A bitter legal dispute between the Nigerian state and banking giant JP Morgan is due to be heard in the UK’s High Court this week.
JP Morgan is being sued by the Nigerian government over allegations it negligently allowed corrupt officials to pilfer more than three quarters of a $1.3bn oil investment, the Telegraph first reported. Court filings reportedly state that JP Morgan should have been aware that the transactions it was asked to perform, transferring hundreds of millions of dollars to foreign bank accounts controlled by Nigerian oil minister Dan Etete, were potentially fraudulent.
Court filings seen by the Telegraph claim the transactions should have caused a “reasonable and honest banker to consider that there was a real possibility that the Nigerian state was being defrauded and thus refrain from making payment.”
“International banks have a critical role to play in the global fight against fraud and corruption,” a spokesperson for the Federal Republic of Nigeria told City A.M..
“The FRN is confident that its claim against JPMorgan will succeed, and justice will be delivered for the people of Nigeria,” the spokesperson added.
A contested Nigerian oil field, containing 9bn barrels of crude, is at the heart of the case. In 1998 the former oil minister Etete awarded the licence for the field to his company Malabu Oil and Gas, a firm without assets or employees, for just $20m.
Shell later snapped up the oil field in partnership with Italian company Eni for $1.3bn, the majority of which was sent to Malabu while the Nigerian state holding on to just $208m. The remainder of the money ended up in foreign bank accounts controlled by Etete.
The transactions were facilitated by JP Morgan which is the impetus for the current legal drama. However, the world’s largest investment bank claims it simply followed the instructions of its client, the Nigerian state, which it claims were approved at the time by the Attorney General.
“JP Morgan is confident that it acted appropriately in making these payments, which were authorised by senior representatives of the Nigerian government, and only processed following extensive engagement with law enforcement and other agencies and courts,” a spokesperson told City A.M..
“We will robustly defend against this claim, and trust that the court will fully acquit the firm of any wrongdoing,” the spokesperson added.