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Shell Executives Charged in Italy over Malabu Deal

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Shell
  • Shell Executives Charged in Italy over Malabu Deal

Senior Royal Dutch Shell executives have been charged in Italy for their role in an alleged vast “bribery scheme” that deprived Nigeria of over a billion dollars from the sale of a prolific oil block – Oil Prospecting Lease (OPL) 245 – by Malabu Oil and Gas Limited to Shell and Italian oil giant, Eni, in 2011, the Milan Public Prosecutor’s Office confirmed last Friday to Global Witness, a non-governmental organisation fighting corruption.

Officials facing trial include Malcolm Brinded, the second most powerful person in the company when the deal was struck. Others charged are Peter Robinson, former vice-president for Shell’s sub-Saharan Africa operations and Guy Colegate and John Copleston, former Shell employees and ex-MI6 agents as well as the company itself, also facing bribery charges alongside the individuals.

News of the charges broke Monday just as human rights lawyer and activists, Mr. Olisa Agbakoba (SAN), dragged President Muhammadu Buhari before the Federal High Court in Abuja, asking the court to restrain him from continuing to hold the office of Minister of Petroleum Resources while in office as President of Nigeria.

Commenting on the charges against the Shell officials, Olanrewaju Suraju of Human and Environmental Development Agenda of Nigeria, said: “These charges are a clear signal that it is no longer business as usual for oil companies in Nigeria. It’s now time for the Dutch and British authorities to follow Italy’s lead and hold their biggest company to account.”

In 2011, Shell and Eni paid $1.1 billion for OPL 245, an oil block located in deep waters offshore Nigeria, allegedly knowing that the money would go to Malabu Oil and Gas owned by a former Minister of Petroleum Resources, Dan Etete, who had been convicted for money laundering in France.

Etete was accused of awarding himself the block while in office under former military head of state, Gen. Sani Abacha.

The historic decision follows a dramatic U-turn in which it admitted that it knew its billion dollar payment would go to Etete, in exchange for OPL 245.

“This could be the biggest corporate bribery trial in history, and a watershed moment for the oil industry. The top brass of the UK’s largest company is in the dock after it finally admitted dealing with a convicted money launderer.

“There can be no clearer sign that wholesale change is needed. Shell must first apologise to the Nigerian people, then take clear steps to reassure investors and the broader public that this won’t happen again,” said Barnaby Pace of Global Witness.

In April, Global Witness and Finance Uncovered revealed that Shell executives knew that the $1.1 billion they paid for OPL 245 would go to Etete and was likely to be used in a vast bribery scheme.

For years, Shell had claimed that it only paid the Nigerian Government. But after the Global Witness investigations, Shell shifted its position and acknowledged it had dealt with Etete through his front company, Malabu.

In December, the Milan Public Prosecutor alleged that $520 million from the deal was converted into cash and intended to be paid to former President Goodluck Jonathan, members of the government and other Nigerian government officials.

Now, Italian authorities have brought bribery charges against Malcolm Brinded, then Head of Upstream, alongside three others.

According to the Shell Foundation, Brinded has stepped down from his role as Chairman of the Board of Trustees due to the legal action in Italy.

Brinded remains a trustee of the foundation as well as retained positions as Chair of Engineering UK and President of the Energy Institute.

In September 2017, BHP Billiton announced that Malcolm Brinded would not return to the BHP Billiton board due to judicial inquiries over the OPL 245 deal.

In 2002, Brinded was awarded the CBE for services to the U.K. oil and gas industry. These individual charges are in addition to existing charges brought against Shell, Eni, the Italian company’s CEO, former CEO and Chief Operations Officer, middlemen and several Nigerian officials.

“Shell’s current CEO, Ben van Beurden has described the emails we leaked as ‘pub talk’, but most pub chats don’t end up in criminal proceedings.

“Mr. van Beurden has had four years as CEO to address a scandal that now threatens to engulf his company but has done next to nothing. He should draw a line under the case by admitting the company’s guilt, removing Mr. Brinded from his position, and setting out his plan for overhauling the company’s anti-bribery efforts for the future,” said Pace.

“These charges are a clear signal that it is no longer business as usual for oil companies in Nigeria. It’s now time for the Dutch and British authorities to follow Italy’s lead and hold their biggest company to account,” added Suraju.

OPL 245 holds significant discovered hydrocarbon reserves and will increase Shell’s reserves by a third. Two oil and gas discoveries have been made on the block.

Etan and Zabazaba were discovered in 2005 and 2006 respectively. Eni plans to develop the Etan and Zabazaba fields in phases with subsea wells tied back to a leased floating production storage and offloading (FPSO) vessel.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

MPC Meeting on July 22-23 to Tackle Inflation as Rates Set to Rise Again

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Interbank rate

The Monetary Policy Committee (MPC) is set to convene on July 22-23, 2024, amid soaring inflation and economic challenges in Nigeria.

Led by Olayemi Cardoso, the committee has already increased interest rates three times this year, raising them by 750 basis points to 26.25 percent.

Nigeria’s annual inflation rate climbed to 34.19 percent in June, driven by rising food prices. Despite these pressures, the Central Bank of Nigeria (CBN) projects that inflation will moderate to around 21.40 percent by year-end.

