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Vol 62 No 14

Published 8th July 2021


Italy's Eni misled shareholders

New oil database shows the political connections of Eni's partner, and contradicts the company's claims to shareholders

New disclosures show that the publicly listed Italian oil major Eni misled its shareholders over its business ties to one of Congo-Brazzaville's most controversial and powerful political figures, Africa Confidential can reveal.

A key licence partner of Eni's, Africa Oil and Gas Corporation (AOGC), has been at the centre of numerous corruption scandals, including a Milan corruption probe that Eni paid €11.8 million to settle in March (AC Vol 62 No 8, Eni handed oil stakes to officials). According to the plea bargain, Eni granted AOGC oil licences worth several million dollars, in return for securing licence renewals on advantageous terms.

AOGC had long been tied to Denis Gokana, oil advisor to Congo-B President Denis Sassou-Nguesso and then head of the national oil company (AC Vol 50 No 21, Brazzaville counts on France and the IMF). However, questioned on the matter at its 2017 annual shareholder meeting in the context of the corruption probe, Eni stated that its own 'in-depth investigations' revealed that Gokana left AOGC as both a manager and shareholder in November 2005.

But a new Hydrocarbons Repository, established by Congo-B as a transparency move, says that since at least 1 November 2010 Gokana has been the ultimate owner of the entirety of AOGC. Gokana is also CEO of AOGC, according to the Repository.

The disclosures also cast doubt on Eni's statement at a 2018 annual general meeting that Gokana 'held no direct or indirect interests in Petro-Congo', as the company is one third-owned by AOGC.

Given the corruption risks, the disclosure of Gokana's ownership of AOGC also has implications for other oil companies. Norwegian and French juniors Hemla and Perenco are in joint ventures with AOGC, according to reports from the Extractive Industries Transparency Initiative. Mercuria – one of the world's top commodity traders – has also partnered with AOGC. Total divested certain licence interests when the Congolese government awarded stakes to AOGC and one of its subsidiaries, citing potential compliance concerns.

According to the Milan plea bargain, in 2014 and 2015 Eni granted AOGC and other companies associated with Congolese public officials oil licence interests worth US$77 million in return for securing licence renewals on advantageous terms. Gokana, AOGC and Petro-Congo were among those named as having benefitted from the arrangement. Eni – owned 30% by the Italian state and listed on the New York and Milan stock exchanges - is Congo-B's second largest oil producer, after France's Total.

The illicit agreement further involved the allocation of a 23% share in an oil licence worth an estimated $23m to World Natural Resources, a British company linked to senior Eni executive Roberto Casula, according to the plea bargain. AOGC, an existing licence partner, brokered the deal by exercising its right to first refusal to secure the 23% share and immediately flipping it on to WNR, Global Witness reported.

Earlier corruption trials implicating Gokana include one in a London high court in 2005. Under his control and instruction, AOGC was used as a 'façade' in a series of 'sham transactions' set-up to defeat the claims of Congo's creditors, the judge found. AOGC further profited from under-priced oil cargoes sold by Congo's national oil company and its subsidiary Cotrade, while all three entities were under Gokana's effective control, the judge reasoned, representing a major conflict of interest and cost to the state. In the same year, AOGC made substantial payments to a company owned by President Sassou-Nguesso's son, Denis Christel, which paid off his credit card bills for lavish shopping sprees (AC Vol 62 No 13, A fox guarding the hen house).

Regarding the Milan case, Eni said that 'it is not involved in any corrupt conduct with regard to its activities in Congo'. The company said on its website that the settlement was reached 'after the reduction of the alleged offence to undue inducement by the Court of Milan'.

As evidence submitted in the case, former Eni director Luigi Zingales said he raised concerns about Gokana's role in AOGC, only to have them brushed aside by CEO Claudio Descalzi. Zingales reportedly claimed the company 'did not seem to want to do any serious study' on AOGC's ultimate owners, and that Descalzi 'told me my behaviour was paralysing Eni's commercial activities'. Eni told Africa Confidential that Zingales' statements were 'seriously incorrect'.

Eni also said that it hired a 'specialised third party' to conduct due diligence on its Congo activities in 2013 and 2015, and this resulted in 'a favourable opinion to go on with the deals'. Despite the new disclosures, Eni reiterated that 'the documents show that he [Gokana] left AOGC in 2005, both as a shareholder and as a manager'.

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