How Nigeria Survived The $11B Heist By P&ID And Its Nigerian Accomplices

BY MICHAEL CHIBUZO

The Business and Property Court in London on Monday halted the enforcement of the $11bn arbitration award in favour of P&ID against Nigeria. In a judgment delivered by Mr. Justice Robin Knowles, the court held that the process through which P&ID secured the contract was fraudulent.

In the concluding part of the 141-page judgment, Justice Robin Knowles stated as follows:

“In the circumstances and for the reasons I have sought to describe and explain, Nigeria succeeds on its challenge under section 68. I have not accepted all of Nigeria’s allegations. But the Awards were obtained by fraud and the Awards were and the way in which they were procured was contrary to public policy.

“What happened in this case is very serious indeed, and it is important that section 68 has been available to maintain the rule of law. Section 68 (3) provides:

“(3) If there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may-

(a) remit the award to the tribunal, in whole or in part, for reconsideration,

(b) set the award aside in whole or in part, or

(c) declare the award to be of no effect, in whole or in part.”

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“I was asked by Lord Wolfson KC in closing that should my judgment conclude in favour of Nigeria, as it does, to leave over the question of the order the Court should make so that the parties have the opportunity to present argument once they have considered the judgment. I respect that request and will hear that argument as soon as that can be arranged,” Justice Knowles concluded.

The long-running saga between P&ID, a shell company registered in the tax-haven British Virgin Islands and the Nigerian government started back in 2010. Below is the summary of the sequence of key events that took place, beginning from 2010:

On January 11, 2010, during the tenure of President Goodluck Jonathan, Process and Industrial Developments (P&ID) Ltd signed a gas supply and processing agreement (GSPA) with the Federal Government of Nigeria to develop a gas processing plant in Calabar, Cross Rivers state. Under the GSPA Nigeria was to supply specified quantities of “wet” gas (flared gas) to Gas Processing Facilities (GPFs) constructed by P&ID. P&ID was to strip the wet gas into “lean” gas, to be delivered to Nigeria to be used for power generation. The remaining natural gas liquids were to be retained by P&ID for onward sale either domestically or by export. The stated duration of the GSPA was 20 years.

Nigeria did not supply any wet gas to P&ID, and P&ID did not construct any Gas Processing Facilities that would process the wet gas if it were supplied. On August 22, 2012, The GSPA collapsed as P&ID failed to do any work. P&ID few months later in January 2013 commenced the private arbitration against Nigeria at the London Court of International Arbitration, relying on an arbitration clause in the GSPA. Sir Anthony Evans was nominated to the Tribunal by P&ID. Chief Bayo Ojo SAN (former Attorney-General of Nigeria) was nominated by Nigeria. Lord Hoffmann was appointed Chairman on 29 January 2013. 

The government of Former President Goodluck Jonathan reached an out-of-tribunal agreement with P&ID later in 2013 for the payment of $850 million compensation to P&ID for the breach of contract and passed on disbursement to the administration of President Buhari who won elections in 2015. President Buhari was against the idea of paying the negotiated sum. He directed the then Attorney-General, Abubakar Malami to set aside the settlement agreement with P&ID and challenge the enforcement of the award before the English Commercial Court. 

On July 17, 2015: The arbitration tribunal decided that Nigeria had committed a repudiatory breach of the GSPA, that the GSPA was terminated on P&ID accepting that repudiatory breach, and that Nigeria was liable in damages. The Tribunal published a further award dated 31 January 2017 dealing with quantum (“the Final Award”). The Final Award required Nigeria to pay P&ID US$ 6.6 billion. Interest was awarded at the rate of 7%. 

The Federal government then went before the Commercial Court in London and challenged the Award on Liability and the Final Award  and an award on jurisdiction. Nigeria alleged that the GSPA between FG and P&ID in 2010 was a product of bribery, corruption and perjury. Crucially the federal government equally alleged that some of the lawyers representing Nigeria at the time of the arbitration, including two Leading Counsel, were corrupted by P&ID and therefore did not do everything necessary to protect the interest of Nigeria. 

On June 28, 2018, the then Attorney-General of the Federation, Abubakar Malami, was directed by President Muhammadu Buhari to investigate the entire GSPA with P&ID. The Economic and Financial Crimes Commission (EFCC) on September 18, 2018 secured a criminal conviction against P&ID and P&ID Nigeria on charges of fraud and money laundering. A year later, on September 20, 2019, Grace Taiga, a former director for Legal Services at the Ministry of Petroleum was charged to court and remanded in Prison over allegations of bribery from P&ID and failing to follow due process in giving legal advice on the GSPA.

On August 16, 2019, Justice Butcher of the UK Commercial Court granted P&ID the right to seize Nigeria’s assets, effectively converting the arbitration award to an enforceable judgment. Nigeria decided to appeal and also apply for a stay of execution while its appeal was pending. The judge granted Nigeria’s request for a stay on any asset seizures while its legal challenge is pending but ordered it to pay $200 million to the court within 60 days to ensure the stay. It also mandated Nigeria to pay some court costs to P&ID within 14 days.

On September 26, 2019, Ross Cranston, a judge of the Business and Property Courts of England and Wales, granted Nigeria’s application for an extension of time and relief from sanctions, temporarily halting the enforcement of the award. Later in December of 2019, Justice Cranston agreed with Nigeria’s prayer that the award of the contract and the arbitration fine should be properly scrutinised. Nigeria provided evidence to argue that the GSPA was secured through fraud and corruption. 

On September 4, 2020, the English court granted Nigeria leave to challenge the arbitration award. Justice Cranston while granting that leave and sending the case back to the High Court for trial stated:

“It is not my function at this preliminary stage to decide whether a fraud took place. However, it has been necessary to consider a considerable amount of the material to decide firstly, whether, as Nigeria contended, there is a prima facie case of fraud and how strong that case is, and secondly, the steps Nigeria took to investigate the alleged fraud from late 2015. Both matters are relevant to the issues of whether Nigeria’s claim is barred altogether and whether time should be extended in its favour and relief from sanctions granted.”

The co-founder of P&ID, Brendan Cahill, was detained on 22nd December, 2021 by Irish authorities following investigations into the alleged bribery of Nigerian officials over the GSPA. Nigeria subsequently sought the extradition of Brendan Cahill and other accomplices to Nigeria to face fraud trials.

On January 23, 2023, Nigeria’s substantive application to set aside the arbitration award was heard by Justice Robin Knowles as the fraud trial began. On March 9, 2023, Nigeria made its final case that P&ID and its associates are guilty of bribery and corruption on an industrial scale.

Justice Robin Knowles then reserved judgment on the matter. Seven months later, Mr. Justice Robin Knowles finally ruled in favour of Nigeria, agreeing that the arbitration awards “were obtained by fraud and the awards were, and the way in which they were procured was, contrary to public policy”.

With this judgment, Nigeria will heave a huge sigh of relieve considering the fact that the potential sum in contention as damages to P&ID if Nigeria’s case had not succeeded was over US$11 billion, which is around a quarter of Nigeria’s current foreign reserves. That fine would have been the largest sum awarded against a government in history.

It is hoped that all the indicted public officials that connived with P&ID to facilitate the fraudulent GSPA and lay a mine for Nigeria to default and trigger a ridiculous arbitration award against Nigeria would be made to pay heavily for their attempt to pull off the greatest heist against a sovereign government by its own nationals collaborating with outsiders. This would serve as a deterrent to other civil servants mulling similar motives.