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Abuja challenges a gigantic court judgement against it by arguing that the claimants had planned it all as a scam from the start
Faced with the prospect of its oil and gas revenues falling this year by at least US$26.5 billion, President Muhammadu Buhari's government sees the dismissal of a $10bn judgement against it by a construction company and a London hedge fund – backed by a senior British government minister – as a strategic priority. After a decade of courtroom battles across the world, the case is finally edging towards a close.
Abubakar Malami, Nigeria's Attorney-General, scored two tactical victories in courts in New York on 14 May in the country's dispute with Process and Industrial Development which says Nigeria reneged on a 2010 gas and power contract. P&ID, a British Virgin Islands company, was formed by two well-connected Irishmen who had been selling arms to Nigeria's military since the 1980s (AC Vol 60 No 17, Executive exerts its privilege).
P&ID blames the Nigerian government for the company's failure to build a plant to generate electricity from 'waste' gas, and sought compensation for loss of all its potential future earnings. Specifically, P&ID claim that the Nigerian government had not, as it was supposed to under the contract, secured the necessary gas.
Neither of the two international oil companies, Addax and ExxonMobil, operating in the area where the gas plant was meant to be built had made any arrangements to supply the required gas.
An arbitration tribunal in London found in favour of P&ID seven years after it signed the contract. That ruling was upheld last August, with the court awarding the firm a $6.6bn judgement. With interest, the total is now nudging $10bn, more than twice what Nigeria spends annually on education, health and counter-terrorism combined.
Nigeria hopes to overturn that decision and revoke the award when the case returns to London in the next few weeks. Under Goodluck Jonathan's presidency, the government's legal strategy had been to dispute the circumstances around the original contract award and then the seat of arbitration, liability and quantum of damages in court while also seeking to settle with P&ID, which P&ID rebuffed.
The gas plant contract was invalid because neither the petroleum resources minister nor officials in the ministry had the constitutional right to sign it without approval from the federal executive council in Abuja, Malami told Africa Confidential last year.
After the arbitration award was confirmed in London last year, President Buhari intervened directly, telling the UN General Assembly in September: 'The present Nigerian government is facing the challenges of corruption head-on. We are giving notice to international criminal groups by the vigorous prosecution of the P&ID scam attempting to cheat Nigeria of billions of dollars.'
At the Southern District Court in New York, which hears some of the most complex financial fraud cases, Malami applied to subpoena records from banks that may have worked with P&ID, and VR Advisory Services, a hedge fund that acquired a 25% stake in P&ID after the 2017 award was made.
Malami submitted a 56-page statement outlining his case: that the P&ID contract was from the beginning intended to create a lucrative judgement in favour of a company with no track record in construction; that due process was not followed, and instead manipulated by a small cabal of ministers and aides; and that since September 2019 evidence has emerged that proves systemic corruption. 'The only thing P&ID engineered was a fraudulent arbitration claim,' he said.
P&ID, represented by Kobre & Kim, an international law firm that worked with Low Taek Jho, the fugitive businessman at the centre of the 1MDB corruption scandal in Malaysia, did not challenge the orders. But iNHouse, a PR agency linked to the ruling Conservative Party in Britain, described the exercise as a 'a desperate attempt to substantiate Nigeria's spurious allegations of fraud.'
Britain's Home Secretary Priti Patel, previously Secretary of State for International Development until she was forced to resign because of ministerial misconduct in November 2017, has written in the British press defending P&ID's claim and condemning Nigeria's rejection of it.
iNHouse lobbyists said that witnesses in Nigeria had been coerced into making false confessions. 'The claim that P&ID deliberately concealed documents by destroying them is totally false,' iNHouse told Bloomberg, after records relating to the company were lost in a fire.
Malami says the architects of what he now calls a scam were Rilwanu Lukman and Michael Quinn, respectively Minister of Petroleum Resources and head of P&ID at the time of the original 2010 contract. Lukman died in 2014. Quinn died the following year (AC Vol 59 No 17, Blame game scuppers reform).
Two officials linked to Lukman, one of whom is a co-operating witness, say in statements that they received payments from P&ID, including a bag containing $50,000 in cash after a dinner in 2009 at Chopsticks, a Chinese restaurant in Abuja.
Malami says Mohammed Adoke, his predecessor as Attorney-General, and Diezani Allison-Madueke, Lukman's successor, both linked to separate corruption scandals, then conspired to facilitate the scam against Nigeria. Allison-Madueke has been unable to leave Britain since 2015 when the authorities seized her passports and launched an investigation into the sources of her personal wealth.
