged in one of the biggest financial deceptions in oil industry history,” said Tyson Slocum, director of Public Citizen’s Energy Program. “Either Shell misreported its compliance efforts, demonstrating the effective deceit involved in deferred prosecution agreements and necessitating follow up action from the DOJ; or Shell actually did report its illegal activity, in which case what the heck was DOJ doing?”

“This is one of the biggest scandals in the history of the oil industry, and it took place under the nose of U.S. authorities who had already caught Shell paying bribes in Nigeria the previous year. Shining a light on corrupt deals prevents multinational companies from scheming with greedy government officials to get rich at the expense of ordinary people.” said Simon Taylor, a director at Global Witness.

“Deferred prosecution agreements do not deter corporate bad actors and do nothing to hold such actors accountable,” said Amit Narang, regulatory policy advocate for Public Citizen’s Congress Watch division. “Big Banks and other corporations that have received deferred prosecution agreements continue to violate the law with impunity. The Trump administration and Attorney General Jeff Sessions should make clear that the Obama administration’s reliance on deferred prosecution agreements is a thing of the past and that the DOJ is now fully committed to aggressively pursuing CEOs and other executives at corporations when wrongdoing occurs.”

In April 2017, Royal Dutch Shell’s Vice President for Global Media Relations Andy Norman stated that the company was aware that its 2011 deal for the Nigerian oil license OPL 245 would result in money being passed to Dan Etete, a convicted money launderer. Etete had awarded the block to Malabu Oil and Gas, a company he secretly owned, while in office as Nigerian oil minister of the country. Norman told the New York Times, “Over time, it became clear to us that Etete was involved in Malabu and that the only way to resolve the impasse through a negotiated settlement was to engage with Etete and Malabu, whether we liked it or not.” He added, Shell knew that the Nigerian government “would compensate Malabu to settle its claim on the block.” Shell also told journalists in that if it was ultimately proved that bribe payments relating to the OPL 245 deal were made, “it is Shell’s position that none of those payments were made with its knowledge, authorization or on its behalf.”

This move followed the publication of leaked internal emails by Global Witness, which show that Shell’s most senior decision-makers were told money was likely to flow to some of the most powerful people in the country, which would also likely include then-President Goodluck Jonathan, as part of a vast bribery scheme. Following an investigation of the deal the public prosecutor for Milan has requested that Royal Dutch Shell face trial on international bribery charges and has stated it intends to bring proceedings against four former Shell executives. Preliminary hearings ahead of a trial in Italy began on April 20. The company’s subsidiary has also been charged with official corruption in Nigeria.

A spokesperson for Jonathan told the BBC that no charges or indictments have been brought or secured against the former president relating to this transaction and described the allegations as a “false narrative.”

Read the FOIA request.