P&ID $11b award against Nigeria obtained by fraud, Tinubu hails victory

• AGF reveals P&ID overtures for out-of-court settlement
• Nigeria must engage experts to study international agreements, says Falana
• A lesson for the Bar, Bench to improve on justice delivery, Okutepa, Akinola, Akingbolu say

After a long, tortuous legal battle, it was a ‘sweet’ win for Nigeria yesterday, and a narrow escape from a hefty penalty over a failed 2010 deal to develop a gas processing plant in the country.

Justice Robin Knowles of the Commercial Courts of England and Wales halted enforcement of a $11 billion Process & Industrial Developments (P&ID) Limited arbitration award against Nigeria.

According to the judge, the company’s award against Nigeria was obtained by fraud.
“In the circumstances and for the reasons I have sought to describe and explain, Nigeria succeeds on its challenge under section 68. I have not accepted all of Nigeria’s allegations, but the awards were obtained by fraud and the way in which they were procured was contrary to public policy,” Justice Knowles ruled.

In January 2010, a Virgin Islands-registered company founded by two Irish business partners, P&ID, signed a Gas Supply and Processing Agreement (GSPA) with Nigeria to develop a processing plant in Calabar, Cross River State capital, but the deal failed in August 2012 and the company sought a $5.96 billion compensation from Nigeria with arbitration proceedings against the country at the London Court of International Arbitration.

In January 2017, the arbitration said Nigeria breached the contract and ordered the country to pay the company $6.6 billion with interest starting from May 2013. Before the verdict, the interest fixed at seven per cent ($1 million daily) had accumulated to $9.6 billion, but which has now accrued interests to $11 billion.

According to the firm, the alleged violation frustrated the construction of the gas project agreed to during the government of former president Umaru Yar’Adua and deprived P&ID the potential benefits expected from 20 years’ worth of gas supplies with “anticipated profits of $5 to $6 billion.”

An initial out-of-tribunal agreement for the payment of $850 million was reached by the Goodluck Jonathan administration and the disbursement was passed on to the Muhammadu Buhari administration.

Buhari, however, balked at the idea of paying the negotiated sum, set aside the settlement agreement and challenged the enforcement of the award before the English Commercial Court.

Subsequently, Nigeria filed an appeal against the enforcement of the award and the court granted the relief sought by the country in September 2020.

The Nigerian side argued that there was enough evidence that the contract and the arbitration award were procured by fraud. It thereby urged the court to set the award aside, saying that some individuals in the case were being tried for money laundering and graft.

In his ruling, the judge not only agreed that the arbitration awards were obtained by fraud but also that the manner they were procured were contrary to public policy.
Heaving a sigh of relief, President Bola Tinubu described the judgment as a victory for Africa. The President commended Justice Knowles for “prioritising the merits of the case above all other considerations.

“This landmark judgment proves conclusively that nation states will no longer be held hostage by economic conspiracies between private firms and solitarily corrupt officials who conspire to extort and indebt the very nations they swear to defend and protect,” the President said in a statement by his spokesman, Ajuri Ngelale.

“Today’s victory is not for Nigeria alone. It is a victory for our long exploited continent and for the developing world at large, which has for too long been on the receiving end of unjust economic malpractice and overt exploitation.

“Nigeria is appreciative of the tremendous efforts of the defense team and acknowledges the role of the Federal Ministry of Justice and the Office of the Attorney-General in the process of defending Nigeria’s interest in this case,” the President stated.

Also, the Federal Government hailed Monday’s judgment. Reacting to the judgment midway into the Federal Executive Council (FEC) meeting presided over by President Tinubu yesterday, Attorney General of the Federation (AGF) and Minister of Justice, Lateef Fagbemi, expressed government’s satisfaction with the verdict, describing the judgment as a triumph over corruption and predatory international investors.

He credited the court victory to the close collaboration between various government agencies, including the Federal Ministry of Justice, Economic and Financial Crimes Commission (EFCC), Nigerian Police Force (NPF), Central Bank of Nigeria (CBN), Ministry of Petroleum Resources, the Nigerian National Petroleum Company (NNPC) Limited, Department of State Security Service (DSS) and the Nigerian Financial Intelligence Unit (NFIU).

According to him, associates of P&ID had last week approached the Nigerian government for an out-of-court settlement. Fagbemi further said hearings in the United Kingdom (UK) court would determine the costs to be paid by P&ID and other involved parties.

The Minister said: “The arbitral award had over the years, played the assets of the Federal Republic of Nigeria (FRN) and those of its agencies all over the world, at the risk of attachment, erosion of foreign reserves and distortion of monetary, fiscal and other policies of government with attended dire consequences for Nigeria and its people. These emphasised the need for FRN to vigorously challenge and resist the enforcement of the award by P&ID.

“The judgment handed down today found that the award had been obtained by fraud and in a way, which goes contrary to public policy. In particular, the judge concluded that P&ID obtained the award by practicing the most severe abuses of arbitral process. It has been a night of long nights indeed.

“The success marks the culmination of a decade of legal action and is not just a victory for the poor of Nigeria but any similar target of corruption and fraud.
“This successful result is a decisive victory for the people of Nigeria, who stood to lose over $11 billion and for the administration, which has now reached a milestone in its mission to challenge the scourge of corruption.

“The judgment also serves as a damning indictment of predatory international investors, who should now rightfully be deterred from prying upon Nigeria and other developing nations to satisfy their greed.

