1/ The Shell & Eni trial in Milan this morning is hearing testimony from Keith Ruddock, former General Counsel for Shell's Upstream business. He will be the most senior executive yet to testify in the ongoing corruption trial. Live tweeting to the thread below. 
2/ Side gripe - Shell has taken to laying out placecards for their numerous staff in the public/ press area of the overcrowded courtroom. They were unwilling to move them so our 9 month pregnant colleague from the press can have a seat. Not the first time this has happened.
3/ Ruddock takes the stand. He's been called as a defence witness by Shell who will start the questioning. Ruddock spent 20 years at Shell from 1992 to 2012, when he left for another company. He's since retired but is a trustee and has a role at the University of Strathclyde.
4/ Ruddock led the legal wing of the upstream wing of Shell which had 175 staff. Nigeria alone had 45 staff in the legal department. He reported to the Legal Director of Shell and sat on the legal and exploration and production leadership teams for Shell.
5/ The Upstream department was lead by Malcolm Brinded, one of the defendants in the case. I should note all the defendants in the case including Brinded have pleaded innocent.
6/ Ruddock sat at what was called the Executive Committee minus 1 level, of people who reported to people on the executive committee. He first became aware of the OPL 245 matter in 2006. He was part of senior discussions in the Hague to decide what action to take.
7/ Ruddock says that the OPL 245 matter in 2010/2011 was probably in the top 20 issues but not top 10 issues absorbing his time at the time, bearing in mind he had a wide geographic mandate.
8/ Ruddock says he deputy in Sub Saharan Africa was Guus Klusener who he says was very experienced, he had been head of legal for the Sakhalin joint venture in Russia.
9/ Ruddock says he is aware of money laundering related allegations concerning Mr Klusener but these were concerning issues after Mr Klusener had left Shell and he understands there was a settlement in the case and no finding of wrongdoing.
10/ Ruddock discussed with Klusener OPL 245, the arbitration, the potential structures for resolving the matter and the ongoing due diligence to identify any red flags that could stop the transaction moving forward.
11/ Ruddock says the case was discussed at the Upstream leadership team meetings and amid a smaller sub-set of the team who had something to add.
12/ Ruddock says that Shell opted for action over the block being taken away by the Nigerian Government in 2006 in the international Arbitration courts rather than the Nigerian courts which as a foreign company suing Nigeria was seen as not as productive an option.
13/ Ruddock says the decision to sue was taken very seriously given the importance of the relationship with Nigeria. The decision was elevated to the CEO, Chief Financial Officer and Legal Director.
14/ Ruddock says they welcomed the engagement of the Nigerian Attorney General Mohamed Adoke in discussions around the case in 2010.
15/ Ruddock says they met numerous time with representatives of the Nigerian Government who sought a settlement. They suspended proceedings twice for discussions. He believed the Govt was embarrassed by the case and were concerned about the impact on investment if they lost.
16/ Ruddock comments on email which he says show that while Etete represented himself as speaking on behalf of Malabu and the Nigerian govt treated him as representing Malabu. He was not a director or shareholder and he says it was difficult to identify his actual relationship.
17/ Ruddock says the Nigerian Government encouraged and directed Shell to deal with Etete. Ruddock says that they had a difficult relationship with Etete dating back to the initial revocation of OPL 245 from Malabu in 2001.
18/ Ruddock is asked about Etete's conviction in 2007 for money laundering and an email he sent briefing Brinded and other senior managers raising this and how Shell could turn the conviction to their advantage.
19/ Ruddock says they had to ensure they weren't involved in money laundering and good due diligence. There could be an advantage in going around Etete to other shareholders in Malabu who might not be so hostile. He quickly says that of course Etete wasn't a shareholder.
20/ Ruddock says that Shell saw the Nigerian Government's involvement in any deal was also essential, Etete had suggested that they not be included at one point.
21/ Ruddock is read Shell internal emails describing Etete as Goodluck Jonathan's Oga and that he was very important and influential in Bayelsa and it was important for him to support the Jonathan initiative to give an amnesty to militants in the Delta.
