P&ID Faces Financial Ruin After Court Ruling Establishing Fraud

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  • Rejected $200m, oil bloc settlement, out of greed wanted $2bn
  • How Malami, late Abba Kyari, Emefiele managed case

Tobi Soniyi

Process & Industrial Development Limited (P&ID) now faces a bleak financial future following the judgment of the United Kingdom Commercial Court, which established a prima facie case of fraud against the company in the failed Gas Supply Processing Agreement (GSPA) with Nigeria.

Apart from facing financial ruin, Interpol is said to have placed top officials of the company on watch list in Ireland and in the UK, and currently barred them from travelling out since they are likely to face criminal prosecution in several jurisdictions, including Nigeria, which has already commenced their criminal prosecution.

The company, P&ID would have walked away with about $800 million as a settlement agreement suggested by then Minister of Petroleum, Diezani Alison-Madueke. But former President Goodluck Jonathan refused to sanction the agreement.

Rather, the former president chose to hand over the case file to the government of President Muhammadu Buhari, who defeated him in the 2015 presidential election.

However, when Buhari took over as president, negotiation with P&ID continued. And after the new Federal Executive Council under him reviewed the case, Nigeria offered to close down the matter by offering P&ID $200 million payout and an oil block as full and final settlement of the their claim.

But the company rejected the offer and demanded a whopping $2 billion for doing nothing, which Buhari turned down and called their bluff.

Convinced they had boxed Nigeria into an obnoxious corner, the directors of the company refused the deal and chose instead to up the ante by asking that Nigeria pay them billions of US dollars for a project they did not implement and indeed lacked the capacity to carry out.

Since it already had a judgment of $6.6 billion, it decided to pursue the arbitral award and enforcement, which by this this time had shot up to $9.6 billion, and felt it had a better chance of getting more money from Nigeria.

To share from the $9.6 billion judgment fraudulently awarded against Nigeria, a sovereign debt hedge fund managed by VR Capital Group reportedly bought a 25% stake in the company. The hedge fund was notorious for obtaining judgment.

But a deft decision by the late Chief of Staff to the President, Mallam Abba Kyari, the Governor of the Central Bank of Nigeria, Godwin Emefiele and the Attorney General of the Federation, Abubakar Malami, to jettison all negotiations and prove the fraud, which the contract was ab inito, changed the country’s fortune thereafter.

Also, Vice President Yemi Osinbajo, a Senior Advocate of Nigeria, after reviewing the case file reportedly told the president that the whole exercise was a fraud and advised that Nigeria seek a legal redress.

Buhari, thus, charged Malami, the late Kyari and Emefiele to handle the matter. The trio, however, decided to change strategy from appeasement to full declaration of war.

First, they decided to sack all lawyers previously engaged and instead hired a shrewd new legal team, Mishcon De Reya Shaistah Akhtar, a partner with the firm, to lead the legal team alongside Mark Howard QC of Brick Court Chambers, they applied to the court for an extension of time to challenge the arbitral award.

Suffice it to say Emefiele’s deep involvement was because some of CBN’s assets overseas were particularly at risk of being sold to liquidate the arbitral award.

Eventually, Nigeria’s effort to challenge the award paid off, when the Commercial Court in London, granted her request to stay execution of the judgment.

While granting permission to appeal the case, the UK Commercial Court asked the Nigerian Government to deposit $200m (N72.2bn) into the court’s account within 60 days for the stay of execution to take effect.

That order effectively halted P&ID from enforcing the judgment granted by the Arbitration Tribunal, a development that paved the way for Nigeria to contest the $9.6bn (about N3.25 trillion) granted the Irish firm.

Buoyed by that decision, Nigeria moved into action by filing a brief, detailing all the fraudulent practices that characterised the agreement and how those, who should have helped the country to avoid liability, compromised themselves.

Enter the EFCC

The Economic and Financial Crimes Commission was also mandated to investigate the fraud.

