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    Tuesday, June 14, 2022

    Nigeria Loses $1.7 Billion JP Morgan Case

    Nigeria has lost its $1.7 billion claim against JP Morgan Chase Bank over the transfer of proceeds from the sale of OPL 245 in the controversial Malabu oil deal.

    The civil case in London, which was heard earlier this year, relates to the purchase by Shell and Eni of the offshore OPL 245 oilfield in Nigeria.

    A London Court Judge, Judge Sara Cockerill ruled Tuesday, June 14, 2022, that the Nigerian government could not show that it had been defrauded in the case.

    In the suit, Nigeria claimed more than $1.7 billion for the bank’s role in the controversial deal. Nigeria also alleged that JP Morgan was “grossly negligent” in its decision to transfer funds paid by oil giants Shell and Eni into an escrow account controlled by a former Nigerian oil minister, Dan Etete.

    According to Nigeria, the transactions put JP Morgan in breach of its Quincecare duty, which obliges banks to disregard a customer’s instructions if following those instructions might actually facilitate a fraud against that customer.

    The Quincecare Duty is a duty for the financial institution to protect its customer from itself where circumstances are such as to put the bank on reasonable inquiry that there may be fraud on the account.

    Earlier in February, Nigeria’s lawyer, Roger Masefield, argued that the nation’s case rested on proving that there was fraud and JP Morgan was aware of the risk of fraud.

    “The evidence of fraud is little short of overwhelming,” the lawyer told the court.

    “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.”

    But a London High Court judge said no such breach took place.

    Judge Cockerill said that by the time of the 2013 payments, the bank was “on notice of a risk” of fraud.

    “There was a risk – but it was, on the evidence, no more than a possibility based on a slim foundation,” the judge ruled.

    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.

    Nigerian military ruler Sani Abacha had awarded the offshore oilfield licence, OPL 245, to a company Etete owned in 1998.

    Subsequent Nigerian administrations challenged Etete’s rights to the field over many years until a deal to resolve the impasse via a sale to Shell and Eni was struck in 2011.

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