Buhari Administration’s Desperation Hits Fever Pitch

On Sunday, Nigeria’s Attorney General, Abubakar Malami gave a press conference where he exulted the progress of the “intensive and extensive investigation” the Nigerian Government has commenced through the Economic and Financial Crimes Commission (EFCC) into those involved with P&ID.

It is truly disturbing that the nation’s chief law officer would take so much pride in an investigation that has ignored and undermined the rule of law at every turn.  In reality, this is a sham investigation designed to deflect blame from the disastrous mistakes made by AG Malami.

AG Malami is proud of his ‘investigation’ that has, amongst others, harassed one of Nigeria’s most eminent legal jurists, Alfa Belgore, a former Chief Justice.  Mr Justice Belgore gave expert evidence in his capacity as a private lawyer on behalf of P&ID on Nigerian law before the Arbitration Tribunal. It should be alarming for all Nigerians that those who practice law – a foundation for any democracy and the rule of law – are themselves now subjects of government investigations and harassment.

There is a historical parallel to what AG Malami and the EFCC are doing. This is a ‘Show Trial’. Show Trials were typically practiced by dictatorial Soviet regimes as a way to create the impression of ‘justice’ for what were in reality pre-determined decisions of executive authority dressed up as legal proceedings.

The EFCC investigation has all the elements of a Show Trial. Illegal and unprovoked detentions; denying access to legal representation; attempts to force ‘confessions’ through intimidation; and smearing the names of the detainees via the press and government spokespeople. And yet, no substantive charges have been laid. No evidence of any wrongdoing has been produced. This is not a real investigation: it is all for Show.

As part of the Nigerian Government’s disinformation campaign (an essential element of any Show Trial), AG Malami produced a “list of questions” to which he did not have an answer. This is very revealing: AG Malami has been the point person for the Buhari Administration’s legal strategy for the past four years, and yet he claims not to know some basic details about the P&ID case. A very unusual admission from a senior government Minister.

Nevertheless, in the event that AG Malami’s amnesia is still occurring, we have provided below the answers to AG Malami’s questions:

Nigerian Government Question #1: In whose interest was the critical contract awarded and what was it to achieve?  

Answer: The P&ID contract is genuine, and was in support of established public policy of the Nigerian Government. AG Malami knows this. As the country’s chief law enforcement officer, the Buhari Administration had the opportunity to contend before the Arbitration Tribunal and the English Commercial Court that the project was not public policy of the Nigerian Government. Appropriately, the Nigerian Government never argued this point.

Here’s the fact that AG Malami conveniently continues to ignore: the P&ID project was planned for the benefit of the people of Nigeria. In 2008, the Nigerian Ministry of Petroleum Resources launched a Gas Master Plan that laid out plans for a vast infrastructure project program that sought foreign direct investment. As part of this program, the Ministry envisaged a series of smaller gas development projects in the short-term (i.e. – Gas Supply Agreements) in a move to reduce flaring and to deploy the wasted gas to power generation/electrification. At the time, there were 13 projects envisaged with P&ID being one of them. The P&ID project would have generated up to 2,000 megawatts of power. Such a major increase in low-cost electricity supply brought by the P&ID project could have been transformative for millions of Nigerians. At present, under the Buhari Administration, the World Bank estimates that only 59% of the country have access to reliable supply of electricity. To learn more, watch this BBC short-film to understand the real-world consequences for Nigerian families facing an energy poverty crisis. Regrettably, the government’s failure to meet its obligations means that the benefits of the P&ID project were not realised – and flaring continues to this day.

Nigerian Government Question #2: Why was the centre of arbitration taken to London, and not Nigeria, a sovereign nation?

Answer: The answer is rather straightforward: Clause 20 of the GSPA contract – signed by both parties – states, “The venue of the arbitration shall be in London, England or otherwise as agreed by the Parties.”

On 27 May 2016, the Arbitration Tribunal wrote to the Nigerian Government to confirm that: “As the parties will be aware from Procedural Order No 12, the Tribunal has decided that the seat of the arbitration is England. It follows that the Federal Court of Nigeria had no jurisdiction to set aside its Award.” 

In case AG Malami has any further doubts, Justice Butcher wrote the following from his August 16 judgement regarding the seat of arbitration:

  • Paragraph 67: “I conclude that the terms of Procedural Order No. 12, coupled with the fact that neither it nor the Final Award have been set aside by this or any court, determine the location of the seat of the arbitration as being London, England, and that that is not a matter which the FRN can now ask this court to revisit.”
  • Paragraph 87: “I have also reached the same conclusion as did the Tribunal in relation to there being an agreement by conduct that the seat of the arbitration as provided for by clause 20 of the GSPA should be regarded as London.”

Nigerian Government Question #3 & 4: Why was the contract not passed unto the Federal Ministry of Justice for vetting? Why was the Federal Executive Council’s approval not sought for in the execution of the agreement?

Answer: These questions are designed to advance claims by the Nigerian Government that 1) the P&ID contract was forged, and 2) the Ministry of Petroleum Resources did not have the authority to sign the agreement without approval from the Federal Executive Council or the Attorney General. This is false. As AG Malami is more than aware, the authority of the Minister of Petroleum Resources to sign the GSPA was specifically challenged by the Nigerian Government in the liability phase, and the Tribunal found in favour of P&ID (Paragraphs 41 – 54 of the Liability Award). The idea that the ‘wrong Ministry’ or ‘wrong person’ approved the P&ID contract is an old, tired allegation that has already been considered and rejected in the legal proceedings.

Nigerian Questions #5: Was there any Direct Capital Inflow arising from the contract?

