FG: Nigeria’s Assets Not in Imminent Danger over $9.6bn Judgment Debt

Says deal fraudulent Emefiele: Agreement breaches foreign contract rules Buhari directs EFCC, NIA, IG to investigate

The federal government yesterday pushed out concerted response to the judgment of a London court that authorised an Irish company, Process and Industrial Developments Ltd. (P&ID), to seize $9.6 billion of Nigerian assets in the United Kingdom, with an assurance that the judgment debt would not endanger the nation’s assets.

It described the botched gas contract, over which P&ID secured an arbitration award and the enforcement judgment, as fraudulent and a breach of foreign contract rules.

Already, President Muhammadu Buhari has ordered a multi-agency probe of the contract, which will be carried out by the Economic and Financial Crimes Commission (EFCC), National Intelligence Agency (NIA) and the Inspector General of Police.

The Minister of Information and Culture, Alhaji Lai Mohammed; Attorney General of the Federation and Minister of Justice, Mr. Abubakar Malami (SAN); Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed; and the Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday presented the federal government’s position on the $9.6 billion judgment debt to journalists at a news conference in Abuja.

In 2010, a period of political tension, following the crisis triggered by the ill-health of President Umaru Musa Yar’Adua, the Federal Ministry of Petroleum Resources and P&ID signed the contract which alleged default of the terms by Nigeria led to the $9.6bn arbitration award and the recent enforcement judgment of London Court, granting the company leave to recover its award from Nigeria’s assets in the UK.

Mohammed told the gathering that Buhari had directed the EFCC, NIA and the Inspector General of Police to conduct a thorough investigation into the UK court judgment against Nigeria.

He said the directive was an attempt to unravel the circumstances surrounding the judgment just as he gave a detailed account of how the disagreement arose and efforts the government had made to get the judiciary to throw out the case.

He also assured Nigerians that the federal government is taking all necessary steps to appeal the decision of the UK Court, to seek for a stay of execution of the decision, to defend its rights and to protect the nation’s assets.

According to him, in the 20-year Gas Supply Processing Agreement (GSPA) purportedly entered into with P&ID in 2010, the company never performed as agreed.

He explained: ‘’With the contract having suffered a setback, the case went to arbitration. P&ID’s claim in the arbitration proceedings was mainly for the loss of profit for the 20-year term of the GSPA. In an interim award, the Arbitration Tribunal ruled that Nigeria has breached the contract. Though Nigeria successfully applied to have that award set aside by the Federal High Court in Lagos, the tribunal ignored this decision.

‘’Consequently, on January 31, 2017, the tribunal rendered its final award against the Ministry of Petroleum Resources in the sum of $6.597 billion together with pre-award interest at the rate of seven per cent per annum, effective from 20 March 2013 and post-award interest the same rate from the date of the award. This interest increased the size of the award to $9.6 billion.’’

The federal government added that after the arbitration award in 2017, Nigeria made several attempts to negotiate the award and resolve the issue amicably with P&ID but to no avail. The failure to amicably resolve the issue eventually led to the enforcement proceedings instituted simultaneously by the company in the UK and the US.

Mohammed spoke on how the federal government then engaged the services of the US law firm of Curtis, MalletPrevost, Colt & Mosle LLP, which took steps to defend the proceedings in the US District Court of Columbia to dismiss P&ID’s application for the enforcement of the award on the grounds that Nigeria, as a sovereign state, has an absolute right to obtain an authoritative determination of its sovereign immunity.

Mohammed said while Nigeria had recorded some successes in US case, adding that the federal government would defend its interest and that of the people of Nigeria.

He said: “It is worth mentioning that in challenging the award, the federal government relied upon an expert report analysing the damages given to the P&ID. The expert concluded that the damages were clearly unreasonable and manifestly excessive and exorbitant; went far beyond any legitimate protection of the commercial interest of the P&ID; were completely wrong and obviously unjustifiable; and that the damages overcompensated P&ID on a frankly gargantuan scale and imposed a punitive award on Nigeria.’’

He said it was because of the foregoing that the federal government took all available steps to resist the enforcement of the penalty clause before the UK courts but it failed to stop the judgment.

On the contract, Mohammed said the federal government viewed with serious concerns the underhanded manner in which the contract was negotiated and signed, adding that there were indications that the deal was carried out by some vested interests in the past administration, which apparently colluded with their local and international conspirators to inflict grave economic injury on Nigeria and its people.

