The $9bn judicial scam against Nigeria (1)

On Friday 16 August, Mr Justice Butcher of the London Admiralty Court awarded a record-breaking US$9.8 billion against the Federal Government of Nigeria (FGN) for breach of contract involving a shadowy off-the-shelf company, Process and Industrial Development Limited (PI&D). I despise that judgement, notwithstanding the fact that Christopher Butcher QC is reputed to be among the most formidable judges in England and Wales today. A first class graduate of Magdalene College Cambridge; he is the swaggering rights of a Vinerian Scholar and Prize Fellow of All Souls College Oxford, with a doctorate from king’s College University of London, to boot. I respectfully submit that his judgement is absolutely fraudulent.

The award grants the claimants leave to seize all of Nigeria’s commercial assets at sea and on land. Our embassy, consular buildings and diplomatic property are, however, protected under the 1961 Vienna Convention on diplomatic immunity. Every other commercial property, sea-faring vessel, gold deposits, shares, bonds, securities, real estate and central bank reserves owned by our government are fair game.

This may well go down as one of our worst debacles as a country, comparable only to the 2009 loss of the strategic Bakassi Peninsula at the International Court of Justice in The Hague. That case was presided over by a French jurist, Gilbert Guillaume, whose country and oil companies had strategic interests in the Bakassi Peninsula. A French career magistrate and graduate of the elite École national d’Administration (ENA), we stood no chance whatsoever.

I now understand why Bonaparte had such contempt for mere lawyers. Greedy lawyers will enthusiastically mortgage their county if the fees are attractive enough. The late Judge Taslim Olawale Elias, a former President of the ICJ and by far our greatest jurist ever, warned us to avoid adjudication with Cameroon. But our greedy lawyers only saw dollars and gave the wrong advice to the then military government.

As a consequence, we lost forever the most strategic naval outpost on the south eastern corridor of our great country. President Olusegun Obasanjo, we are told, had dangled before him the prospect of a titillating Nobel Peace Prize. When the world powers got what they wanted they swiftly turned their backs on the old fox. We did not imbibe the wisdom of Sir Winston Churchill, who famously remarked that borders are to be defended, not negotiated. What we lost in Bakassi was, in my estimation, more than US$100 billion in net present value (NPV) terms.

Today, the dogs are returning to their own vomit. Philosophers of history tell us that history repeats itself, first as tragedy and second as farce.

In 2010 PI&D signed a Gas Supply and Processing Agreement (GSPA) with the Federal Ministry of Petroleum Resources (FMPR) in respect of the accelerated gas development project in Nigeria’s OMLs 67 & 123. The objective was to build a facility to process raw gas into lean gas to be used to generate electrical power. The company will invest in gas facility wholly at its own expense. As compensation, they will keep all the proceeds from the export of the by-products and condensates such as methane, propane, hydrogen sulphides and nitrogen. The government on its part would commit to building the requisite gas pipelines and other relevant infrastructure while ensuring arrangements with third parties to deliver gas to the processing plant.

After two years of no-show and following alleged persistent remonstrations with the government, in 2012 PI&D decided to take the matter to a London arbitration tribunal, claiming damages for breach of contract. They argued that, in failing to build the required pipelines, the government failed to fulfil its requisite part of the contract. Meanwhile they themselves had not made the first move by way of building the gas processing plant. They claimed to have made several futile attempts to engage with the government in finding a practical way out of the impasse. As some of my gentle readers would recall, the years 2010-2012 coincided were among the most difficult in our country. President Umaru Yar’Adua was afflicted with life-threatening illness throughout his presidency from May 2007; dying in a Saudi hospital in March 2010, precisely around the time the contract was supposedly signed. If the late president was woken up from his grave today, he probably wouldn’t remember this obscure contract that was allegedly signed on his behalf by his petroleum Minister, Rilwan Lukman, who was himself a sick man.

