Nigeria is currently battling one of the biggest lawsuits of its time.
Almost US$10 billion is at stake. The aggressively pursued debt is threatening to strip away state assets worth more than ten times the country’s national health budget; eight times its education budget; or well over a quarter of its gross foreign reserves.
Since 2012, Process and Industrial Developments (P&ID), a shell company now backed by a powerful international vulture fund, VR Advisory Services Limited, has been attempting to enforce a scam agreement procured through fraud and corruption against the people of Nigeria.
This all began from a sham commercial deal designed to fail from the very start.
The contract in question, the gas supply and processing agreement (GSPA), covers a 20-year plan for building and operating a sophisticated gas-stripping plant.
Yet in 2010, it was awarded to P&ID, a shell entity created and run by a failed music record producer from Ireland, who had no technical capabilities or substantive experience managing a major infrastructure project. The company is now registered in the British Virgin Islands, with no apparent assets other than this debt. P&ID never had the ability to fulfil the agreement – and never intended to.
Two years later, as work on the gas processing plant had yet to begin, the agreement collapsed. This led P&ID to launch private arbitration proceedings against the Federation. In a highly unusual and questionable move, the Ministry of Petroleum Resources at the time maintained exclusive control over the proceedings.
Following a lengthy legal process that was deliberately concealed from the rest of the Nigerian Government, in 2017 the private arbitration tribunal ordered Nigeria to pay P&ID US$6.6 billion in damages with interest accruing from 20 March 2013 at a rate of seven per cent, which equates to more than US$1 million a day. It now stands at nearly US$10 billion.
Nigeria now faces a situation where a shell company with little credibility could be paid a sum double the combined budgets of three of its most important spending ministries. The contract is a clear example of a highly orchestrated scam.
In 2019, the Federal Republic of Nigeria argued before the English High Court that the GSPA and its arbitration decision should be objectively scrutinised, and any award delayed. The Court agreed to consider Nigeria’s challenge, based on new and substantive evidence of fraud and corruption levelled against P&ID by Nigeria’s legal team.
Sadly, the evidence shows that corruption went to the highest levels of the previous administration. The standard protocols required by Nigerian law for approving federal contracts were bypassed, demonstrating that the GSPA was intentionally withheld from key government individuals. For example, due to its size, the GSPA needed to be authorised by both the Bureau of Public Procurement and the Federal Executive Council – neither were contacted.
These fresh findings have been referred to in the High Court as “seismic”. It is telling that P&ID has prioritised the dissemination of inaccurate claims in the media and online, over addressing the very real allegations of fraud made against them in Court.
Following a scheduled case management conference in January 2020, a timetable has now been set by the London High Court to formally hear Nigeria’s challenge.