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Market Digest Nigeria

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Nigerian Newspaper Headlines (27th September,2019)

$9.6b debt

Guardian Newspaper: UK court grants Nigeria stay of execution over $9.6b debt

The Federal Government yesterday achieved a major boost in its effort to upturn the $9.6 billion judgment in favour of Process and Industrial Development (P&ID) as a UK court yesterday granted the country leave to appeal, and a stay of execution of the earlier judgment.

The ruling by the Commercial and Arbitral Court of the United Kingdom (UK) offers Nigeria a fresh opportunity to prove its allegation against P&ID that the company was bent on using its alleged claim of expertise in gas processing to defraud Nigeria. The court heard the Federal Government’s fresh grounds to review the judgment and ruled that a stay of execution be granted subject to a $200 million security payment to court within 60 days pending the determination of the appeal.

Reacting to the condition, Minister of Justice Abubakar Malami said: “I am pleased with today’s development in the court as I see this as a positive resolution that constitutes an important step in the government’s effort to defend itself in a fair and just process. We look forward to challenging the UK Commercial Court’s recognition of the tribunal’s decision in the UK Court of Appeals, uncovering P&ID’s outrageous approach for what it is: a sham based on fraudulent and criminal activity developed to profit from a developing country.

“We will study the court rulings, exercise the right of appeal, and consider the legal options available at our disposal as it relates to the payment of $200 million in view of the 60 days window stipulated by the court.” Reacting, P&ID, in a statement sent to The Guardian, welcomed the ruling, saying: “The Nigerian government will now have to put its money where its mouth is if it wants to avoid immediate seizure of assets.”

It said further: “The Nigerian government’s recent media exercise to allege fraud against P&ID turned out to be a red herring. Indeed, the Nigerian government did not present any evidence to support Attorney General Malami’s ‘findings’ from his sham investigation. The Nigerian government knows there was no fraud and the allegations are merely political theater designed to deflect attention from its own shortcomings.” Some Nigerians allegedly involved in the failed gas supply contract were recently convicted by the local court, which also ruled on the seizure of P&ID’s assets in Nigeria.

The project conceived by P&ID’s founders, Brendan Cahill and Michael Quinn, was to deliver “much-needed power generation to millions of Nigerians and create profitable by-products for sale on the international market. Under an agreement with Nigeria, P&ID would build a state-of-the-art gas processing plant to refine natural gas (‘wet gas’) into ‘lean gas’.” P&ID “would receive no payment for this work: instead, it would own the by-products created by the refining such as propane, ethane and butane, known as Natural Gas Liquids (NGLs) and would have the right to sell them on the international markets. This market would be worth billions of dollars over the 20-year lifespan of the contract.”

Nigeria reportedly failed to supply the ‘wet gas’ (which was required under the terms of the contract) and so the project could not continue. P&ID claimed it made multiple compromises in an attempt to find a workable solution but did “not find a willing partner on the other side of the table.” In 2012, P&ID went to arbitration to try to resolve the dispute, and in 2016, the panel of independent arbitrators ruled that Nigeria was liable to the company, a decision that has led to the current situation. President Muhammadu Buhari, meanwhile, has disclosed that Nigeria lost an estimated US$157.5 billion to illicit financial flows between 2003 and 2012.

Quoting from the 2014 Global Financial Integrity Report in his address to the High-Level National Side-Event, he noted that such massive loss of assets resulted in dearth of resources “to fund public services or to alleviate poverty” in the country. The event was organised by the African Union Development Agency and New Partnership for Africa’s Development (AUDA-NEPAD) and the Economic and Financial Crimes Commission (EFCC) on Wednesday in New York, on the margins of the 74th United Nations General Assembly.

“That is why our government has made it a war we intend to win. We will give all it takes to ensure there is no hiding place for purveyors of corrupt practices who are truly enemies of the people,” Buhari said. Details of the president’s address were disclosed in a statement by his Special Adviser on Media and Publicity, Femi Adesina, and made available to newsmen in the early hours of yesterday. Stressing the need to strengthen good practices on asset recovery and return, Buhari said: “In the last five years, our government has made significant progress to curb corruption. And we have recovered millions of dollars stolen from our country.”

