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08 December 2014
October and November 2014 saw the return of fraud and bribery to the headlines. First, reports emerged of alleged corrupt payments by executives of Italian oil company Eni in a case involving a former Nigerian oil minister. A few weeks later, a High Court judge delivered a decision that cast doubt on the ability of a Nigerian bank to enforce in Nigeria an English High Court judgment obtained against a former bank chief executive. Finally, a former House of Representatives committee chairman on trial for extorting a bribe succeeded in further delaying his trial by making false allegations of bias against the trial judge.
In October 2014 the media reported that Italian prosecutors were alleging that half of the $1.1 billion paid for an oil producing lease (OPL) by Eni and Royal Dutch Shell had gone on bribes to Nigerian politicians, intermediaries and others. Reuters reported that Italian prosecutors had placed Eni's former and current chief executive officers under investigation for alleged international corruption and had requested their UK counterparts to assist in freezing suspect assets. The prosecutors alleged that at least $533 million had been paid out to Nigerian officials and others as part of the scheme. The two individuals under investigation, along with Eni, denied any wrongdoing
This case, involving OPL 245, has seen many twists and turns over the past few years. In April 1998 Nigerian company Malabu (incorporated less than one week before) was granted OPL 245 over an area approximately 2,000 square kilometres off the Nigerian coast, in the Eastern Niger Delta region, by the incumbent military-led government. It later emerged that the then minister of petroleum resources had a major – if not the entire – beneficial interest in the company. In submissions to an investigation commenced by the House of Representatives in October 2012, the government described the grant of OPL 245 to Malabu as "flawed" and "unethical".
In March 2001 Malabu assigned a 40% interest in the OPL to a company owned by Shell. However, four months later, the civilian government, which had been in office since late May 1999, revoked the licence. In May 2002 Nigeria's state-owned petroleum corporation entered into a production sharing contract in respect of OPL 245 with the Shell company that had previously taken a 40% interest in the block. This sparked a dispute between Malabu and Shell, and in late December 2006 OPL 245 was re-awarded to Malabu. This development resulted in Shell commencing International Centre for Settlement of Investment Disputes arbitration proceedings against Nigeria.
Malabu, being essentially a shell company with no assets other than OPL 245, had no means of exploiting OPL 245 other than with the assistance of a major oil company. However, with all the controversies swirling around OPL 245, it was unsurprisingly unable to make any progress towards finding a partner. OPL 245 was eventually transferred to Shell and Eni through an arrangement that saw Malabu relinquish its interests in OPL 245 to the Nigerian government in exchange for $1,092,040,000. On the same day, Shell and Eni agreed to pay the Nigerian government the same amount in exchange for rights over OPL 245. New York Supreme Court Justice Bernard J Fried described the role of the Nigerian government as that of "the proverbial straw man" who was "holding $1.1 billion for ultimate payment to Malabu". This sum was paid to an escrow account with JP Morgan Chase and at least $800 million was disbursed to Malabu on the instructions of the Nigerian government. The English High Court froze $215 million in July 2011 on the application of a company that claimed to be entitled to fees for assisting in the negotiation of the transaction that saw Malabu receive the $1,092,040,00 indirectly from Shell and Eni. This was paid into court the following month, and in a judgment delivered in July 2013, $110.5 million was awarded to the company, with the balance to be returned to Malabu.
Efforts by non-governmental organisations and other bodies to have some of these funds frozen in the United Kingdom came to nothing and it is unclear whether the request from Italian prosecutors for the freezing of funds in the United Kingdom resulted in any funds being frozen there. What is absolutely certain, however, is that in spite of a damning report from the House of Representatives and what appear to be clear violations of Nigerian law in the manner in which the moneys to be received and paid out by the Nigerian government were actually received and paid out, the Nigerian government is unlikely to take any action. The official Nigerian position appears to be that there has been no infraction of Nigerian law. Under Nigerian law, all moneys paid to the Nigerian government are required to be paid into the Federation Account and no money may be paid out from that account unless appropriated by the National Assembly. The moneys paid by Shell and Eni were not paid into the Federation Account and the National Assembly did not appropriate the payment to Malabu. The Italian investigations will be closely followed in Nigeria to see how the case develops.
In August 2009 the Central Bank of Nigeria moved to address what it saw as weaknesses in a number of Nigerian banks. This action resulted in these banks being taken over by the Central Bank, and executives of the concerned banks being prosecuted for fraud and other alleged misdeeds. One of the banks involved was Intercontinental Bank, which was subsequently acquired from the Central Bank by Access Bank. Access Bank subsequently commenced proceedings in the English High Court against Intercontinental's former chief executive, succeeding in July 2012 in securing a judgment ordering him to pay the sum of £654 million. Access Bank applied to register the judgment in Nigeria for the purposes of enforcement in Nigeria, and in July 2013 obtained an order of the Lagos State High Court registering the English judgment. That order was set aside in February 2014 on the grounds that the Lagos State High Court lacked the jurisdiction to entertain the application for registration. The reasoning of the Lagos State High Court judge who set aside the registration was that since the English High Court's judgment turned on Nigerian company law issues, had the action been brought in Nigeria the Federal High Court – and not the Lagos State High Court – would have had jurisdiction to entertain the claims. He therefore held that Lagos State High Court lacked jurisdiction to register the English judgment and set aside the registration. Access Bank, rather than appeal the decision, sought to register the judgment in the Federal High Court. In a recent decision the Federal High Court ruled that the judgment was not enforceable in Nigeria.
Full details of this decision, which is likely to be appealed by Access Bank, were not available immediately, but it raises questions about the approach of Nigerian courts to the enforcement of foreign judgments in Nigeria and the wisdom of litigating such cases outside Nigeria. While it is almost certain that had the action been commenced in Nigeria it would be nowhere near conclusion now, given the slow pace at which Nigerian courts work, the gains of trying the case more expeditiously in England will almost certainly be lost if the manner in which the enforcement proceedings have gone is any guide.
The former chairman of a committee of the House of Representatives which was charged with investigating alleged fraud in the operation of the subsidy on petroleum products, and who is presently on trial for extorting $620,000 from the chief executive of a petroleum product retailing company, appears to have come up with another strategy to delay his trial further. News of the alleged offence first became public in February 2012 when video footage of the chairman receiving $500,000 in cash from the businessman came to light. The cash itself has not been located and the chairman was not charged with any offence until February 2013. Since then, his efforts to have the charges dismissed on technical grounds have failed in both the High Court and the Court of Appeal, which also refused a stay of further proceedings.
In what appears to have been another attempt to delay his trial, the chairman wrote to the chief judge of the Federal Capital Territory where he is being tried alleging that the trial judge was likely to be biased against him due to an alleged close personal relationship between her and the businessman who was filmed giving the chairman the money. The allegation turned out to be without foundation, but it nevertheless succeeded in further delaying the trial as the judge withdrew from the case, complaining that the expressed lack of confidence in her impartiality made it difficult for her to continue the case. The case will now be re-assigned to another judge. It is unclear whether any action will be taken against the chairman for making the totally unfounded allegation, which was withdrawn in open court by his counsel.
For further information on this topic please contact Babajide Oladipo Ogundipe at Sofunde Osakwe Ogundipe & Belgore by telephone (+234 1 462 2502), fax (+234 1 462 2501) or email (firstname.lastname@example.org). The Sofunde Osakwe Ogundipe & Belgore website can be accessed atwww.sooblaw.com.
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