How Shell, Eni Got Enmeshed in $1 Billion Scandal: QuickTake Q&A

Royal Dutch Shell Plc and Eni SpA have become entangled in a $1.1 billion bribery scandal involving a field in Nigeria that could potentially hold enough crude to meet three months of the world’s demand. At least three countries are probing the companies, and Italian prosecutors have named Eni’s Chief Executive Officer Claudio Descalzi and Shell’s former head of exploration and production, Malcolm Brinded, among people who could be prosecuted. Nigeria’s anti-graft agency also filed charges against the companies in March.

In 1998, Nigeria’s military dictator Sani Abacha awarded Oil Prospecting License 245 in deep waters off Nigeria’s southern coast to Malabu Oil and Gas Ltd., a Lagos-based company connected to then-Petroleum Minister Dan Etete. Under successive governments, the license was canceled, awarded to Shell, and then awarded to Malabu again. Finally, in 2011, Shell and Eni paid the government $1.3 billion, including about $200 million as a signature bonus -- a onetime fee charged by some oil-producing nations -- to nail down the contract once and for all.