Eni Did No Due Diligence in Malabu Oil Deal, Says Ex-Board Member

Eni made no thorough background checks on a middleman it hired to broker a $1.3 billion Nigerian acquisition, a former board member of the Italian oil group told a Milan court.

Milan prosecutors alleged that bribes totalling around $1.1 billion were paid, including to middleman Emeka Obi, in the 2011 purchase by Eni and Anglo-Dutch peer Royal Dutch Shell of Nigeria’s Oil Prospecting Lease (OPL) 245 offshore oilfield.

The prosecutors allege the bribes were paid to win the licence to explore the field which, because of disputes, has never entered into production. Shell expects the landmark corruption trial to last many months.

All those charged have denied any wrongdoing, while Eni declined to comment on Wednesday.

Luigi Zingales, an Eni board member from May 2014 to July 2015, told judges he had flagged to the company a lack of due diligence into a broker firm used in the deal, and headed by Obi, calling it “a significant hole in governance”.

Zingales, who at the time was also a member of Eni’s risk committee, said using a middleman was not its normal practice.

Asked if he had spoken of his doubts with current Eni CEO, Claudio Descalzi, who is one of those being tried, Zingales said they had spoken during a board meeting.

“He was very kind, very open. Then around April (2015) he told me my interest, my asking questions was paralysing the company,” he said.

It was not immediately possible to contact Descalzi.

In a separate trial, a Milan court found Obi guilty in September of international corruption after prosecutors alleged he had received a mandate from former Nigerian oil minister, Dan Etete, who has denied any wrongdoing, to find a buyer for OPL 245, collecting $114 million for his services.

The oilfield is one of the biggest sources of untapped oil reserves in Africa, with an estimated 9 billion barrels.