Contrary to claims by the counsel to the suspended Acting Chairman of the EFCC, Ibrahim Magu, that the judgment granting Nigeria extension of time to challenge the judgment was a vindication of his client, Magu, the EFCC was given the mandate to investigate the fraud since 2015 but failed to act on time.

But Malami’s argument is that had the commission acted with dispatch, the award might not have been made against Nigeria in the first place. It was not until after the arbitral award that EFCC swung into action.

Hedge Fund, VR Capital Group

Meanwhile, it is not only P&ID that is facing financial ruin as a result of the judgment, Hedge Fund Managers, which bought 25 per cent equity shares in the hope of a handsome pay day is equally facing bankruptcy.

There are other middlemen in the huge international syndicate that specialise in defrauding countries through bogus lawsuits under the pretext of breach of contract.

The Central Bank Governor, who has played a key role in managing Nigeria’s challenge of the arbitral award had earlier in his reaction to the London Court ruling said, it was not time to celebrate yet.

He claimed that the nation’s primary concern was to defeat the criminal syndicate with the phony contracts and get them out of country.

The Background

P&ID, yesterday, said it welcomed the decision of the English Commercial Court granting Nigeria’s application for extension of time to challenge the $9.6 billion arbitral award for the failed GSPA.

A spokesperson for the company, Ryan Grillo, in an email said, “P&ID welcomes the opportunity to refute Nigeria’s false allegations and wild conspiracy theories at trial, and has every confidence that the English Commercial Court will resolve the case justly and expeditiously.”

Also, yesterday, counsel to the federal government at arbitration tribunal, Olasupo Shasore, SAN said he was relieved by the fact that the corrupt and fraudulent foundation of the case was affirmed in the judgment.

He however said, “I am disappointed that part of the case made for that result was a case against me based on demonstrably false statements, unfounded innuendoes and spiteful personal attacks on my professional conduct and reputation.”
Justice Ross Cranston, while upholding Nigeria’s application for extension of time to apply to set aside the award held that Nigeria successfully established a prima facie case of fraud against P&ID.

The judge, in his judgment, made a scathing rebuke of Shasore.
He said: “However, what persuades me of a prima facie case of dishonesty in Mr. Shasore’s conduct of the arbitration are his payments of US$100,000 each to Ms. Adelore and Mr. Oguine.

“Ms Adelore occupied Ms Taiga’s position at the Ministry as the senior lawyer, and Mr. Oguine was her counterpart at the NNPC. Their salaries as public servants, according to the Attorney General, Mr. Malami, were some US$5000 per annum.
“Mr. Mill submitted that these payments had nothing to do with P&ID. Moreover, Mr. Shasore had volunteered the information about them to the EFCC and described them as gifts. The argument that Mr. Shasore volunteered the payments goes nowhere, since once the EFCC had information from the bank accounts; it was difficult to deny them.

“As to Mr Shasore’s account that these were gifts, that does not seem to me a complete and honest explanation for why he should make these payments to these senior public servants.”

In a statement issued in his defence, Shasore said he did his best in the circumstance.

“I was instructed in this matter and accepted the instructions on behalf of my firm and to the knowledge of my partners in late 2012 and I made every effort to defend and vindicate my client

at every stage with very few tools and with minimal support from within the government itself.

“I represented Nigeria up until the liability stage in the arbitration. I did not represent Nigeria in the damages stage of the arbitration, which means I was not involved when the huge sum of damages was awarded against Nigeria.

“The complete records will show the series of steps that I took to defend Nigeria and the several results, which I secured in that effort at various stages. None of this is consistent with the unfounded allegations that I failed to present the best available defence.

“With very little or no cooperation from relevant government officials at the time, I filed a jurisdiction objection that potentially could and should indeed have terminated the case in favour of Nigeria, because it was clear to us from the beginning that the contract was a scheme against Nigeria.

