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The highly publicised corruption trial which alleges that oil majors Eni and Shell took part in an unlawful acquisition – that of the OPL 245 oil licence in Nigeria – entered its final phase on Monday, 21 September in Milan, with the defence presenting its case.
Key business and political figures were set to go before the Italian court in relation to a Nigerian business deal dating back to the early 2000s. The corruption case is one of the largest in the oil industry’s history.
The managers accused include Eni CEO Claudio Descalzi and his flamboyant predecessor, Paolo Scaroni, a personality from the Italian employers’ federation Confindustria. A no less notable protagonist in the case is Paola Severino, who formerly served as Italian minister of justice in Mario Monti’s cabinet from 2011 to 2013 and is defending Descalzi.
The criminal lawyer Nerio Dioda, active in the Milan Bar Association, is defending Italy’s Eni, which has solid ties with the Italian government and the political establishment.
$1.1bn in bribes
A Milan court, which opened the proceedings in spring 2018, alleges that most of the money Eni and Shell paid in 2011 to acquire the exploration licence for the OPL 245 offshore oil block in Nigeria went towards bribes.
The amount involved is around $1.1bn, out of a total transaction price of $1.3bn. Eni’s CEO and the company itself deny the corruption allegations being brought against them.
Nevertheless, on 21 July prosecutor Fabio De Pasquale requested severe punishments for executives from two oil companies and for several Nigerian, Italian and Russian middlemen: an eight-year jail sentence for Descalzi and Scaroni; a seven-year and three-month jail sentence for Malcolm Brinded, ex-boss of Shell’s exploration and production division; and a 10-year jail sentence for former Nigerian oil minister Dan Etete.
De Pasquale, who was a key prosecutor in the mani pulite (“clean hands”) judicial investigation which targeted political corruption in Italy in the 1990s, has been heavy-handed in his latest case: the sentence he requested for Descalzi is the maximum prison penalty a business executive can face for international corruption under Italian law.
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If he is convicted, Descalzi’s future could be imperilled. His appointment as Eni CEO was renewed in May 2020 for three years despite the ongoing trial. Descalzi himself took over the company after his predecessor Scaroni was found guilty in April 2014 of environmental crimes during his previous tenure at the electric utility company Enel. The same causes have the potential to produce the same effects.
Italian political environment
Essentially, the outcome of the proceedings will rest on the Italian government’s stance – Prime Minister Giuseppe Conte and the Five Star Movement are currently at the helm – and the country’s political situation. Italy’s stake in Eni amounts to just 30%, but it has a decisive influence over the company’s executive appointments, especially the position of CEO.
“Up until now, in spite of transparency and governance scandals, the successive national and regional governments, no matter their political affiliation – the Democratic Party, the Five Star Movement or the Northern League, which is powerful in Milan – were happy with Eni’s financial situation, as Descalzi restructured the company and got it back on track, whereas it was struggling before he came onto the scene,” said Antonio Tricarico, who is part of the Italian financial transparency NGO Re:Common and has been following the case for nearly a decade.
Who will replace Descalzi if he’s found guilty?
Another piece of information needs to be taken into account: it will be hard for the Italian government to find someone to replace Descalzi.
“Less political than his predecessor, this trained engineer had the backing of most operational staff and his rare critics were either former close associates of Scaroni – who is no more of a saint than Descalzi – or people who had gradually been edged out, as demonstrated by the fate of Professor Luigi Zingales, a director appointed by the Renzi cabinet, who resigned from his role in 2015, and Karina Litvack, another director, who was responsible for sustainable development and risk management. We have hardly heard from her anymore,” added Tricarico.
According to this expert on the inner workings of the Italian justice system, after the defence presents its case, with hearings scheduled to go on for several weeks, the Milan court is expected to hand down its ruling at the end of 2020.
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