P&ID Arbitration

 Federal Republic of Nigeria and P&ID–2

More information can be found at: Nigeria-PandIDcase.org.

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Overview

Since 2012, the vulture fund-backed shell company P&ID has attempted to enforce a sham contract procured on the basis of fraud against the people of Nigeria.

The Economic and Financial Crimes Commission have uncovered clear evidence of “seismic” levels of corruption in the contract. Unfortunately, that corruption went to the highest levels of the previous government.[1]

Nigeria now face a situation where a shell company with little credibility could be paid a sum greater than five times the country’s education budget.

P&ID was created and run by a failed record producer from Ireland. He had no substantive experience managing a major infrastructure project. The company is now registered in the British Virgin Islands, with no assets other than this debt.[2]

The contract is a clear example of a highly orchestrated scam. The Buhari administration is working to crack down corruption and has successfully arrested and charged a number of high-level officials. Its investigations are complex and ongoing.[3]

It is telling that, despite many opportunities to do so, P&ID have failed to address the allegations of fraud and corruption levelled against them.

Frequently asked questions

  1. 1.What happened?

The Federal Republic of Nigeria and P&ID entered into a 20-year GSPA in early 2010, whereby the Government agreed that it would supply natural gas (wet gas) to P&ID. In turn, P&ID agreed to process and return eighty-five per cent of the wet gas in the form of lean gas, which could be used for energy generation.[4]

For the purpose of enabling the wet gas to be processed, P&ID agreed to construct two or more process streams with ancillary facilities – however, the construction was never carried out.[5]

In 2012, P&ID alleged that the Federation had not fulfilled its obligations in regard to the GPSA and claimed damages for lost profits - in the region of US$6 billion.[6]

However, P&ID spent little to no money in preparing to fulfil its obligations. The vulture-fund-backed P&ID is not a genuine commercial entity and would never have been able to carry out its part of the agreement.[7]

The GSPA is yet another example of officials using sham commercial deals to fraudulently divert much-needed assets from the Nigerian people.

  1. 2.Why wasn’t the fraud uncovered earlier?

Clear and concrete evidence of fraud was only recently discovered as a result of the Buhari Government’s anti-corruption efforts, spearheaded by the Economic and Financial Crimes Commission.

This evidence proves that ministers at the highest levels of office in the previous administration knowingly entered into the sham GSPA, and deliberately failed to properly defend the Federation in subsequent arbitral proceedings.

In particular, the standard protocols required by Nigerian law for authorising federal contracts were bypassed, suggesting that the GSPA was deliberately withheld from the rest of Government by officials who oversaw its signing.

Unlike the previous administration, President Buhari has taken a firm stance against corruption.[8]

Since he was elected, President Buhari has established several initiatives aimed at tackling fraud.[9] This includes the Presidential Advisory Committee Against Corruption and the Whistle Blowers Policy in 2016, as well as the National Anti-Corruption Strategy (NACS) 2017-2021 in 2017.

  1. 3.Who are P&ID?

P&ID is essentially a ‘shell’ company based in the British Virgin Islands.

It is 75% owned by Lismore Capital Limited, which is incorporated in the Cayman Islands. The remaining 25% share has recently been acquired by VR Advisory Services Limited  – a ‘vulture fund’. Vulture funds are a type of hedge fund that invests in buying the debt of the world’s poorest countries and often taking aggressive action to recover this debt.

P&ID had no intention of fulfilling its obligations under the GPSA. The company had no apparent assets – including land – no industry experience and no credentials suggesting it would be able to complete the agreement.

The founders of the company have both been associated with corruption in Nigeria in the past and provided false evidence to the Tribunal about their prior experience of oil and gas projects.

Latest updates

January 24, 2020:

A spokesperson for the Attorney General of the Federation said:

“The Federal Republic of Nigeria appeared in the English High Court for a scheduled case management conference (CMC) on January 24, 2020. The CMC was held for the Court to decide procedural issues relating to our application to set aside the arbitral award on the basis that it was procured by fraud and corruption.

A timetable has now been fixed for a hearing to decide if our application can be brought outside the normal time limits.

This is another positive milestone in the Federation's fight to overturn this award.

Based on new and credible evidence discovered by the Economic and Financial Crimes Commission (EFCC) - referred to in court as “seismic” – it is increasingly clear that this was a highly orchestrated scam, involving a cover-up by ministers at the highest levels of office in the previous administration. These officials, who were entrusted to safeguard the future and assets of Nigeria, knowingly entered into the sham GSPA, and deliberately failed to defend the Federation in the ensuing arbitral proceedings.

It is telling that to date P&ID has said nothing to rebut these allegations of fraud. These issues will now be before the Court to consider in relation to the Federation's challenge to this award.”

December 6, 2019:

On 6 December 2019, the Federal Republic of Nigeria filed a new and substantive challenge in the English Courts, in our ongoing fight against the vulture-fund-backed P&ID.[10]

This is a major step forward in our bid to overturn the injustice of the US$9.6 billion award.

The challenge argues that the gas supply and processing agreement (GSPA) is based on fraud and corruption and that the subsequent arbitral process was riddled with irregularities and deliberately concealed from the rest of the Government.[11]

Based on new evidence that has come to light in recent investigations, it is now clear that the original contract was a sham commercial deal designed to fail from the outset[12]. The Federation has strong reasons to believe that this is a highly orchestrated scam to deliberately strip Nigeria of our assets and our future.[13]

The Federation has recently expanded its legal team, to include leading London law firm Mishcon de Reya. The team is led by Shaistah Akhtar, Partner, and Mark Howard QC of Brick Court Chambers. The expansion will enable the Government to launch investigations and challenges.