Malami insists the Buhari government is deadly serious about its anti-corruption campaign. It secured 603 convictions on corruption charges between 2015-18, he says, snagging Joshua Dariye and Jolly Nyame, two former State Governors (AC Vol 59 No 15, The probity contest). It is also pursuing international oil companies Shell and ENI in connection with allegations that they bribed senior officials in the Jonathan administration to secure OPL 245, one of the region's biggest oil blocks, in 2011, at well below market prices.
But Malami is much less clear on other issues. Bayo Ojo, also a former Attorney-General and Nigeria's representative on the arbitration panel considering the P&ID dispute, differed from colleagues only on the scale of the January 2017 award. Ojo himself denies allegations by Italian prosecutors in December 2017 that he received $10 million as part of a separate criminal conspiracy to defraud Nigeria over the transfer of OPL 245 in 2011 (AC Vol 59 No 25, Sharks in an oily soup).
Malami also accepts claims by Odein Ajumogobia, a lawyer who specialises in international arbitration and was Minister of State for Gas at the time of the 2010 P&ID contract, in his own witness statement, that he did not know anything about the deal. Neither was Ajumogobia aware, he said, that a partner in his own law firm was subsequently given the job of defending Nigeria, unsuccessfully as it turned out, against P&ID. However, the partner claims Ajumogobia was well aware of the case.
Moreover, Malami does not explain why it was only after he had been in office for three years, after such desultory management of the arbitration process and after President Buhari had publicly raised his objections to any kind of settlement, that serious investigations by the Economic and Financial Crimes Commission (EFCC) in Abuja began into allegations of corruption over the P&ID deal.
Other sources say Malami had earlier recommended that Buhari adopt the proposed compromise negotiated by his predecessors of a $100m cash payment and an oil licence.
'Of course we all knew what was really going on,' says a leading figure in the current administration. 'The true facts would embarrass a great many people.' But any notion that Malami has tried to cover up the true scale of corruption around P&ID is not one that P&ID is likely to raise when the case comes back to London. P&ID insists there was no corruption and its intentions were wholly honourable.
Reputations and ruination
Insiders in Abuja say the scale of the Process and Industrial Development saga, one of the biggest awards for a project that was never built, suggests that a much wider range of political and corporate interests are tied up with it than have come to light so far. Here is the cast list ahead of the next hearings in London when Nigeria will press its claim of grand corruption against P&ID.
Rilwanu Lukman, as Minister for Petroleum Resources in 2008-10, had championed reforms for the local processing of associated gas into electricity in Nigeria. Well-respected internationally as a former President of the Organisation of Petroleum Exporting Countries, Lukman, who died in 2014, seems an unlikely candidate to be at the centre of one of Nigeria's biggest fraud cases.
Taofiq Tijani, Lukman's technical assistant, is co-operating with the Economic and Financial Crimes Commission and has a plea bargain with the authorities in Abuja. He says Lukman told him to facilitate the P&ID deal and that he, Tijani, was 'repeatedly bribed' by P&ID.
Grace Taiga, legal director at the Petroleum Ministry under Lukman, has also confessed to receiving payments from P&ID. Nigeria says these are supported by bank records.
VR Capital, with offices in London, New York and Moscow and 'a presence' in Argentina, advertises itself as a hedge fund trying to achieve 'superior risk-adjusted returns through investments in distressed securities with a strong focus on emerging markets'. Despite its claims to have more than 100 years of experience in its top management team, VR Capital doesn't reveal the identity of its staff, other than Ashok Raju in New York.
Michael Quinn and Brendan Cahill, Irish co-founders of P&ID, were veterans on Nigeria's contracting scene, covering everything from weapons to medical supplies.
General Theophilus Danjuma, who fought in the civil war alongside Buhari and is now a billionaire businessman, knew Quinn and Cahill. Danjuma's company, Tita-Kuru, told Nigerian officials that it drew up some plans for a gas project at a cost of $40m which P&ID managed to obtain without paying.
Mohammed Adoke and Diezani Allison-Madueke were appointed Attorney-General and Minister of Petroleum Resources respectively by Goodluck Jonathan in 2010. Adoke and Allison-Madueke have been linked by prosecutors in Milan to a criminal conspiracy of corruption around the disputed transfer of the OPL 245 block to Royal Dutch Shell and ENI in 2011. Both Adoke and Diezani deny wrongdoing, as do Shell and ENI.
Abubakar Malami acted as Muhammadu Buhari's lawyer in court challenges to his defeats in presidential elections in 2003, 2007 and 2011. Critics say he has adopted inconsistent positions on high-profile commercial disputes, arguing both for and against settling with Shell and ENI on OPL 245. At one point, he argued for softening penalties against MTN, South Africa's mobile operator, which had been fined $5.1bn for breaching the law on telecommunications security (AC Vol 59 No 19, Big business gets stuck into the elections).
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