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Nigeria is currently battling one of the biggest lawsuits of its time.
Approximately US$11 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; over 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 almost US$11 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 July 2020, the Federal Republic of Nigeria argued before the London Commercial Court that it should be permitted an extension of time, to bring its fresh challenge to overturn the then $10 billion arbitral award in favour of vulture-fund-backed P&ID.
Nigeria brought its challenge on the basis that the GSPA was a sham commercial deal designed to fail from the start, and that its subsequent arbitral award was based on fraud and corruption.
The Federation relied on a number of ongoing investigations across multiple jurisdictions, including the US, to build its case. During the July hearing, new evidence was presented to further support Nigeria’s challenge.
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.
Through Nigeria’s investigations in the US, it has become increasingly apparent that P&ID and VR Capital will go to any length to aggressively pursue the award, including delaying and obstructing the Federation’s investigations into the GSPA. In addition to providing false evidence and misleading the Arbitral Tribunal, it has also recently come to light that P&ID had failed to disclose evidence of suspicious payments to the English Courts when they had a clear opportunity to do so. Further, not a single document or credible witness has been produced by P&ID and VR Capital to contradict Nigeria’s fraud evidence.
In September 2020, the London Commercial Court ruled that Nigeria could challenge the then $10 billion arbitral award. The unprecedented judgment cited exceptional circumstances and noted that prima facie evidence of a massive fraud had been uncovered.
In his judgment, the judge Sir Ross Cranston stated, “Nigeria has established a strong prima facie case that the GSPA was procured by bribes paid to insiders as part of a larger scheme to defraud Nigeria. There is also a strong prima facie case that P&ID’s main witness in the arbitration, Mr Quinn, gave perjured evidence to the Tribunal and that, contrary to that evidence, P&ID was not in the position to perform the contract. As to the Jurisdiction and Liability stages of the arbitration, there is a prima facie case that they were tainted by the conduct of Nigeria’s advocate… It seems to me that Nigeria has made a good case that, at the time it took part or continued to take part in the arbitration, it did not know and could not with reasonable diligence have discovered the grounds it now advances.”
In October 2021, P&ID revealed that it has been in possession of numerous documents which might be confidential to the Federal Republic of Nigeria. These include documents from the time of entry into the GSPA and legal advice provided to Nigeria as to how to defend the arbitration.. These included documents from the time of entry into the agreement and legal advice provided to Nigeria as to how to defend the arbitration. One of the email threads confirmed at least one of the suppliers of these confidential documents to have been Ms Olufolakemi Adelore, using an email address to communicate with P&ID’s agent and middleman Mr Adetunji Adebayo.
These confidential documents were shared with two P&ID representatives, Mr Seamus Andrew and Mr Trevor Burke QC, among others, who failed to disclose this to the FRN or tribunal at any time.
In February 2022, Nigeria obtained orders from appeal courts in the US and British Virgin Islands enabling the country to obtain discovery to support its fraud allegations against P&ID.
In April 2022, a New York federal court rejected the arguments of VR Capital, which acquired a 25% of P&ID in 2015, to withhold documents detailing the deal with P&ID, granting Nigeria’s legal team unprecedented access to important documents.
In July 2022, a hearing in the London High Court judged that it would be reasonable and proportionate for P&ID to disclose further information related to private messages sent between key figures associated with the company over a period of several years, based on the evidence summarised in this Skeleton on behalf of the FRN.
During the hearing, it became apparent that Mr Trevor Burke QC, one of two P&ID representatives who received confidential documents concerning the FRN by email, is the nephew of Mr Michael Quinn, the founder of P&ID. Mr Burke QC allegedly acted for P&ID without any written retainer in place and received payments of up to US$ 3.5 million. These payments were not paid through his chambers, Three Raymond Buildings, and he stands to receive around US$750 million in the event P&ID is successful in enforcing the award.
A full trial of the issues where the FRN’s substantive application to finally set aside the award is now being heard in the High Court. The fraud trial began in London in January 2023.