He however noted: “There are still a lot of other funds that are stuck in foreign bank accounts due to international laws, different jurisdictions and justice systems that make it difficult for repatriation.” Describing illicit financial flows as “illegal movement of funds from one country to another,” Buhari lamented: “These flows deplete Africa’s internally generated revenues, foreign exchange earnings, reduce tax revenues, drain natural resources, facilitate corruption and stunt private sector development.”

Citing tax avoidance as another form of illicit financial flow, he quoted the Tax Justice Network and the International Monetary Fund to have estimated over US$200 billion per year “lost by developing countries when multinational enterprises do not pay taxes in the countries where they made the profit. This amount is significantly higher than the annual development aid received by these countries which are estimated to be about US$143 billion.”

Buhari commended the organisers of the meeting designed to finding “pragmatic ways to promote international cooperation to combat illicit financial flows and strengthen good practices on asset recovery and return, as an arm of sustainable development policies in Africa.” He also lauded their “shared commitment to root out corruption from our continent.” Emphasising the imperative of international cooperation towards stemming the incidence of illegal financial flows, Buhari said: “Any lasting solution to the above challenges will require international cooperation and coordination,” of African countries and their international counterparts.

“This is one reason why the Nigerian government supports this initiative of AUDA/NEPAD and remains committed until we ensure that there are no safe-havens for stolen assets from Africa,” he said. On the outcome of the meeting, Buhari said: “I have high expectations. At the end of the deliberations, I expect other African leaders to see the pragmatic ideas on how to strengthen our anti-corruption institutions to reduce or effectively eliminate illicit financial flows.”

Punch Newspaper: Federal Govt suit: Pay $250,000 in 14 days or forget appeal – P&ID

The Process and Industrial Development Limited has said Nigeria will not be able to  file an appeal in respect of the $9.6bn arbitral award until the Federal Government pays it a $250,000 cost awarded by a United Kingdom court. The firm said the $250,000 payment must be paid to it by Nigeria within 14 days. Justice Christopher Butcher of the Commercial Court in London on Thursday granted Nigeria’s request to stay of execution of the enforcement of the $9.6bn arbitral award pending the Federal Government’s appeal.

Granting the stay conditionally, the judge ordered Nigeria to make a $200m security payment into its account within 60 days. He also granted Nigeria’s request for a leave to file the appeal in respect of the $9.6bn arbitral award. AFP reports that the amount of the running cost was not disclosed in the open court. But P&ID, in a statement e-mailed to The PUNCH following our enquiries from the firm at the end of the Thursday’s proceedings, said the running cost which the Nigeria government must pay to it within 14 days before it could file the appeal amounted to $250,000.

Court’s ruling on enforcement not award—P&ID

It said the Thursday’s ruling by the British court was not a permission to the Federal Government to appeal against the arbitral award but to appeal against its enforcement in the form of seizure of its assets. The statement  read, “For background, today’s judgment granted the Nigerian government leave to appeal the UK court’s decision that it could be subject to asset seizures to enforce the arbitration award in favour of P&ID.

“It does not allow the government to appeal the award itself. “As you’ll be aware, the High Court in the UK heard arguments in the case today, with the Nigerian government seeking a stay of asset seizures and leave to appeal the asset seizure decision. “The court has ruled the government may appeal – if it meets the conditions that $250,000 must be paid to P&ID in costs within 14 days and $200m in security paid to the court within 60 days.”

The British court had in August this year delivered a judgment recognising a London-based arbitration panel’s  award of $9.6bn against Nigeria over a failed Gas Supply Processing Agreement signed in 2010 between the Federal Government and P&ID for “lean gas” production in the country.

Parties to the case returned to the court on Thursday with Nigeria obtaining the leave of the court to appeal against the judgment and an order of conditional stay of execution of the judgment subject to the Federal Government’s payment of security fund of $200m into the court’s account within 60days.

Nigeria failed to raise fraud allegation against us at UK court, says P&ID

Reacting to the Thursday’s proceedings in a separate statement posted on a website dedicated to the firm’s public relations on the controversial judgment, the P&ID said the Federal Government’s much-touted allegation of fraud in the GSPA which led to the arbitral award of $9.6bn against the country, was not canvassed when the matter came up before a United Kingdom court on Thursday.