Market analysts expect a further rate hike as the committee seeks to rein in inflation. Nabila Mohammed from Chapel Hill Denham anticipates a 50–75 basis point increase.

Similarly, Coronation Research forecasts a potential rise of 50 to 100 basis points, given the recent uptick in inflation.

The food inflation rate reached 40.87 percent in June, exacerbated by security issues in key agricultural regions.

Essential commodities such as millet, garri, and yams have seen significant price hikes, impacting household budgets and savings.

As the MPC meets, the National Bureau of Statistics is set to release data on selected food prices for June, providing further insights into the inflationary trends affecting Nigerians.

The upcoming MPC meeting will be crucial in determining the trajectory of Nigeria’s monetary policy as the government grapples with economic instability.

The focus remains on balancing inflation control with economic growth to ensure stability in Africa’s largest economy.

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Economy

Nigeria’s Growth Forecast Lowered to 3% for 2025, Higher than Most Emerging Markets

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IMF global - Investors King

The International Monetary Fund (IMF) has projected a 3% growth rate for Nigeria in 2025, slightly down from the 3.1% forecasted for 2024.

Despite this slight decline, Nigeria’s projected growth remains higher than that of many emerging markets as detailed in the IMF’s latest World Economic Outlook released on Tuesday.

In comparison, South Africa’s economy is expected to grow by 1.2% in 2025, up from 0.9% this year. Brazil’s growth is projected at 2.4% from 2.1% in 2024, and Mexico’s growth forecast stands at 1.6% for 2025, down from 2.2% in 2024.

However, India is anticipated to see a robust growth of 6.5% in 2025, although this is slightly lower than the 7% forecast for 2024.

The IMF’s projections come as Nigeria undertakes significant monetary reforms. The Central Bank of Nigeria has been working on clearing the foreign exchange backlog, and the federal government recently removed petrol subsidies.

These reforms aim to stabilize the economy, but the country continues to grapple with high inflation and increasing poverty levels, which pose challenges to sustained economic growth.

Sub-Saharan Africa as a whole is expected to see an improvement in growth, with projections of 4.1% in 2025, up from 3.7% in 2024. This regional outlook indicates a modest recovery as economies adjust to global economic conditions.

The IMF report underscores the need for cautious monetary policy. It recommends that central banks in emerging markets avoid easing their monetary stances too early to manage inflation risks and sustain economic growth.

In cases where inflation risks have materialized, central banks are advised to remain open to further tightening of monetary policy.

“Central banks should refrain from easing too early and should be prepared for further tightening if necessary,” the report stated. “Where inflation data encouragingly signal a durable return to price stability, monetary policy easing should proceed gradually to allow for necessary fiscal consolidation.”

The IMF also highlighted the importance of avoiding fiscal slippages, noting that fiscal policies may need to be significantly tighter than previously anticipated in some countries to ensure economic stability.

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Economy

Nigeria’s Inflation Rises to 34.19% in June Amid Rising Costs

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Food Inflation - Investors King

Nigeria’s headline inflation rate surged to 34.19% in June 2024, a significant increase from the 33.95% recorded in May.

This rise highlights the continuing pressures on the nation’s economy as the cost of living continues to climb.

On a year-on-year basis, the June 2024 inflation rate was 11.40 percentage points higher than the 22.79% recorded in June 2023.

This substantial increase shows the persistent challenges faced by consumers and businesses alike in coping with escalating prices.

The month-on-month inflation rate for June 2024 was 2.31%, slightly up from 2.14% in May 2024. This indicates that the pace at which prices are rising continues to accelerate, compounding the economic strain on households and enterprises.

A closer examination of the divisional contributions to the inflation index reveals that food and non-alcoholic beverages were the primary drivers, contributing 17.71% to the year-on-year increase.

Housing, water, electricity, gas, and other fuels followed, adding 5.72% to the inflationary pressures.

Other significant contributors included clothing and footwear (2.62%), transport (2.23%), and furnishings, household equipment, and maintenance (1.72%).

Sectors such as education, health, and miscellaneous goods and services also played notable roles, contributing 1.35%, 1.03%, and 0.57% respectively.

The rural and urban inflation rates also exhibited marked increases. Urban inflation reached 36.55% in June 2024, a rise of 12.23 percentage points from the 24.33% recorded in June 2023.

On a month-on-month basis, urban inflation was 2.46% in June, slightly higher than the 2.35% in May 2024. The twelve-month average for urban inflation stood at 32.08%, up 9.70 percentage points from June 2023’s 22.38%.

Rural inflation was similarly impacted, with a year-on-year rate of 32.09% in June 2024, an increase of 10.71 percentage points from June 2023’s 21.37%.

The month-on-month rural inflation rate rose to 2.17% in June, up from 1.94% in May 2024. The twelve-month average for rural inflation reached 28.15%, compared to 20.76% in June 2023.

The rising inflation rates pose significant challenges for the Central Bank of Nigeria (CBN) as it grapples with balancing monetary policy to rein in inflation while supporting economic growth.

The ongoing pressures from high food prices and energy costs necessitate urgent policy interventions to stabilize the economy and protect the purchasing power of Nigerians.

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