“When the then Nigerian officials failed to supply documents or any witness to defend their case, I fought liability by enlisting the support of the legal adviser of NNPC, who gave evidence to the best of his knowledge, when everyone else with knowledge refused to do so. I instructed the UK firm of Stephenson Harwood, a respected international arbitration team and a
leading Barrister to attempt to set aside the award on liability in England.

“We overcame numerous hurdles and faced a hostile tribunal, which relied on the testimony of a principal witness, who had died before the hearing and whose testimony should have been discounted. It is on record that I fought hard for the tribunal to dispense with that evidence. I am happy that the falsity of that testimony has now been recorded in the High Court in England.

“Indeed this was the ground on which I took the matter to the Federal High Court in Nigeria, which was the proper seat of the arbitration and successfully obtained an order setting aside the liability award. There was no basis to proceed to the damages hearing since the liability, had already been set aside by a court of competent jurisdiction.

“Indeed, Nigeria continues to rely on this order in the proceedings in the United States. In addition, I obtained an injunction restraining the parties and the tribunal from proceeding with the arbitration,” he explained.
He also defended the legal fee paid to him saying there was nothing excessive about it.

“This was payment to two law firms and not exceptional or unusual in the context of such a dispute. In fact, in order to extract the best possible case for Nigeria, it was from these fees that expenses were paid to ensure attendance at hearings and meetings in the UK by witnesses for Nigeria,” he added.

He however pledged his readiness to assist Nigeria in setting aside the award saying, he knew right from the onset that it was a case of fraud.

Justice Cranston held that Nigeria acted reasonably well and that the delay in bringing the allocation was not deliberate.
According to him, the balance of fairness necessitated that Nigeria be given the opportunity to argue her case to set aside the judgment.

The judge said: “With that as background, I find persuasive Mr. Howard’s submission that the fairness factor does have an impact in challenges, where there is strong prima facie evidence of fraud, certainly of the through-going character alleged in this case.

“Not only is the integrity of the arbitration system threatened, but that of the court as well, since to enforce an award in such circumstances would implicate it in the fraudulent scheme. Conclusion on the Kalmneft factors.”
The judge further held that the delay in the case was extraordinary and weighed heavily on the side of the balance against an extension.

“In my view, however, other factors bring it down in favour of an extension. As I have explained, the delay is not in my view the result of a deliberate decision made, because of some perceived advantage, and in all the circumstances, Nigeria has acted reasonably”, the judge noted.

He held that given the strong prima facie case of fraud, which Nigeria had established, “The position is along the lines of that identified in Terna, where Popplewell J identified the substantial injustice an applicant would suffer in respect of the underlying dispute if deprived of the opportunity of making a challenge should an extension of time be refused: Terna Bahrain Holding Company WLL v Bin Kamil Al Shamsi [2012] EWHC 3283 (Comm), [2013] 1 Lloyd’s Rep 86, [33].”

His Lordship further held that, “For the reasons I have given, P&ID has contributed to the delay, and it will not by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if the application is permitted to proceed.
“Although not a primary factor, fairness in the broadest sense favours an extension in this case. For the reasons given, I grant Nigeria’s applications for an extension of time and relief.”

Conclusion

Nigeria made its set-aside and related applications on December 5 2019, when she argued that this was the earliest time at which she considered that it had adequate concrete evidence to allege fraud and corruption against P&ID before a court of law.

Nigeria’s case is that the Awards are liable to be set aside (i) under s.68 of the 1996 Act on the basis that they, and the GSPA on which they are based, were procured by fraud and/or other conduct contrary to public policy; and (ii) under s.67 of the 1996 Act on the basis that the arbitration agreement in the GSPA was procured by fraud, such that the Tribunal lacked jurisdiction.

Nigeria also sought to resist P&ID’s Enforcement Application on the same grounds. She argued a strong prima facie case that Mr. Quinn gave perjured evidence to the Tribunal, that (contrary to Mr Quinn’s evidence) P&ID would never have been able or willing to perform the contract, that P&ID’s intention in bidding for the contract must therefore be to extract money from the country through an arbitration or a contrived settlement payment (having either procured by bribes).