* Deal concerns multi-billion barrel oil block OPL 245
* Shell, ENI say they bought from government for $1.3billion
* Gov't then paid $1.09 bln to firm linked to former oilminister Etete
* Etete had awarded block to the same firm for $2 mln in1998
* Court documents show ENI, Shell both negotiated with Etete
By Tim Cocks
LAGOS, July 24 (Reuters) - British police are investigatinga money-laundering allegation related to a big oil field boughtby Shell and ENI from Nigeria for $1.3billion, after most of the cash they paid ended up in a companylinked to a former Nigerian oil minister.
The probe concerns offshore block OPL 245, which industrysources say contains up to 9.23 billion barrels of crude - morethan enough to keep China running for two and a half years - theownership of which had been in dispute for more than a decade.
"The proceeds of crime unit is investigating amoney-laundering allegation in the UK in connection with OPL245. The investigation is at an early stage," a UK spokesmansaid.
Transparency campaigners, who asked the UK to look into thematter, assert that Shell and ENI used the Nigerian governmentas a go-between to obscure the fact that they were dealing withformer oil minister Dan Etete, who also has a 2007money-laundering conviction in France related to bribes he wasalleged to have taken when in government.
In his capacity as oil minister, Etete awarded block OPL 245in 1998 for a payment of just $2 million to Malabu Oil and Gas,a company in which he played a prominent role.
The critics claim that Shell and ENI, which haven't beenaccused of any legal wrongdoing, wanted to distance themselvesfrom Etete given his reputation and his involvement in theoriginal award of the oil block to Malabu.
A Shell spokesman told Reuters it had purchased the blockfrom the government, making no payment to Malabu, and that itacted transparently and in accordance with Nigerian law.
ENI declined to comment to Reuters, but it told shareholdersin May that the transaction was with the government, not Malabu.
Reuters was not able to locate Etete for comment. His lawyerdid not immediately respond to a request for comment.
While Shell and ENI say they bought the block from theNigerian government, for which they paid it $1.3 billion in2011, Nigeria says it was helping resolve an ownership disputeover the block between Shell and Malabu and immediatelytransferred $1.09 billion from the sale to Malabu. Thegovernment retained the remainder.
Etete had awarded the block to Malabu during the rule ofmilitary dictator Sani Abacha, whose son Mohammed and otherclose allies were shareholders in the company. That deal waslater annulled after the death of Abacha by a new governmentthat judged the award improper.
In a UK court case brought by Emeka Obi against Malabu forunpaid fees relating to his help in brokering the Shell/ENIdeal, the judge in that case, Justice Elizabeth Gloster,concluded in her ruling last week that "From its incorporationand at all material times ... Etete had a substantial beneficialinterest in Malabu."
Etete said he was only a consultant to the company, buthe represented the company in the court case and in allnegotiations with the oil majors, and he told the court he wasthe sole signatory to its accounts.
Documents relating to Obi's London case show that both Shelland ENI met several times with Etete to negotiate the deal. Anemail from a Shell employee to another middleman recounts how hemet Etete for face-to-face negotiations over "lots of icedchampagne".
Obi said in court he approached ENI on Malabu's behalf onDec. 24, 2009, and introduced Etete to an ENI representative todiscuss the deal.
THE GO-BETWEEN
Global Witness campaigner Tom Mayne said: "It's obvious fromthe meetings Shell and ENI both had with Dan Etete that theyknew he was the person to speak to and then agreed that the dealbe structured in such a way that it went through thegovernment."
Babatunde Oluajo, national secretary of Zero CorruptionCoalition, told Reuters his Nigerian campaign group had askedthe UK government to look into the matter.
"In regard to our ... commitment to the fight againstcorruption in Nigeria ... we wish to ... formally request for afull investigation into the activities of ... companies andindividuals in the procurement of the OPL 245 in Nigeria," readsa letter the group sent to the UK High Commissioner on July 5.
Nigerian lawmakers also began investigating the deal lastweek to ascertain if Attorney General Mohammed Aboke, who helpedfinalise the deal with Eni and Shell, had acted properly, as hisinvolvement only came to light in the London court case.
Aboke said he was acting in the interests of all parties tofacilitate a deal and end the long-running ownership disputeover the oil block. He also said in a press report last weekthat resolving the dispute would help the government attractinvestment into the oil and gas sector.
The investigations highlight the regulatory risks faced byoil companies doing business in African countries with a historyof weak governance and endemic corruption.
In the five years Abacha was in power, he liberally dishedout oil blocks to political allies and is suspected of havingenriched himself to the tune of about $4 billion before he died.
Malabu had been registered on April 24th, 1998, five daysbefore Etete awarded it block OPL 245. Three months later,Abacha died.
Though Malabu's original shareholders had been Abacha's sonand allies - and Etete himself, according to the British judgein Obi's court case - the company secretary Rasky Gbinigie toldthe court he had lost all the documents showing who owned itnow.
The ownership of OPL 245 had also been unclear ever sincethe government annulled the initial award to Malabu in 2001, andthen awarded it first to Shell and then back to Malabu after aseries of court cases.
Shell was still pursuing action to recover the block when itfinally struck the deal to buy it with ENI in 2011.
