London Court Hears Nigeria’s $1.7bn Oil Deal Suit Against JP Morgan
A London high court Wednesday began to hear a lawsuit by Nigeria against U.S. bank JP Morgan Chase, claiming more than $1.7 billion for its role in a disputed 2011 oilfield deal.
The civil suit filed in the English courts relates to the purchase by energy majors, Shell and Eni of the offshore OPL 245 oilfield in Nigeria, which is also at the centre of ongoing legal action in Italy.
A panel of judges in Milan acquitted the companies and executives, who all denied any wrongdoing of bribery, however, prosecutors appealed the ruling.
In the court documents pertaining to the London case, Nigeria alleges 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.
The trial opened with details of the claim by Nigeria’s lawyer, Roger Masefield. JP Morgan would present its defence early next week. The trial will end on April 7, 2022, and a judgment would likely take several months.
In court, Masefield explained that Nigeria’s case rested on proving two key points: there was a fraud and JP Morgan was aware of the risk of fraud.
He noted that JP Morgan had breached its duties, saying that the evidence of fraud was a little short of overwhelming.
He said: “Under its Quincecare duty, the bank was entitled to refuse to pay for as long as it had reasonable grounds for believing its customer was being defrauded.”
JP Morgan’s London offices deal with business for Europe, the Middle East and Africa, including Nigeria.
A spokesman for the bank in a statement said that it was confident that it acted appropriately in making these payments, adding that the bank would robustly defend against this claim.
The damages sought include cash sent to Etete’s company Malabu Oil and Gas, around $875 million paid in three instalments in 2011 and 2013, plus interest, taking the total to over $1.7 billion.
The Nigerian government at the time asked JP Morgan to make these transfers as part of the oilfield sale, court documents show.
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.
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