Nigeria sues JP Morgan over controversial oil deal, demands $1.7 billion as damages

Nigeria has filed a lawsuit in a London court against JP Morgan Chase, demanding over $1.7 billion in damages for its role in the disputed 2011 Malabo oil sale. The hearing is set to begin on Wednesday.

The civil challenge, which was brought in British courts in 2017, is in reference to Shell and Eni's $1.3 billion purchase of an oil block prospecting license OPL 245, which has also been the subject of a legal struggle in Milan and the United Kingdom.

The Federal Government has previously accused JP Morgan of egregious carelessness in transferring monies paid by Shell and Eni into an escrow account controlled by Nigeria's former Minister of Petroleum, Dan Etete, rather than into a government account and without undertaking adequate due diligence.

According to Reuters, Nigeria is seeking damages in the amount of $875 million paid in three installments in Etete's Malabu Oil account, plus interest, for a total of nearly $1.7 billion, with the Federal Government asking JP Morgan to execute these transactions as part of the oilfield sale.

According to a Nigerian spokesman, JP Morgan was well aware that the payments put its customer, the Federal Republic of Nigeria, at danger of being deceived, which is exactly what transpired.

JP Morgan’s response to the allegation:

"J.P. Morgan is convinced that it acted appropriately in making these payments, which were allowed by senior Nigerian government representatives and only completed after substantial discussion with law enforcement and other agencies and courts," a bank spokesman said. "We will vigorously defend ourselves against this claim."

What oil giant, Eni has to say: The two oil majors engaged in the agreement, Shell and Eni, were not named as defendants in Nigeria's complaint filed in the London High Court.

"Eni was finally acquitted following the trial in Milan because there was no case," Eni stated in an email, "therefore we have nothing to contribute with regards to the OPL 245 agreement and to the London trial, which does not concern Eni."

Background history:

This contentious oil deal began nearly two decades ago, when the late former military president, Sani Abacha, handed Malabu Oil, owned by Dan Etete, the offshore oilfield license OPL 245.

According to reports, Etete allegedly paid roughly $2 million for the oil block, which was widely seen as too low by industry experts given the block's potential to deliver billions of dollars in crude, despite the fact that it remained underdeveloped.

Shell and Eni paid the Nigerian government $1.3 billion in 2011 to acquire an oil block prospecting license. However, it was claimed that roughly $1.1 billion of that money wound up in the account of Malabo Oil and Gas, which was owned by Dan Etete, the then-Petroleum Minister, and was used to pay political bribes.

Shell and Eni, on the other hand, have constantly denied knowing that the funds would be used as bribes, while a report claims that senior Shell officials were briefed on how the funds would be spent.

Shell, Eni, and their executives were on trial in Milan from 2018 until 2021 in a linked Italian case. The businesses allegedly paid $1.1 billion in bribes to Nigerian authorities and others through the OPL 245 contract, according to Italian prosecutors.

Last March, a panel of judges acquitted the companies and executives, all of whom denied any wrongdoing. Prosecutors have filed an appeal against the decision.

A UK court also dismissed a $1.1 billion lawsuit filed by the Nigerian government against Shell and Eni over a dispute over the OPL 245 oil field in May 2020, claiming that the UK court lacked jurisdiction to hear the case.