LESSONS FROM THE NIGERIA VS. P&ID CASE

 All business contracts must be transparent and adhere to due diligence, writes Oluwagbemiga Ogunsote

On Monday, October 23, 2023, a commercial court in the United Kingdom rendered a verdict that significantly altered the course of a protracted and complex legal battle between Nigeria and Process & Industrial Developments (P&ID), a British Virgin Islands-based company. In what can only be seen as a victory for Nigeria, Justice Robin Knowles, presiding over the case, made a ruling that set aside an earlier arbitral award against Nigeria.

The earlier award in favour of P&ID was a staggering sum of $6.6 billion, alongside a seven percent interest rate, as damages to be paid by the Federal Government of Nigeria. The implications of this week’s ruling are profound, as it potentially prevented P&ID from seizing foreign assets owned by the nation.

But just before we act like we are wont to do – pat ourselves on the back and put that past behind us and move on – it is important that we do what rational beings would do. We should as a matter of utmost importance reflect on how we got here in the first place. Perchance, such an exercise will enable us to take away critical learnings that may steer us away from threading such a path in future.

Let us be realistic…if the arbitration award was not as huge as it was to even pose an existential threat to Nigeria, the last-minute efforts to stall and thwart the payment of the award might never have taken place.

In 2010, during the Yar’Adua/Jonathan administration, Nigeria had entered (what on the surface was) a laudable gas supply and processing agreement (GSPA) with P&ID, with the goal of developing a gas processing plant in Cross River State to help cut down gas flaring and increase availability of gas for other national uses such as power generation.

Flaws and fraud in the contracting process would eventually be exposed. How a contract with such national ramifications could have been executed in a shabby manner that it was, clearly showed that private pecuniary interests had taken control of the process. It would later come to light that Nigeria’s Ministry of Justice was not even carried along. Sensitive documents that had no business being in the hands of P&ID found their way out of confidential government circles and into P&ID meeting rooms. Even P&ID Nigeria Ltd which was the original corporate entity the government had discussions with ended up being a different corporate entity from P&ID which the government eventually signed the contract with.

Due diligence and adherence to laws and processes are often sacrificed for selfish interests…and the P&ID contract was no exception. However, we have no idea the scale of loss Nigeria has suffered due to this in other less celebrated scams.

Eventually, the GSPA project never came to fruition, and P&ID alleged that Nigeria had breached the terms of the contract. This dispute culminated in a protracted legal battle that was taken to arbitration in 2012, with a senior lawyer Mr Olasupo Shasore (SAN), a former Attorney-General of Lagos State, representing Nigeria’s interests.

The ramifications of such an enormous sum leaving Nigeria’s coffers would have been nothing short of an economic catastrophe. Interestingly, Nigeria had a 90-day window in 2017 to appeal the ruling …and didn’t take it until the time lapsed and a summary, no-contest judgment was issued against Nigeria.

Consequently, Nigeria, seeking to be allowed to re-enter a dispute of the award, initiated legal proceedings in both the United Kingdom and Nigeria to prove that the project was fraudulent from conception and that even the arbitration process was not spared from corruption and manipulation to favour P&ID.

Typical of the strategy of locking the stall after the horses have bolted, the Economic and Financial Crimes Commission set up a special P&ID unit specifically for this case to work backwards and prove the different levels of ‘fraud’. In the fireworks that followed, innocent people were caught in the crossfire. One of such was Nigeria’s counsel, Mr Shasore, who it transpires had consistently urged Nigerian officials to engage in the arbitration process to avoid an adverse judgment and had penned a letter to EFCC as far back as March 2016 calling on the agency to investigate corruption in the case. Accused of all manner of malpractice and vilified repeatedly in the media for same, Shasore’s experience also showcased another flaw in our system that we must pay attention to, and address vehemently whenever we can: how government functionaries pay little attention to who and what may need to be sacrificed so that they can save face or service their interests.

Speaking in this direction in Monday’s judgment, Judge Knowles had scathing words for former Attorney General, Abubakar Malami with respect to the accusations against, and mistreatment, of Mr Shasore.

In his judgment, he mentioned three matters (Page 101, Para 470) that referred to Nigeria’s conduct in relation to the previous hearing. One of them was, “Mr Malami’s decision to put forward a false and dishonest case in his evidence before Sir Ross Cranston about the alleged corruption of Mr Shasore SAN, which has only been abandoned sub silentio in the course of this trial.”

He had earlier (Page 96, Para 442-5) had this to say, “Mr Shasore SAN has not, in my judgment, been shown to be corrupt. His actions are inconsistent with Nigeria’s theory that he was….on the other hand, the account given in this judgment shows that responsibility for failures to obtain evidence and to avoid delay lay rather with many ministers and officials, whom Mr Shasore, SAN and others (including Stephenson Harwood and Mr Cordara QC at one stage) pressed repeatedly.”

In a stunning indictment of the former Attorney General’s conduct in the case, Judge Knowles emphasised: “I add that in my view, Nigeria (and specifically Mr Malami SAN, the Attorney General) did not in truth believe Mr Shasore, SAN was corrupt.” He went on to list facts including the fact that the Nigerian government continued to appoint Mr Shasore to represent its interests in other arbitration cases.

Sadly, in the euphoria of the quashing of the award, these are other dimensions of the judgment that will escape mentions by the media which had served as channels of amplification of the false allegations for years. Indeed, the judge referred to the fact that Mr. Shasore chose not to make any attempt to give any independent account to the court of the allegations made against him – an option which was open to him. I can only conclude that such a golden silence can only be characterised as patriotism.

The P&ID case has laid bare critical deficiencies in how the Nigerian government sometimes manages contractual agreements. To avert future disputes, Nigeria must mandate adherence to transparency and rigorous due diligence as non-negotiable prerequisites in all business contracts. Contracts must be meticulously researched and formulated to prevent costly legal battles. Nigeria’s oversight and accountability mechanisms concerning foreign investors require substantial improvement.

The Nigeria vs. P&ID case serves as a stark reminder of the dire consequences that negligence, corruption, and a lack of due diligence can bring about. As Nigeria seeks to recover and glean lessons from this experience, we have a unique opportunity to implement critical reforms that will safeguard the nation’s interests in the future. Through the adoption of transparency, the strengthening of legal frameworks, and a commitment to public engagement, Nigeria can work diligently to prevent the recurrence of such a costly and damaging legal battle.

 Ogunsote writes from Garki, Abuja