In May 3, 2015, at the tail end of the Goodluck Jonathan administration, PI&D allegedly wrote to express its willingness to accept a settlement of US$850 million. Note again the timing. According to a spokesman for the erstwhile administration, Reno Omokri, President Jonathan did not feel comfortable making such a payment in the eve of his administration, knowing that it might grossly be misperceived by the incoming administration. I imagine that he would We would presume that he would have asterisked the issue in his hand-over notes to President Muhammadu Buhari when he took over on 29 May 2015.

Buhari is not a statesman who could master his own brief; being more of a latter-day Caliph who prefers to leave the tiresome business of governing to his grateful subalterns. And like his kinsman from Katsina, he was and remains a sick man. It was not until six months later, on 11 November 2015, that he was able to form a cabinet. As a consequence there was no Attorney-General and Minister of Justice in place when, in July 2015, the tribunal awarded PI&D US$1.9 billion in damages. The three members of the tribunal were: Lord Hoffman, Anthony Evans and Bayo Ojo, one of our former Attorneys-General.

Lord Hoffman QC is a retired judge and a recognised London arbitrator. A former Rhodes Scholar from South Africa, Leonard Hubert Baron Hoffmann was one of the most influential Law Lords on the British legal firmament. But he is also known to be controversial; occasionally prone to delivering judgements that raise eyebrows. Would it also be fair to speculate that Lord Hoffmann might have been desirous of making a punitive award against Nigeria commensurate with the US$5.2 billion (negotiated down to US$3.2billion) that our NCC lumbered on South African telecoms giant MTN? Sir Anthony Evans is a former Lord Justice of Appeal and also Chief Justice of the Dubai International Financial Centre Court. They could hardly be expected to be sympathetic to Nigeria.

Former Attorney-General Bayo Ojo SAN was said to have delivered a dissenting opinion, arguing that the award should never have exceeded US$250 million. Being a former Attorney-General was too close for comfort. He ought to have recused himself. They placed him there as a token to give a semblance of “objectivity”. I would have preferred someone like Fidelis Odita, QC, SAN, arguably the greatest financial and capital markets legal luminary in Britain.

On 31 January 2017, the Arbitral Tribunal rendered a final award of US$6.597 billion against us. The figure was revised upwards ostensibly based on calculation of 7% interest effective from 20 March 2013, leading to a total figure of US$9.8 billion.

Lawyer for the claimants, Andrew Stafford QC of the London chambers Kobre & Kim, was quoted as saying that his client is “committed to vigorously enforcing its rights, and we intend to begin the process of seizing Nigerian assets”. Feigning compassion for Nigeria, Brendan Cahill, the key principal, claims that “PI&D was eager to deliver this promising project in the hope of bringing electricity to millions and helping Nigeria reach its full potential. Unfortunately, the government did not uphold its side of the contract”.

From the word go, the Buhari administration refused to engage with PI&D. The erstwhile PDP administration, if truth be told, was deeply mired in grand larceny such as we had never seen before in the oil sector. According to London’s Royal Institute of International Affairs, our treasury was losing something like US$1 billion per month from oil theft. The excesses of people like former oil minister Diezani Allison-Madueke stank to the high heavens. Try as we may, we cannot deodorise the stench of those years. This explains why the current administration thought to distance itself from the case.

But it was a big mistake. You don’t ignore problems and they automatically go away. Under international law, governments may change, but the state continues. For better or worse, a government inherits the assets and liabilities of its predecessors.

The government rightly point out that the scale of the award is ruinously extortionate. They also maintain that London is not the right jurisdiction on a case of this nature. The EFCC describes it as “daylight robbery” and is launching its own forensic investigation. Attorney-General Abubakar Malami predictably blames the PDP administration for “conniving with local and international contractors in a bid to inflict grave economic adversity on the Federal Republic of Nigeria and the good people of Nigeria”.

But PI&D insist that the government and Malami were to blame for their dilly-dallying and prevarication. The beat continues.