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JP Morgan Chase Tells British Court How Jonathan’s Administration Paid $874m To Etete

Global banking giant, JP Morgan Chase (JPMC), has told the Business and Property Courts of England and Wales how the Nigerian government under former President Goodluck Jonathan authorized the payment of $875 million to Mr. Dan Etete, former Petroleum Minister, in respect of the disputed oilfield, OPL 245.

Global banking giant, JP Morgan Chase (JPMC), has told the Business and Property Courts of England and Wales how the Nigerian government under former President Goodluck Jonathan authorized the payment of $875 million to Mr. Dan Etete, former Petroleum Minister, in respect of the disputed oilfield, OPL 245.

The bank made the claim in its statement of defense filed by its solicitors, Freshfields Bruckhaus Deringer. The Nigerian government had accused JPMC of negligence in the transfer of funds from the disputed oilfield to Malabu Oil, a company owned by Mr. Etete, and filed a claim of over $875 million against the bank.

The suit is in respect of the purchase of the offshore OPL 245 oilfield by Royal Dutch Shell and Eni in 2011 and revolves around a $1.3 billion payment from Shell and Eni to secure the block that was deposited into a Nigerian government escrow account managed by JPMC.

In its defense, the bank said the Nigerian government’s claim that it did was negligent is unsubstantiated and lacked merit.

According to JPMC, the Nigerian government, on 29 April 2011, Shell Nigeria Exploration and Production Company (SNEPCO) and Nigerian Agip Exploration Limited (NAE) reached an agreement under which the Nigerian government made a commitment to allocate prospecting license in respect of OPL 245. JPMC said it was neither part of the negotiation nor a party to the agreement.

Following the resolution agreement, the parties were required to enter into an escrow agreement, which would see SNEPCO and NAE transfer $1,092,040,000 into the escrow account, which would be used by the Nigerian government to settle all claims in respect of OPL 245.

By the terms of the agreement, JPMC was appointed as escrow agent and required to open an escrow account into which NAE was to pay $1,092,040,000. It was equally obliged to release the funds and transfer them to an account nominated by the Nigerian government upon the receipt of an escrow completion notice signed on behalf of SNEPCO and NAE. On 24 May 2011, NAE transferred the agreed sum of $1,092,040,000 into the escrow account.

Four days earlier, said JPMC, it reached a depository agreement with the Nigerian government.  It dismissed the Nigerian government’s claim that the depository agreement was reached on 1 May 2011. On 19 May 2011, the Nigerian government, as stated in the agreement, nominated an account into which the funds should be transferred upon receipt from NAE and SNEPCO of an escrow completion notice. On 23 May 2011, JPMC transferred the funds into a depository account in two installments. The first of $1,092,035,000 and the second of $5,000, which it initially retained to cover the fees it incurred on the escrow account. The fees, it disclosed, were later paid by NAE.

JPMC added that it received a letter dated 3 August 2011 from Dr. Yerima Lawan Ngama, then Minister of State (Finance), which specified instructions on activities on the depository account. The letter stated that the account required a “category A” signatory and a “category B” signatory. It listed Dr. Ngama and Mr. Danladi Kifasi, then Permanent Secretary, Ministry of Finance. It listed as “category B” signatories Mr. Otunla Jonah Ogunniyi, then Accountant-General of the Federation; and Mr. Babayo Shehu, Director of Funds in the Accountant-General’s Office.

On 17 August 2011, JPMC said it received written instructions, dated the previous day, from the Nigerian government for the transfer of $401,540,000 to a First Bank of Nigeria account in the name of Malabu and another for the transfer of $400million to a Keystone Bank account also in the name of Malabu. Both instructions, explained the bank, were signed by Dr. Ngama and Mr. Ogunniyi as category A and category B signatories respectively.

Three days after it received the instructions, JPMC said it contacted both signatories by telephone to confirm their written instructions and sought the consent of Serious Organized Crime Agency (SOCA) before going ahead.