‘’In view of the above, and in an attempt to unravel the circumstances surrounding the entire transaction, the Attorney General of the Federation, with the approval of Mr. President, has requested the Economic and Financial Crimes Commission (EFCC), the National Intelligence Agency (NIA) and the Inspector General of Police (IG) to conduct a thorough investigation into the company, the circumstances surrounding the agreement and the subsequent event, which includes commencing a fullscale criminal investigation,’’ the minister added.

He appealed to the Nigerian media to be patriotic in the reportage of the matter, which could threaten the existence of the country.

Mohammed stated that despite the recent recognition of the award by a UK court, and contrary to some reports, Nigeria was not about to lose any of its assets to P&ID.

‘’There is no imminent threat to Nigeria's assets!” Mohammed said, adding: “In the first instance, the enforcement of the award cannot even commence now because the judge in the UK court ordered that the P&ID couldn’t enforce the judgment against Nigeria until after the court resumes from its current vacation.

“What this means is that enforcement action cannot begin until further hearing on the matter, which will take place on a date to be determined by the court upon its resumption. The federal government therefore wishes to use this opportunity to assure Nigerians that there is no immediate threat to Nigeria’s assets as has been wrongly interpreted by a section of the media.’’

Malami, who labelled the contract as ‘’fraudulent,’’ said the purported contract was bound to fail from the beginning because the Ministry of Petroleum that entered into the agreement with P & ID, on behalf of the federal government to supply gas products was not a producer of such products. He added that it is only the Nigerian National Petroleum Corporation (NNPC) and its partners that produce gas in Nigeria and who should have entered into such a deal with P&ID.

He said: “How can the Ministry of Petroleum supply what it does not have? The ministry does not produce gas; the product is produced by NNPC and its partners.’’

In his contribution, Emefiele described the contract as fishy, saying there are no records at the CBN to prove that P&ID, as a foreign company, deserves to be awarded $9.6 billion contract in Nigeria. He accused the company of breaching foreign contract rules.

He said: “We have checked our records and there is no documentation to show that the company followed due process. We have written to the relevant security agencies to investigate the matter. Like the AGF stated, the contract was bound to fail from the beginning; There is no evidence to show that the company deserve to be awarded $9.6 billion.’’

He reaffirmed Nigeria’s determination to resist the ruling, adding that there are certain anomalies in the process leading to the award of the contract, which are currently being looked into by the EFCC and other security agencies.

The CBN governor said the government would follow through to stop the execution of the judgment and win the

appeals both within Nigeria and abroad.

On her part, the finance minister described the contract as an assault on every Nigerian, stating that the ministry is working with the Ministry of Justice to ensure that the judgment is set aside in the general interest of the nation.

Malami said that preliminary investigations have revealed local and international conspiracy in the purported gas contract leading to the award of 9.6 billion dollars’ judgment debt against Nigeria.

He added that the preliminary investigations revealed that the contract from conception was bound to fail because of deliberate inherent elements designed into it.

“I want to draw attention first to the composition of parties in the agreements which are the Federal Ministry of Petroleum Resources (FMPR) and the company, Process and Industrial Developments Ltd. (P&ID).

He added: “As you rightly know, the federal ministry of petroleum resources is

not a producer of gas. Gas products are produced by International Oil Companies (IOC) and NNPC.

‘’When you conceive, sign and execute a contract for the supply of gas products without involving the IOC and NNPC as parties to the agreement, you know very well that there are a lot of questions to answer rising from the conception of the contract.

“This, among others, gave rise to the insinuation of fraudulent conspiracies right from the conception of the agreement. “The fact

remains that you cannot sign an agreement to provide a product that you do not have.’’

He further explained that the ministry does not have oil field and gas products but it went ahead to sign the agreement without involving those that are producers of gas products.

The CBN Governor said the claim by P&ID that it spent $40 million on the botched contract was not correct.

According to him, “We have heard that the contractors, in this case,

claimed that they spent $40 million in the project. On our part in CBN, we know that as a foreign company, if you are investing in a contract or project in Nigeria, there are various options that you adopt.

“If you are bringing in machines into the country to execute a contract, you must file certain forms and pay some money through the CBN. We have gone through our records but we do not have any information to show that the company brought in one cent into the country for the purported

project.

The Finance minister on her part said the case was weighty considering the fact that the awarded $9.6 billion are equivalent to N3.5 trillion.

“N3.5 trillion in our national budget will be covering for us recurrent votes if not more. Apart from being exorbitant, it is unfair and an assault to every Nigerian,’’ she said

She added that every Nigerian must come together to ensure that the judgment is set aside because the consequences will affect everyone.