22/ Ruddock is read an email detailing a proposal for Etete to set up a new corporate vehicle for the transaction that Shell could pay where Klusener says this 'clearly won't fly for us for a number of legal/ ethical reasons'. Ruddock says the proposal didn't make sense to him.
23/ Ruddock is asked about the due diligence and anti-bribery checks on transactions. He says the amount of legal support depended on the size of the transaction and Shell's investment decision manual. He says the finance department was in charge of anti-money laundering.
24/ Ruddock says that while the headline figure for how much Shell would pay was within the authority of Malcolm Brinded because of the "additional risks in the background" it was appropriate to elevate the decision to the CEO, CFO and legal director.
25/ Ruddock is asked about Shell's emails raising the exclusion of the NNPC and back-in rights. Ruddock says this "was not a usual construction" but when Malabu first had the license in 1998 and then in 2006 the NNPC was excluded by the Government.
26/ Ruddock explains that in late 2010 Mr Abacha and his associates had sued Malabu saying Etete did not have the power to do a deal. This lead to Shell using a structure where neither Shell nor Eni paid Malabu but the Nigerian Government did instead.
27/ Ruddock explains a reference to a deferred prosecution agreement was one signed by Shell with US DOJ in 2010 around "facilitation payments" made by a subcontractor to Nigerian customs officials around a separate project.
28/ Ruddock is asked if the NNPC and DPR raised concerns around the deal. He says he knew they raised concerns but assumes as the AG, Minister of Finance and Minister of Petroleum all signed the deal so he assumed that they were resolved.
29/ Shell's questions end, Mr Brinded's lawyer asks about Ruddock impression of Mr Brinded's attitude to anti-bribery. Ruddock says Brinded was passionate about addressing any breach in the business principles.
30/ Peter Robinson, former Shell head of commercial Sub-Saharan Africa lawyer takes over. Ruddock confirms that Robinson wouldn't have had decision making authority on OPL 245. He says Robinson was involved with many deals and had a lot of interaction with the Legal department.
31/ A few brief questions from advocates from the other former Shell executives, we'll have a break before cross-examination by the Public Prosecutor this afternoon.
Update on gripe - more senior lawyer representing a former Shell executive came over and apologised and wanted to make sure our pregnant colleague had a seat. Impact reporting.
32/ After a few clarifications from lawyers from Eni and Etete's lawyers the Public Prosecutor has taken over questioning.
33/ Ruddock agrees SNEPCO, Shell's subsidiary's deferred prosecution agreement was probably around November 2010. Ruddock says that SNEPCO was held accountable for its subcontractors payments. Prosecutor shows a DOJ press release saying SNEPCO knew about payments.
34/ The Prosecutor tries to ask whether Ruddock is aware of the complaint by Shell to Dutch authorities alleging Peter Robinson involvement in kickbacks in other Shell deals. Robinson's lawyer objects. The prosecutor drops the question. Robinson has denied wrongdoing.
35/ Ruddock confirms that Shell and the Federal Government continued engagement with Etete until the conclusion of the deal. Ruddock says he doesn't know who agreed the final price on behalf of Malabu. His colleagues didn't mention it to him.
36/ Ruddock is asked why they often referred to Etete as E and Malabu as M in the Shell emails. Ruddock says he see nothing suspicious in that, just convenience of typing, maybe on a blackberry or iphone.
36/ Ruddock is asked about Shell's concern about Malabu's shareholding. Ruddock says the concern was that Etete wasn't a shareholder or director.
37/ Ruddock is asked who PECOS is. He says it was a company that was the majority shareholder in Malabu at one point. He is asked who the beneficial owner was. Ruddock says he doesn't know.
38/ Ruddock had said Shell was encouraged to negotiate with Etete by the Government. He is asked, who in government. Ruddock says numerous ministers, including originally President Obasanjo.
