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In the $1.7 billion lawsuit against JP Morgan Chase Bank over the transfer of money from the sale of OPL 245, a UK court decided against Nigeria.
The Nigerian government could not establish that it had been deceived, according to Judge Sara Cockerill of the Business and Property Courts of England and Wales Commercial Court on Tuesday.
The Federal Government has sued JP Morgan, arguing that the bank "ought to have known" that the deal in which Malabu sold its whole stake in OPL 245 to Shell and ENI for $1.1 billion was tainted by corruption and fraud.
Nigeria contended, among other things, that the bank acted carelessly when it transmitted $875 million in funds between 2011 and 2013, during a six-week trial.
Nigeria asserted, among other things, that the bank acted recklessly when it transferred $875 million in payments from government accounts to Etete, who had been convicted of money laundering, between 2011 and 2013.
The country demanded $1.7 billion in damages, plus interest, for what it called "glaring" red flags, such as "overwhelming" proof of fraud and harsh warnings from its own compliance personnel when the payments were authorized.
The case essentially examined the extent of a bank’s duty of care toward clients, and whether it should have halted payments even if that meant overriding assurances from government officials.
The bank in its defence rejected Nigeria’s claims, maintaining that all due processes were followed and money laundering checks were done, arguing that allegations of fraud only came up after a new government took over in Nigeria.
JPMorgan also argued that it filed suspicious activity reports with enforcement authorities and gained their consent before making the transfers.
In the judgement, Judge Cockerill ruled that the Nigerian government could not prove that it was defrauded, saying it may be that with the benefit of hindsight, “JPMorgan would have done things differently” but declared that “none of these things individually or collectively amount to triggering and then breaching” the bank’s duty of care to its client.
According to the judge, by the time of the 2013 payments, the bank was “on notice of a risk” of fraud.
In its reaction to the judgment, JP Morgan in a statement said, “This judgment reflects our commitment to acting with high professional standards in every country we operate in, and how we are prepared to robustly defend our actions and reputation when they are called into question.”
A spokesperson for the Federal Government said it will be reviewing the judgment before deciding next steps.
“The FRN will continue its fight against fraud and corruption and to work to recover funds for the people of Nigeria,” it said.
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