ENI Eni Spa

By Eric Sylvers and Sarah Kent 

MILAN -- Italian prosecutors are pursuing a criminal trial for Royal Dutch Shell PLC and the chief executive of Italian oil company Eni SpA on charges of corruption tied to a controversial Nigerian deal, according to a person familiar with the matter.

The prosecutors' request -- if granted by a judge over the next several months -- could lay bare the operations of Shell and the actions of Eni executives in pursuit of a potentially giant Atlantic Ocean oil discovery that has come to symbolize pervasive graft in Nigeria's energy industry.

The investigation targets 11 individuals, including Eni's current CEO, Claudio Descalzi and his predecessor Paolo Scaroni. Charges are being pursued against Shell as a corporation, though no executives are named, the person familiar with the matter said.

Eni's board on Wednesday expressed support for Mr. Descalzi, saying he was innocent. A spokeswoman for Shell declined to comment. Messrs. Descalzi and Scaroni didn't immediately respond to requests for comment.

The move to prosecute the two companies is the latest twist in a decadeslong saga involving allegations that their 2011 deal to buy the oil block for over $1 billion amounted to an enormous bribe. The block, known as OPL 245, is believed to hold 9 billion barrels of crude oil.

Shell -- long the dominant Western oil company in Nigeria -- had been pursuing the right to develop the block for years, fighting over ownership with successive Nigerian governments and a former Nigerian oil minister, Dan Etete, whose company claimed ownership.

Shell made headway in 2011 when it teamed up with Eni to buy the block from the Nigerian government, according to court records viewed by The Wall Street Journal.

Days after Eni paid a $1.1 billion sum to the Nigerian government for the block, the money was transferred to bank accounts held by Mr. Etete, according to the documents. From there the money filtered down to numerous companies associated with Nigerian government officials, the court records show. Mr. Etete and his lawyers were unable to be reached for comment.

Italian prosecutors have maintained that Messrs. Scaroni and Descalzi, then a top Eni executive, knew the government escrow account was a stopover for the money before it moved onto an account controlled by Mr. Etete and was eventually paid as kickbacks.

Mr. Descalzi and Eni have denied wrongdoing. The company has maintained that it doesn't use middlemen and that its executives only dealt with the Nigerian government in the deal for the offshore block. Eni has said that it bears no responsibility for where the money subsequently went.

The Nigerian case has proved embarrassing not only for Eni, which has long been dogged by corruption allegations, but also the Italian government that owns 30% of the company and appoints the top management.

The accusations have been a distraction for Mr. Descalzi as he tries to right Eni's finances during a tumultuous term as CEO. Since he took over in 2014, oil prices nose-dived, and the company was forced to cut its dividend amid heavy losses.

Mr. Descalzi's three-year term is set to expire in April and his renewal could be complicated by the court case. A trial and eventual appeals could drag on for more than five years.

The request for indictments comes after a Nigerian court ordered Eni and Shell to give up control of OPL 245. Indictments in Italy could further embolden Nigerian officials to take on the two oil companies, according to analysts.

Shell said in its fourth quarter results earlier this month that it is appealing the Nigerian court order.

--Manuela Mesco contributed to this article.

Write to Eric Sylvers at eric.sylvers@wsj.com and Sarah Kent at sarah.kent@wsj.com

(END) Dow Jones Newswires

February 08, 2017 16:33 ET (21:33 GMT)

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