39/ Ruddock confirms that Diezani Alison Madueke was head of Shell's external affairs in Nigeria in 2007, he's not sure when she left. An email from Shell's Nigerian country chair mentions her having a relationship with Etete, Ruddock says he never knew more than that mention.
40/ Ruddock is asked about Shell upstream leadership discussion about the problem of dealing with Etete after he was convicted. Ruddock points to a discussion saying it was difficult to deal with contract Etete directly.
41/ The prosecutor asks if anyone at Shell said stop we can't deal at all with Etete as a person convicted of money laundering. Ruddock says no, nobody said that and the government was still encouraging engagement with Etete.
42/ Ruddock is asked about the mention of Nigeria regulations generally barring international companies owning more than 40% of any one block. Shell and Eni end up owning 100%. Ruddock says the key point is 'generally' and the Government can make exceptions.
43/ Ruddock is challenged on what he meant by back channels. The dictionary suggests secret, unofficial means of communication? Ruddock says no, its a normal business practice to have off the record communications with government. He didn't know who the back channel person was.
44/ Ruddock is asked about an email from a Shell business advisor, Copleston, referring to General Gusau, former head of intelligence. Ruddock says he wasn't on that email. He didn't know Copleston, knows he worked at the British High Commission but does know if he worked for MI6
45/ Ruddock says he doesn't recall the email from Copleston to Klusener (who reported to Ruddock) which reported a meeting when Etete brought two people with him to a meeting with Shell, one of whom it was suggested would report back to Gusau.
46/ Ruddock says he never saw the email marked OPL 245 brief. Prosecutor says despite you being head of legal you didn't see it? No says Ruddock. The discussed the payment by Shell and Eni and whether it would satisfy "players in Abuja" Ruddock says he don't know who that is.
47/ Ruddock is asked who he thought had to agree a deal other than Dan Etete. Ruddock says he only knew the parties were Malabu and the FGN, he doesn't know which individuals were involved.
48/ Ruddock is pressed on whether it was unethical to do a deal direct to a new Etete controlled entity. He says it was not necessarily unethical for Shell to pay Malabu as they had dealt with Malabu before. But paying Etete directly through a separate structure would be.
49/ Ruddock is presented with an email where he wrote about being confronted by revenue transparency NGOs at an EITI meeting about the problem of any deal which involved Etete.
50/ Ruddock says NGOs (@Global_Witness ) were concerned if any deal would benefit Etete. Ruddock wrote I indicated that Shell was aware of E's history and would conduct its activities accordingly.
@Global_Witness 51/ Ruddock is pressed on what Shell meant. He says it would have been unacceptable to pay Etete directly. He's asked if indirectly was fine? He responds "its complicated" saying it was still unclear what Etete's relationship with Malabu was & if he was a beneficial ownership.
@Global_Witness 52/ Ruddock is asked about a email where Klusener is told about the Swiss bank BSI Lugano refusing the OPL 245 payment from JP Morgan bank on 'compliance grounds'. Ruddock says Klusener didn't brief him on what those grounds that lead the Swiss bank to refuse the money were.
@Global_Witness 53/ The lawyer for the Federal Republic of Nigeria had a few questions, confirming that Ruddock was in fact forwarded one email. Ruddock apologised for not recognising that earlier. No more questions for Ruddock.
@Global_Witness 54/ The public prosecutor says he is still considering whether to insist that Maarten Wetselaar, a senior Shell executive, currently head of the company's integrated gas and new energies wing should have to give evidence. Shell included him as a witness wants to withdraw him.
@Global_Witness 55/ That's the end of the hearing for today. The court will sit again next week. Follow me for future updates and hearings.
You can read @Global_Witness investigations into the #malabu scandal at globalwitness.org/en/campaigns/o…
You can read @Global_Witness investigations into the #malabu scandal at globalwitness.org/en/campaigns/o…
@Global_Witness 56/ Feel free to send any questions as well (caveat- I'm not a lawyer). You can also find public documents around the trial and the deal at shellandenitrial.org