 


[1]Premium Times (2019), ‘P&ID Contract Scandal: Buhari vows to punish corrupt, unpatriotic Nigerians’, [Accessed: 29th January 2020]

[2] Bloomberg (2019): ‘Is One of the World’s Biggest Lawsuits Built on a Sham?’. [Accessed: 6th January 2020]

[3] Bloomberg (2020): ‘Nigeria Says Official Got Bag of Cash from ‘Sham’ Energy Firm’, [Accessed: 29th January 2020]

[4]The Times (2019): ‘Pay the piper: will an Irish energy firm’s arbitration award bankrupt Nigeria?’. [Accessed: 6th January 2020]

[5] BBC News (2019): ‘Nigerian government ordered to pay $9bn to private gas firm’. [Accessed: 6th January 2020]

[6]Bloomberg (2019): ‘Is One of the World’s Biggest Lawsuits Built on a Sham?’. [Accessed: 6th January 2020]

[7] Financial Times (2019): ‘Nigeria granted stay of execution in $9.6bn court battle’. [Accessed: 6th January 2020]

[8] BBC News (2015): ‘Nigeria president appoints anti-corruption advisers’, [Accessed: 6th January 2020] 

[9] Pulse Nigeria (2019): ‘Osinbajo calls on Nigerians to support Buhari's war on corruption’, [Accessed: 6th January 2020]

[10] Financial Times (2019): ‘Nigeria granted stay of execution in $9.6bn court battle’. [Accessed: 6th January 2020]

[11]Bloomberg (2019): ‘Nigeria’s Battle Over $9 Billion Lawsuit Spreads to Ireland’. [Accessed: 6th January 2020]

[12] Ibid.

[13] Financial Times (2019): Nigeria’s government in UK court to overturn $9.6bn fine’. [Accessed: 6th January 2020]

 

 


 

Federal Republic of Nigeria and P&ID-1

Click Here  to download pdf file


 
On 6 December 2019, the Federal Republic of Nigeria filed a new and substantive challenge in the English Courts, in our ongoing fight against the vulture-fund-backed P&ID.1

This is a major step forward in our bid to overturn the injustice of the US$9.6 billion award.

The challenge argues that the gas supply and processing agreement (GSPA) is based on fraud and corruption and that the subsequent arbitral process was riddled with irregularities and deliberately concealed from the rest of the Government.2

Based on new evidence that has come to light in recent investigations, it is now clear that the original contract was a sham commercial deal designed to fail from the outset.3 The Federation has strong reasons to believe that this is a highly orchestrated scam to deliberately strip Nigeria of our assets and our future.4

The Federation has recently expanded its legal team, to include leading London law firm Mishcon de Reya. The team is led by Shaistah Akhtar, Partner, and Mark Howard QC of Brick Court Chambers. The expansion will enable the Government to launch in full our investigations and challenges.

What happened?

The Federal Republic of Nigeria and P&ID entered into a 20-year GSPA in early 2010, whereby the Government agreed that it would supply natural gas (wet gas) to P&ID. In turn, P&ID agreed to process and return eighty-five per cent of the wet gas in the form of lean gas, which could be used for energy generation.5

 For the purpose of enabling the wet gas to be processed, P&ID agreed to construct two or more process streams with ancillary facilities – however the construction was never carried out.6

In 2012, P&ID alleged that the Federation had not fulfilled its obligations in regard to the GPSA, and claimed damages for lost profits - in the region of US$6 billion.7

However, P&ID spent little to no money in preparing to fulfil its obligations. The vulture-fund-backed P&ID is not a genuine commercial entity, and would never have been able to carry out its part of the agreement.8

The GSPA is yet another example of officials using sham commercial deals to fraudulently divert much-needed assets from the Nigerian people.

Why wasn’t the fraud uncovered earlier?

Clear and concrete evidence of fraud was only recently discovered as a result of the Buhari Government’s anti-corruption efforts, spearheaded by the Economic and Financial Crimes Commission.

Unlike the previous administration, President Buhari has taken a firm stance against corruption.9

Since he was elected, President Buhari has established several initiatives aimed at tackling fraud. This includes the Presidential Advisory Committee Against Corruption and the Whistle Blowers Policy in 2016, as well as the National Anti-Corruption Strategy (NACS) 2017-2021 in 2017, and Executive Order No.6 of 2018 on the preservation of suspicious assets connected with corruption and restriction of movement of persons standing trials for high profile corruption cases.


[1] Financial Times (2019): ‘Nigeria granted stay of execution in $9.6bn court battle’. [Accessed: 6th January 2020] 

[2] Bloomberg (2019): ‘Nigeria’s Battle Over $9 Billion Lawsuit Spreads to Ireland’. [Accessed: 6th January 2020]

[3] Ibid.

[4]Financial Times (2019):‘Nigeria’s government in UK court to overturn $9.6bn fine’. [Accessed: 6th January 2020]

[5] The Times (2019): ‘Pay the piper: will an Irish energy firm’s arbitration award bankrupt Nigeria?’. [Accessed: 6th January 2020]

[6]  BBC News (2019): ‘Nigerian government ordered to pay $9bn to private gas firm’. [Accessed: 6th January 2020]

[7]  Bloomberg (2019):‘Is One of the World’s Biggest Lawsuits Built on a Sham?’. [Accessed: 6th January 2020]

[8] Financial Times (2019):‘Nigeria granted stay of execution in $9.6bn court battle’. [Accessed: 6th January 2020]

[9]  BBC News (2015): ‘Nigeria president appoints anti-corruption advisers’, [Accessed: 6th January 2020]

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