Shell reviews deals involving ex-executive accused of bribery

The logo of a Shell gas station is pictured in Ulm, Germany. The firm has concluded that a Nigerian oilfield sale where it suspects an executive took bribes was not linked to a separate court case. (Reuters/File Photo)
Updated 06 December 2018
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Shell reviews deals involving ex-executive accused of bribery

  • Shell says ex-executive took bribes in oilfield sale, but former executive denies any wrongdoing
  • Shell sees no link to Nigeria oilfield graft case in Italy

LONDON: Royal Dutch Shell has concluded that a Nigerian oilfield sale where it suspects an executive took bribes was not linked to a separate court case in which he and Shell face corruption charges over a $1.1 billion offshore acquisition.
The Anglo-Dutch company filed a criminal complaint in March against Peter Robinson, a former vice president for sub-Saharan Africa, saying he took bribes in the $390 million sale of onshore Oil Mining Lease (OML) 42 to a Nigerian firm.
Robinson is also one of several former Shell employees involved in a trial in Milan, in which Shell and Italy’s Eni are accused of corruption related to the $1.1 billion purchase of a giant Nigerian offshore field, Oil Prospecting Licence (OPL) 245.
Both the OML 42 and OPL 245 deals were signed in 2011.
Shell, the largest foreign investor in Nigeria, said in a statement to Reuters that it had completed an internal review of the OML 42 sale process and other deals Robinson was involved in, and it concluded his only violation was related to OML 42.
Shell, Eni and Robinson deny any wrongdoing in the OPL 245 case. Robinson also denies any wrongdoing in the OML 42 sale.
Regarding the OML 42 sale, Shell said: “We have found no evidence to suggest that this was anything other than an isolated breach by a former employee, operating deliberately outside of Shell systems or controls.”
“We have also found no evidence of a connection between Robinson’s actions on OML 42 and OPL 245, and we have reconfirmed this to the Dutch Public Prosecutor,” Shell said.
Shell filed its complaint against Robinson to the Dutch prosecutor.
The Dutch prosecutor’s officer confirmed on Thursday it had received further information from Shell but offered no additional comment, saying it was still evaluating all the information and determining next steps.
Robinson’s lawyer Chiara Padovani said her client “denies any allegations of criminal misconduct in connection with OML 42.” She also said Robinson “agrees with Shell’s conclusion that the sale of OML 42 is unrelated to OPL 245.”
A source told Reuters in March that documents related to the OML 42 case had been uncovered after investigators looking into OPL 245 raided a house in Perth, Australia owned by Robinson.
Milan prosecutors allege bribes totalling about $1.1 billion were paid, including to middlemen, to win the OPL 245 deal for Shell and Eni.
Shell has said it expects the case in Italy to last many months.


Dubai real estate market recovery to be seen as of 2022: S&P

Updated 20 February 2019
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Dubai real estate market recovery to be seen as of 2022: S&P

  • The outlook on property was part of a challenging assessment of the credit-worthiness of the emirate
  • S&P was generally comfortable with the credit ratings of the emirate’s banking system

DUBAI: S&P Global, the ratings agency, painted a grim picture for the real estate sector in Dubai, with a meaningful recovery in property prices expected only after 2022.
At a presentation to journalists in the Dubai International Financial Center, S&P analyst Sapna Jagtiani said that under the firm’s “base case scenario,” the Dubai real estate market would fall by between 5 and 10 percent this year, roughly the same as the fall in 2018, which would bring property prices to the levels seen at the bottom of the last cycle in 2010, in the aftermath of the global financial crisis.
“On the real estate side we continue to have a very grim view of the market. While we expect prices to broadly stabilize in 2020, we don’t see a meaningful recovery in 2021. Relative to the previous recovery cycle, we believe it will take longer time for prices to display a meaningful recovery,” she said.
S&P’s verdict adds to several recent pessimistic assessments of the Dubai real estate market. Jagtiani said that conditions in the other big UAE property market, in Abu Dhabi, were not as negative, because “Abu Dhabi never did ramp up as much in 2014 and 2015 as Dubai.” S&P does not rate developers in the capital.
She added that a “stress scenario” could arise if government and royal family related developers — such as Emaar Properties, Meraas, Dubai Properties and Nakheel — which have attractive land banks and economies of scale, continue to launch new developments.
“In such a scenario, we think residential real estate prices could decline by 10-15 percent in 2019 and a further 5-10 percent in 2020. In this case, we expect no upside for Dubai residential real estate prices in 2021, as we expect it will take a while for the market to absorb oversupply,” she said.
S&P recently downgraded Damac, one of the biggest Dubai-based developers, to BB- rating, on weak market prospects.
However, Jagtiani said that, despite the “significant oversupply” from existing projects, several factors should held stabilize the market: Few, if any, major product launches; improved affordability and “bargain hunting” by bulk buyers; and a resurgence of Asian, especially Chinese, investor interest in the market.
Jagtiani also said that government measures such as new ownership and visa regulations and reduction in government fees could help prevent prices falling more sharply, as well as “increased economic activity related to Dubai Expo 2020, which is expected to attract about 25 million visitors to the emirate.”
The outlook on property was part of a challenging assessment of the credit-worthiness of the emirate. “In our view, credit conditions deteriorated in Dubai in 2018, reducing the government’s ability to provide extraordinary financial support to its government related entities (GREs) if needed,” S&P said in a report. “The negative outlook on Dubai Electricity and Water
Authority (DEWA) partly reflects our concern that a real estate downturn beyond our base case could out increased pressure on government finances,” the report said.
It pointed out that about 70 percent of government revenues come from non-tax sources, including land transfer and mortgage registration fees, as well as charges for housing and municipality liabilities, as well as dividends from real estate developers it controls, like Emaar and Nakheel.
S&P was generally comfortable with the credit ratings of the emirate’s banking system, which has an estimated 20 percent exposure to real estate. “Banks in the UAE tend to generally display a good level of profitability and capitalization, giving them a good margin to absorb a moderate increase in risks,” the report said.