A High Court sitting in London has granted Nigeria’s plea to allow it proceed with the trial of JP Morgan Chase over allegations bordering on misappropriation of State funds in the sum of $875 million.
The presiding judge, Justice Andrew Burrows gave the order on Thursday in respect of the alleged infractions involved the sale of the Oil Prospecting License, OPL 245, otherwise known as Malabu Oil.
This was revealed in a statement by Mr. Salihu Isah, Special Adviser on Media and Publicity to the Attorney General of the Federation and Minister of Justice, Abubakar Malami (SAN).
The statement disclosed that following the orders of the London Court, JPMorgan Chase, a United States bank “has failed to halt its prosecution by the federal government.”
The statement said in a 26-page verdict, Barrows held that Nigeria “has reasonable grounds to proceed with the trial. The defendant bank has failed to establish that the claimant has no real prospect of success.”
The statement said, “Burrows held the bank ought to suspect the payments were fraudulent and therefore had a duty to protect the Federal Republic of Nigeria until its concerns were cleared up.
“That duty of care entails that the defendant bank could not simply follow the mandate of abiding by the instructions given by the claimant because the bank’s duty of care, as its core, was to protect the claimant against being defrauded by not paying out unless and until it was ‘off inquiry.”
Earlier, JPMorgan Chase had argued that the case should be dismissed as it had received sufficient approvals from Nigerian authorities before allowing the transfer of funds from a government account to those controlled by former Minister of Petroleum Resources, Mr. Dan Etete.
The payments, after a 2011 settlement, aimed to end several years of battle over the ownership of a lucrative but controversial oil licence that has ensnared Royal Dutch Shell and Eni in corruption investigations in Milan, Italy.
The statement said the licence for the c block was shuffled back and forth between Shell and Malabu Oil & Gas, a Nigerian oil company controlled by Mr. Etete and which was first awarded development rights in 1998 when he was also in charge of petroleum resources, but he has denied any wrongdoing.
It said this led the Federal Government to now seek compensation, claiming it was “the victim of a serious fraud” as a result of bribes made to former and current Nigerian politicians and oil executives through the transfer of funds via Malabu accounts.
It alleges that although JPMorgan Chase had reasonable grounds to believe the payments out of the government account were intended to defraud the customer, the bank went ahead in breach of its “duty of care”.
Even as the bank had said it had “no responsibility” to look behind any payment instructions, the judge said this was not consistent with the agreement the bank had with its client.
However, the bank was quoted to have said after the judgment that While today’s judgment “is disappointing, it does not address the underlying claim, which we continue to believe is completely without merit.
“JPMorgan complied with its legal and regulatory obligations in respect of the payments concerned and will defend the claim robustly at trial.”
The federal government on its part said it was now set to go on with its claim and had “full confidence that JPMorgan Chase will be held to account for its actions”.
Meanwhile, Nigeria has filed a separate $1.1bn legal claim against Shell and Eni to “recover the very significant sums lost to corruption and the unlawful activity” of the two energy majors.
But Shell and Eni have said their deal with the Federal Government was legal and that the payment was made to the state and they had no part to play in what happened to the money afterwards.
It will be recalled that several recipient banks also refused to accept the payments and returned the money to JPMorgan as a result of compliance issues, according to the suit.