The Federal High Court in Abuja had on September 19, 2019 convicted and wound P&ID Limited incorporated in British Virgin Island, and the firm’s Nigerian affiliate, P&ID (Nigeria) Limited, for fraud, tax evasion, among other sundry offences. The Attorney General of the Federation, Mr Abubakar Malami, had said the conviction of the two firms was a judicial proof that the GSPA was fraudulent.

He had said the proof of fraud would be presented before the UK court to boost Nigeria’s chances of having the judgment set aside. But P&ID said the fraud allegation about the agreement turned out to be a mere red herring as no evidence was put forward to back it by Nigeria’s legal team in court.

It stated, “The Nigerian Government’s recent media exercise to allege fraud against the P&ID turned out to be a red herring. Indeed, the Nigerian Government did not present any evidence to support Attorney General Malami’s ‘findings’ from his sham investigation. “The Nigerian Government knows there was no fraud and the allegations are merely political theatre designed to deflect attention from its own shortcomings.”

It said Nigeria must have to quickly pay the sum of $200m to avoid immediate seizure of its assets. “The court has ruled that the Nigerian Government must put up $200m to maintain a stay of execution whilst it pursues an appeal against enforcement of the now $9.6bn award in favour of P&ID. “The Nigerian government will now have to put its money where its mouth is if it wants to avoid immediate seizure of assets.”

P&ID can seize Nigeria’s assets if deadlines are missed – Court

AFP reports that Justice Butcher said on Thursday that P&ID had the right to seize Nigerian assets should either of those deadlines be missed. It quoted Justice Butcher as further ruling “that there may be immediate and potentially severe damage to Nigeria if there is no stay”.

FG welcomes stay of execution order

Meanwhile, the Federal Government, on Thursday, welcomed the decision of the British court that granted Nigeria’s request for a stay execution of the $9.6bn judgment it delivered in favour of Process and Industrial Development in August this year.

It described the development as a positive resolution which was an important step in government’s efforts to have the matter resolved in its favour. The Attorney-General of the Federation, Abubakar Malami (SAN), made the government’s position known shortly after the order was made. Malami, who is leading senior government officials who are in London said, “I am pleased with today’s development in the court and see this as a positive resolution that constitutes an important step in the government’s efforts to defend itself in a fair and just process.

“We will study the court rulings, exercise the right of appeal and consider the legal options available at our disposal as it relates to the payment of $200m in view of the 60 days window stipulated by the court. “We look forward to challenging the UK Commercial Court’s recognition of the tribunal’s decision in the UK Court of Appeals, uncovering P&lD’s outrageous approach for what it is: a sham based on fraudulent and criminal activity developed to profit from a developing country.

Also, a statement from the Office of the Minister of Information and Culture, Lai Mohammed, quoted the attorney general as saying the decision was “a positive resolution that constitutes an important step in the government’s efforts to defend itself in a fair and just process.”

Sun Newspaper: P&ID: FG gets ‘execution stay’ order for $200m

A United Kingdom Court yesterday granted  Nigeria’s application to appeal against the judgment secured by Process and Industrial Development Limited (P&ID) to seize the sum of $9.6 billion in Nigerian assets. The court equally granted the application for stay of execution moved by the Federal Government but with a stringent condition.

The application for stay was granted by the court subject to the payment of the sum of $200 million by Nigeria within 60 days  as security to court, pending the hearing and determination of the appeal filed by the Federal Government. However, she is to pay $250m to P&ID immediately as the legal cost incurred by the company so far in the case.

It was learnt that Nigeria’s legal team agreed with the court that all actions and criminal trials in Nigeria shall have no relevance or bearing on the London matters. With the filing of stay of execution, the enforcement of the controversial judgment would be put on hold until the outcome of the appeal. Attorney-General of the Federation and Minister of Justice (AGF), Abubakar Malami, SAN, who confirmed this to Daily Sun, said it was a healthy development for the country.