Again, on 29 August 2013, JPMC received written instructions from the Nigerian government in respect of the transfer of $74.2million from the depository account to an account with the name of Malabu. This, it said, was the balance in the account. It claimed to have followed the steps of confirming with Dr. Ngama and Mr. Ogunniyi as well as obtaining the consent of SOCA before proceeding.

While admitting that it was aware of that Mr. Etete had a relationship with Malabu, JPMC denied admitting that the funds transferred to Malabu rightly belonged to it, as alleged by the Nigerian government. It equally denied knowledge of a separate agreement for resolution of the dispute to which the Federal Government was a party. In addition, JPMC denied acknowledging that NAE was a conduit for fraudulent fund transfers as well as admitting that the licensing rights for OPL 245 were wrongly awarded to Malabu.

The banking giant said it acted in full compliance with its obligations and was under no obligation to undertake inquiries and due diligence.

The Nigerian government had claimed in its suit that JPMC should have known that Nigerian laws prohibit such transfers to an outside company.

“If the defendant acted with reasonable care and skill and/or conducted reasonable due diligence it would or should have known or at least suspected ... that it was being asked to transfer funds to third parties who were seeking to misappropriate the funds from the claimant and/or that there was a significant risk that this was the case,” said the Nigerian government.

In 2017, a judge in the Italian city of Milan ruled that Shell and Eni must stand trial in Italy in a separate case in which Milan prosecutors alleged that bribes were paid to Mr. Etete and others as part of the same oilfield deal. Shell, last year, admitted knowing that some of the payments it made to the Nigerian government as part of the deal would go to Malabu to settle its claim on the block.  It, however, maintained that the transaction was legal.

Investigations into the deal are also ongoing in Nigeria and the Netherlands, where Shell is based. In February, anti-corruption body, Global Witness, alleged that the Attorney-General and Minister of Justice, Mr. Abubakar Malami (SAN), was intent on renegotiating the tainted oil deal at the right if the price is right.

The allegation was contained in a letter to Mr. Malami. Dated 22 February, the letter stated that Mr. Malami wrote to President Muhammadu Buhari, making the argument that there is insufficient evidence to support charges filed against Messrs. Mohammed Bello Adoke, former Attorney-General, Mr. Etete and others for corruption-related offences connected to the acquisition of OPL 245 by Shell and ENI because the resolution agreement on the acquisition precludes the prosecution of SHELL and ENI officials.

Mr. Malami, however, denied the allegations via a letter exclusively obtained by SaharaReporters. Dated 22 March and signed by Mr. Dayo Apata, Solicitor-General of the Federation, the letter accused Global Witness of distorting the contents of Mr. Malami’s letter to President Buhari, leading to the propagation of inaccurate assumptions and conclusions within the public domain.

“For all intents and purposes, the letter under reference essentially identified the need for further investigation to be conducted to ensure that there were no gaps or lapses in the available evidence, bearing in mind that unlike in civil suits, there is a higher standard of proof beyond reasonable doubt in criminal cases in most legal systems (including Nigeria and the United Kingdom)."

“Please note that, contrary to the insinuations in your letter, the actions of the AGF are always critically weighed against national public interest and carried out in line with the rule of law and the policy objectives of this present administration especially as it relates to the anti-corruption fight,” the letter stated.

Mr. Malami expressed the view that Global Witness may not have seen a copy of his letter to the President and that its allegations may have been informed by speculations. He challenged Global Witness to tender the letter, if it has a copy, to his office for confirmation and further clarification where necessary.

 The license for the offshore oil block was awarded to Malabu in 1998 by the military government of the late General Sani Abacha. However, the deal was not finalized with the Nigerian government by Shell until 2011. La

In a 2017 judgment, a British court agreed that $85 million in frozen funds be returned to Nigeria in respect of the deal.

 

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