The CEO of Italy's Eni faces accusations that he approved
bribery payments
By Sarah McFarlane and Eric Sylvers
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 27, 2020).
By some measures, Claudio Descalzi is one of the most
influential chief executives to lead Italian oil giant Eni SpA. But
after 39 years with the company -- the last six as CEO -- he is on
trial, facing charges that he orchestrated the company's payment of
$1.3 billion for drilling rights in Nigeria with the understanding
that most of the money would be paid out in bribes.
As Mr. Descalzi fights the charges in a Milan court, he is vying
for a third three-year term as Eni's CEO. He defends his tenure
leading Italy's second-largest company and denies taking part in
any illegal activity. He wants another term, he said, to continue
transforming Eni and grooming its future leadership.
"I'm not done," he said in an interview with The Wall Street
Journal.
The Italian government, which owns 30% of Eni and picks its
chairman and chief executive, will decide whether to renominate the
64-year-old Mr. Descalzi by May. The government declined to
comment.
The high-profile court case is a rare example of top managers
from Western energy companies facing criminal charges. The trial
revolves around Eni and Royal Dutch Shell PLC's joint purchase of
drilling rights for a block off the coast of Nigeria in 2011 and
has entangled former Shell executives. The companies deny any
wrongdoing. The Milan prosecutors who brought the charges declined
to comment.
Eni and several current and former top managers have been
subject to investigations by Italian prosecutors, who have
questioned the company's legal and compliance practices amid
increasing global oversight of the oil industry.
The verdict, which could come as early as March, can be appealed
twice in the Italian court system. But Mr. Descalzi said that if
found guilty, he would likely resign rather than await the outcome
of a yearslong appeal process. Mr. Descalzi has cut ties with
former longtime loyalists, including Eni's previous head of legal
and compliance, whom he fired last year.
Mr. Descalzi made his mark quickly after ascending to the top
spot in 2014, from his previous position as chief operating officer
of exploration and production, changing an Eni corporate structure
that had existed for 25 years so that all business units report
directly to the CEO. He did it in a month without consultants --
whom, along with bankers, he avoids when possible.
He orchestrated more than $10 billion in deals by reaching out
directly to other CEOs, as he sought to lower Eni's relative
exposure to Africa, where it is the biggest Western producer. When
Eni sought to sell a stake in a natural gas project, Mr. Descalzi
said he sealed the $375 million deal with BP CEO Bob Dudley over
coffee at the Hotel Danieli in Venice, where they were attending a
conference.
When asked about Mr. Descalzi, Mr. Dudley said he is
"straightforward and easy to work with."
In the past decade, Eni has discovered almost 14 billion barrels
of oil equivalent, more than double its large American and European
peers including Shell, Exxon Mobil Corp. and BP, according to
consulting firm Rystad Energy. In the 10 years through 2018, Eni
had a drilling success rate of 45%, about 10 percentage points
higher than the industry average, according to consulting firm Wood
Mackenzie.
The company's share price, however, has fallen by a quarter
during Mr. Descalzi's time as chief executive -- a slightly better
performance than Exxon but worse than other industry peers
including Shell and BP. Analysts say shareholders don't often
reward exploration success immediately because it takes years to
start up production.
Eni's willingness to explore in risky places exposed the company
and its executives to countries that are known to struggle with
corruption. Nigeria, where Eni produces around 100,000 barrels a
day of oil equivalent, was in the top 20% of the most corrupt
countries in the 2019 Corruption Perception Index, published by
charity Transparency International.
While many large energy companies forecast oil demand to drop,
Mr. Descalzi expects growth in developing countries to make up for
any declines in advanced economies. Still, he has pivoted toward
gas and away from oil, as others in the industry have done.
Mr. Descalzi, who joined Eni in 1981 as a petroleum engineer,
rose to the top from modest beginnings. He said in the interview
that his father was a poet and writer so focused on his creative
work that their family sometimes lacked money for food. Christmas
and birthdays passed uncelebrated, and Mr. Descalzi said he often
wasn't allowed to play. That made forming friendships difficult as
a child, and he said he still doesn't have close friends, in part
because he travels so often.
"I was fighting every day because we were a very poor family,"
Mr. Descalzi said. The experience left him determined to carve out
a more comfortable and secure life for himself.
Mr. Descalzi, an only child, has four children with his
Congolese wife, Marie Madeleine Ingoba, whom he met in France in
1982.
Ms. Ingoba is also wrapped up in legal matters related to Eni.
Italian prosecutors are investigating her and Mr. Descalzi for an
alleged conflict of interest involving Eni contracts in Congo
Republic. No charges have been filed. Prosecutors are looking into
whether Ms. Ingoba owned a company that did work for Eni, something
that wasn't declared. Mr. Descalzi and prosecutors declined to
comment on the probe.
Italian prosecutors also are investigating Ms. Ingoba on
possible corruption charges related to the Congo Republic
contracts. Her lawyer, Davide Steccanella, said his client is a
good person and declined to comment on the probe.
When he isn't working, Mr. Descalzi likes to ride motorcycles --
what he refers to as his only passion -- especially his secondhand,
limited edition Harley-Davidson.
"It's freedom, it's fast, I don't have to wait in long queues,"
said Mr. Descalzi, who doesn't like to sit still and when traveling
prefers ordering hotel room service to waiting in restaurants.
"When he says, 'You have to prepare this note; don't worry, give
it to me tomorrow,' after a few hours he calls you and says, 'Have
you prepared the note?'" said Francesco Gattei, Eni's executive
vice president of upstream for the Americas.
Although he can come off as tough, unpretentious and a bit
reserved, Mr. Descalzi can be engaging and affable, say analysts
who have spent time with him.
"If you're in Africa with him in the middle of the jungle in
Congo, at the canteen at an Eni site, the chefs come out and bring
the Parmesan to grate over his pasta and give him a hug and
high-five him," Bernstein analyst Oswald Clint said.
Write to Sarah McFarlane at sarah.mcfarlane@wsj.com and Eric
Sylvers at eric.sylvers@wsj.com
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