Nigerian government on Tuesday suffered a huge financial and legal loss as a U.S. bank, JP Morgan Chase, won a $1.7 billion lawsuit against Nigeria in a London high Court
The London court cleared JP Morgan of the civil suit filed against it by Nigeria over the purchase by energy majors Shell and Eni of the offshore OPL 245 oilfield in Nigeria.
The court ruled that Nigeria was not defrauded in the $1.7bn claim against United States bank, JP Morgan Chase for its role in a disputed 2011 oilfield deal.
Nigeria had alleged that JP Morgan was, “grossly negligent” in its decision to transfer funds paid by the energy majors into an escrow account to a company controlled by the country’s former Oil Minister, Dan Etete, instead of into government coffers.
However, the bank rejected Nigeria’s claims, maintaining that all due processes were followed and money laundering checks were done, arguing that allegations of fraud only came up after a new government took over in Nigeria.
In February, the London court began hearing a lawsuit launched by Nigeria against JP Morgan Chase for its role in the disputed 2011 oilfield deal.
The trial of the long-running case started with details of the claim by Nigeria’s lawyer, Roger Masefield.
The American bank had faulted the allegations leveled against it by the Nigerian government in the controversial Malabu scandal.
The Nigerian government under the administration of former President Goodluck Jonathan and a former Nigerian Attorney-General and Minister for Justice, Mohammed Bello Adoke had claimed more than $1.7 billion from JP Morgan’s role in the controversial deal.
The government had alleged that the bank was “grossly negligent” in its decision to transfer funds paid by oil giants Shell and Eni into an escrow account owned by Malabu, a company controlled by a former Nigerian oil minister, Dan Etete.
The London case dates back to 1998 when Nigerian military ruler Sani Abacha awarded the offshore oilfield licence, OPL 245, to a company Etete owned.
The $20 million price tag – of which Etete paid about $2 million, according to court documents – was widely viewed by industry experts as too low given the block was expected to yield billions of dollars of crude, although it remains undeveloped.
Subsequent Nigerian administrations contested Etete’s rights to the field, triggering years of legal wrangling until a deal designed to end the battles was struck in 2011.
Etete’s company Malabu Oil and Gas handed the undeveloped OPL 245 back to Nigeria as part of a resolution agreement involving Shell and Eni.
To complete the deal, Shell and Eni paid a signature bonus of about $200 million directly to the Nigerian government and then deposited $1.1 billion in the Nigerian government’s escrow account with JP Morgan, court documents show.