“P&ID and its associates, both Nigeria and the world over, shamelessly attempted to defraud the country and enrich themselves through sharing FRN’s privileged documents, fraud, bribery and corruption on an industrial scale. Those efforts, which took place over many years, have now finally been uncovered for all of us to see.

“It is imperative to point out that several agents of P&ID made overtures even as at last week to the Federal Republic of Nigeria for settlement on this case, however, the resolve of the administration of President Tinubu not to go hand in gloves with fraudulent counterparties or condone corruption informed the position of Nigeria to hold fast to its position, not to settle.

“There will be further hearing by the United Kingdom court on the heels of this judgment to determine costs payable by P&ID and others in the matter.”

EFCC also applauded the judgment. Irked by the shadiness and hollowness of the claims of P&ID, it stated that Nigeria began investigating the company through the EFCC and found evidence of two bank transfers totalling $20,000 made by Dublin-based Industrial Consultants (International) Ltd. — part of the P&ID group of companies — to Grace Taiga, a Nigerian government lawyer, who oversaw the award of the gas plant contract.

Based on this new evidence, Nigeria filed fraud challenges against P&ID but the company has failed to respond to the charges. Trials of key suspects allegedly involved in the fraud are ongoing at various levels of court in Abuja.

Two British nationals, James Richard Nolan and Adam Quinn (at large), were, on October 18, 2021, re-arraigned before Justice D.U. Okorowo of the Federal High Court, Abuja, for their alleged complicity in the controversial contract.

The defendants, both directors of Goidel Resources Limited, a Designated Non-Financial Institution (DNFI) and ICIL Limited, were docked on a 32 count-charge bordering on money laundering. Their trial still continues.

Reacting to the judgment, human rights lawyer, Mr Femi Falana (SAN) lauded FG for successfully quashing the arbitrary award against it, and urged the government to engage experts to study local and international agreements going forward.

“I congratulate the Government and people of Nigeria for the legal victory. It is hoped that the Federal Government will learn to engage experts to study and scrutinise all local and international agreements,” he said.

Former Dean, Faculty of Law, Redeemer’s University (RUN), Ede, Prof. Bukola Akinola, said the news of the arbitral award unsettled the government and people of Nigeria, especially as it relates to a purported breach of contract.

“One wonders the extent of liability and the socio-economic implications of implementing such an arbitral award in favour of P&ID considering the frail state of the Nigerian economy. The success of this appeal process is cheery news, which calls to question the need for patriotism among Nigerians in all walks of life.

“There is no doubt that the arbitral award is a breath of fresh air for good governance and especially the office of the Attorney General of the Federation who has worked assiduously to ensure that our external and internal assets are not depleted on the altar of previous seemingly poor corporate governance culture,” he stated.

He noted that fraud was one of the grounds for setting aside the previous award, according to the court.

His words: “It is a trite principle of arbitration that where fraud is established in obtaining an award, it is a ground for setting aside such an award on appeal. It is in the light of the above that all the security agencies concerned and the Federal Ministry of Justice, Ministry of Petroleum Resources, and other stakeholders deserve commendation for this national salvage.

“Permit me to commend the sense of patriotism of the Former Attorney General of the Federation, Chief Bayo Ojo, (SAN) who gave a dissenting award during the hearing of the case. The dissent opinion, I believe, strengthened Nigeria’s case at the Appellate level.

“The government of President Bola Tinubu ought to ensure efficient coordination of international and local agreement, be it bilateral or otherwise to ensure that embarrassing situations such as this award is averted in the future. The setting aside of the award is sound in law and logic for the reasons earlier mentioned.”

Another human rights crusader, Mr Kabir Akingbolu, said the $11 billion awarded against the country transcends the budget of Nigerian for several years and noted that Nigeria is neck deep in a bottomless pit of debt coupled with the unfavourable economic situation or challenges, meaning that there is no way the country would have been able to pay the money.

According to him, the issue leading to the case is also a big warning and serious lessons for Nigerian leaders to learn from.

“It was a contract entered into without due diligence and Nigeria would have paid dearly for it.

“Although most of the excuses and allegations raised by Nigeria were thrown away by the court as unbelievable, the court found that the award was laced or procured by fraud.

“Now, it is expected that the government of Nigeria should not only sweep it under the carpet, it must ensure that all the actors and villains are brought to book. This is another case to test the seriousness of the corruption fighting by the government and the EFCC,” he declared.

On his part, Mr Jibrin Okutepa (SAN) urged the Bar and the Bench to learn from the case and improve Nigeria’s justice delivery system.

He also noted that it is a landmark decision where corruption in the Nigerian system has been exposed at the international level.

Okutepa said:  “I hope the Nigerian legal profession, the Bar and the Bench will learn from this case and improve our justice delivery system. First, no unnecessary preliminary objections were allowed to stall proceedings. Judgment was delivered by email. No qualms. But here, we quarrel with judgment delivered vide zoom even when we participated in the zoom proceedings.

“Nigerian legal practitioners need to learn from this case and to allow justice to be delivered without slaughtering it on the altar of undue legal technicality that does not allow merit of cases to be examined.

“The judgment shows that British justice works. There is no hanky panky. We have to learn from the system that works. It was good that the judgment came this way.”

According to him, the commonwealth of Nigerians has been illegally squandered using phony contracts. Nigeria, he said, is being held in the jugular by the very people who should protect it and develop it.

“Corruption is the most thriving industry in Nigeria. This case is an eye opener. Let the government fight corruption and those fighting corruption must not be corrupt themselves.”