Malami said: “Leave to appeal has been granted. Stay of execution is also granted, subject to the payment of $200m security payment to court pending the determination of the appeal the leave for which has been granted by the commercial court. “We will study the court rulings, exercise the right appeal and consider the legal options available at our disposal as it relates to the payment of $200m, in view of the 60 days window stipulated by the court. The steps we will consider are to study the ruling and act in a way beneficial to the interest of the nation.

“I am pleased with today’s development in the court and see this as a positive resolution that constitutes an important step in the government’s efforts to defend itself in a fair and just process. We look forward to challenging the UK Commercial Court’s recognition of the tribunal’s decision in the UK Court of Appeal, uncovering P&ID’s outrageous approach for what it is: a sham based on fraudulent and criminal activity developed to profit from a developing country,” he said.

The  case against Nigeria centres on a contract signed in 2009 by P&ID, a company registered in the British Virgin Islands, and Nigeria’s Ministry of Petroleum Resources for the building of a refinery to convert natural gas into “lean gas” in Cross River State in southern Nigeria. Under the controversial agreement, Nigeria committed to build a pipeline to carry the gas to the refinery, but it was never completed. Work on the refinery never started, but P&ID said it spent $40m on the project, a claim disputed by Nigeria.

P&ID, which was co-founded by Brendan Cahill and Mick Quinn, a former showbands manager who died in 2015, strongly denies Nigeria’s allegations. The company says it entered into the contract in good faith. However, Nigerian officials say the original contract was flawed. Mr. Malami argued that, by law, a contract of that size should have been scrutinised by the AGF’s office, the Federal Executive Council and the Department of Petroleum Resources, none of which was consulted.

Instead, he said, the Ministry of Petroleum Resources had run a rogue operation and signed the contract with P&ID without going through proper channels. A Nigerian federal court had set aside the arbitration award on the grounds that the original contract was illegal, he said, a ruling that the London courts had not followed. In 2017, a London arbitration court awarded P&ID $6.6bn in damages. With interest, that amount has ballooned to nearly $9.6bn, or roughly 2.5 per cent of Nigeria’s nominal gross domestic product.

In August, the commercial court in London said P&ID could enforce the arbitration decision as if it were a UK court order, which would allow it to begin seizing Nigerian assets. Nigerian officials said they expected to claim “sovereign immunity” in the case, arguing that the country could not be forced to surrender sovereign assets to a private claimant. It will also allege that the contract underlying the claim was fraudulent, and ask for the judgment to be set aside.

P&ID said: “The agreement with Nigeria was signed after years of preparation, field work, evaluation and planning on the part of P&ID. The project was not a novel concept and it only failed when the Nigerian government failed to live up to its end of the contract.”

Last week, two men allegedly linked to P&ID pleaded guilty on behalf of the company to charges of fraud and money laundering in a court in Abuja. The court ordered P&ID to forfeit all its assets, though Nigerian officials have described P&ID as a “shell company” with almost no physical infrastructure or staff.

Two constitutional lawyers and Senior Advocates, Mr. Paul Erokoro and Chief Mike Ozekhome, have hailed the judgment. Mr. Erokoro said the judgment would save the country from the embarrassing situation. “The Federal Government should now take the appeal very seriously to its logical conclusion. “ The judgment itself was a product of scam and fraud involving some Nigerians who ensured that tough conditions were in place to make it difficult for Nigeria to escape liabilities. Nigeria will be broke for another 10 years if the judgment is enforced,” he said.

He urged the Federal Government to go after those involved in the fraudulent contract, including selling their assets. Chief Ozekhome said the ruling affords Nigeria the opportunity to tie the loose ends and appeal the judgment. But it must be done immediately. “I am happy the government listened to our advice and took the measures they have taken so far,” he said. “They must not rest on their oars, a lot still needs to be done about appealing the judgment. They must understand the urgency required to avert huge losses.”

The UK Commercial and Arbitration Court yesterday ordered a stay of execution, pending the determination of an appeal by the Federal Government. The court asked the Nigerian government to make a security payment of $200 million to the court, while also granting Nigeria’s leave to file an appeal against the award. The court said, the stay of executive order is effective subject to Nigeria making the payment with 60 days.

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