EdenTree Investment Management has raised concerns about corruption risk at Shell that could hit shareholders in the pocket as the oil major faces a fresh round of allegations based on its conduct in Nigeria.
The company has been accused of making improper payments totalling $1.3bn to Nigerian officials between 2010 to 2011 in order to gain an exploration license, an investigation by Buzzfeed and Italian newspaper Il Sole reported over the weekend.
Italian oil major Eni is also implicated, but has denied wrongdoing. Shell confirms that payments were made, but argues it was a “fully legal transaction” with the government of Nigeria, the New York Times reports.
However, Ketan Patel, fund manager at EdenTree Investment Management says if allegations are proven correct Shell appears to have failed in delivering much needed change within the company’s culture.
“For resource companies operating in difficult countries in the developing world such as Nigeria, the risk of being complicit in illegal activities is a risk that needs to be assessed and continually reviewed.
“Failure to do so will result, not only, in reputational damage, but significant financial losses which will ultimately be borne by the shareholders.”
The company already has a chequered past in Nigeria, Patel notes, including a $30m criminal fine to settle bribery charges in the country, as part of a larger fine levied by the US SEC in 2010.