BLOOMBERG
After years of stop-and-go litigation, Nigeria could be on the hook for a debilitating $11 billion payout if a trial which started on Monday in a London court doesn’t go its way.
The Nigerian government urged the UK high court to stop the hedge fund-backed firm Process & Industrial Development Ltd. from collecting a massive arbitration award that was handed down in 2017 following a failed — and allegedly fraudulent — gas deal. That amount equals almost a third of Nigeria’s forex reserves, and its payout would deal a huge blow to Africa’s largest economy, which is still recovering from a pandemic-induced recession.
“There are many documents that are as close to a smoking gun as one will ever see in a fraud case,” Mark Howard, lawyer for Nigeria, said in court on Monday. “There are in fact so many incriminating documents in this case that there is a risk of almost becoming desensitized.”
The case centers on a 2010 deal between the Nigerian government and P&ID, a British Virgin Islands-registered firm controlled by two little-known Irish businessmen. The state agreed to provide free gas for 20 years to a facility P&ID would build in exchange for processed gas that would be used for electricity generation. The deal would allow the company to sell the leftover products and the country to boost its power supply.
According to P&ID, the firm never built the planned refinery because the Nigerian government failed to tap its natural gas. Nigeria claims that the deal came about through bribes to former government officials, and that the award should be overturned.
In 2012, P&ID initiated arbitration, claiming that attempts to resolve the issue privately had failed.
Five years later, a closed-door arbitration court in the UK ordered the West African country to pay $6.6 billion to the firm to compensate for lost profits — an amount has since swelled to over $11 billion with interest. P&ID has no other known assets.
Within a year of the arbitration ruling, the hedge fund VR Capital Group Ltd. entered a $45 million deal for a 25% stake in P&ID, which continued pressuring Nigeria to make the payment. VR Capital later increased its stake to 51%, Nigeria said in the court filing….