Answer: Contrary to propaganda emanating from Central Bank Governor Godwin Emefiele that P&ID never invested a “penny in the country” but intended to “defraud the country,” the record is quite clear: Mssrs. Quinn and Cahill had a long and successful business record in Nigeria. As to the $40 million, this relates to costs for preparatory work in the early days of the project. The $40 million came from General Danjuma and was structured as a contract for services. P&ID was reimbursed for this expenditure. This is a red herring, as P&ID did not claim the $40 million in the Arbitration. The Tribunal Award was for loss of profits, and not the $40 million expenditure. This entire discussion is therefore irrelevant, but we won’t be surprised when the EFCC concludes otherwise.

Nigerian Questions #6: Was NNPC, NPDC and IOC’s who were to have supplied the gas component of the agreement not made parties to it?

Answer: The question posited by the AG is unintelligible, but based on what we think he meant, this is the answer. The agreement P&ID had with the Nigerian Government is well-documented and provided the Nigerian Government with ample opportunity to provide input and affect decisions. Here’s a good overview of how transparent this agreement was between parties:

  • Article 9 of the GSPA establishes that a Joint Operating Committee had been set up on 22 July 2009, “comprising of two representatives from the Ministry of Petroleum Resources and two representatives from NNPC nominated by the Government and two representatives nominated by P&ID.”
  • A letter from the Ministry of Petroleum Resources to the Department of Petroleum Resources on 15 January 2010, states “The Hon. Minister of Petroleum Resources has approved the Agreement.”
  • In a follow-up letter from P&ID to the Group Managing Director of NNPC, dated 14 May 2010, reporting on the progress of the project, the Group Managing Director of the NNPC verifies receipt of the letter and notes, “Please proceed as prayed and appraise me subsequently.”
  • Moreover, minutes from a Ministerial Stakeholders meeting on the P&ID project from 10 August 2010 confirm the Ministry’s Permanent Secretary directed the National Petroleum Investment Management Services (NAPIMS) to “obtain a Letter of Undertaking from Addax Petroleum confirming that 150MMSCuFD of associated Wet Gas from OML123 will be made available to P&ID in conformity with the Government’s obligations under the terms of the Definitive Agreement dated 11th January, 2010 with P&ID.”

We hope this helps answer the questions that AG Malami was struggling with. Finally, it is worth revisiting the role played by AG Malami in the current predicament facing the Nigerian Government, and whether his effort to pass all the blame to the Goodluck Jonathan Administration passes muster.

  1. May 3, 2015: P&ID offers to settle the dispute with the Nigerian Government for $850mm. President Goodluck Jonathan indicates they are handing over the negotiations to the incoming Buhari Administration.
  1. May 29, 2015: Muhammadu Buhari is sworn in as the 15th President of Nigeria, but fails to appoint a cabinet for five months.
  1. July 17, 2015: The Arbitration Tribunal found in favor of P&ID (i.e. – the Liability Award). The new Buhari Administration did not make any attempts at settling or negotiating with P&ID, and did not make any effort to challenge the decision.
  1. November 11, 2015: Attorney General Malami was sworn in November 11, 2015, just under three months after the Liability Award.
  1. May 27, 2016: The Arbitration Tribunal wrote to the Nigeria Government confirming that: “As the parties will be aware from Procedural Order No 12, the Tribunal has decided that the seat of the arbitration is England. It follows that the Federal Court of Nigeria had no jurisdiction to set aside its Award.” Neither Attorney General Malami, nor any representative of the Buhari Administration did anything in response other than continue with the proceedings, thereby tacitly accepting the analysis of the Arbitration Tribunal.
  1. June 24, 2016: Having failed to set aside the Liability Award by falsely claiming the seat of arbitration was in Nigeria; not England, Attorney General Malami wrote personally to the arbitrators to say “my office has taken over the handling of the above arbitration on behalf of the Ministry of Petroleum Resources.” He asked for and obtained an extension of time to file a defence to quantum, and appointed his own legal team in place of the Ministry of Petroleum Resource’s legal team.
  1. August 30-31, 2016: The Quantum Hearing (i.e. – amount of damages payable) takes place in London. Attorney General Malami’s legal team conducted Nigeria’s defence at the quantum hearing. Expert witnesses as to quantum were called to give evidence and were cross-examined. After the Quantum Hearing, Attorney General Malami instructed his lawyers to request a standstill agreement, which would take effect from the date of the Award.
  1. January 31, 2017: The Arbitral Tribunal issued a final award, ordering Nigeria to pay P&ID $6.5 billion plus $2.3 billion in uncollected interest as of March 2018.
  1. February 17, 2017: The Award on Quantum was delivered to the parties on February 17, 2017. Despite the 60-day standstill having been agreed by P&ID, Attorney General Malami made no attempt to negotiate with P&ID during the 60 days following the handing down of the Quantum Award.
  1. April 28, 2017: After the 60 days had expired, Attorney General Malami instructed his lawyers to write to P&ID’s lawyers and explained that “The delay was occasioned by the bureaucracy of the Federal Government in a bid to determine a reasonable strategy after receipt of the Arbitral award.” The Attorney General’s lawyers added: “we now have the authority of the Vice President of the Federal Republic of Nigeria to meet with the Claimant to negotiate the Terms of the Arbitral award.”
  1. Today: In the lead up to the judgment by the English Commercial Court, Attorney General Malami allowed the time for acknowledging service in both the United States and London to lapse without filing any response. In both jurisdictions, Nigeria’s lawyers Curtis Mallet had to apply for ex post facto extensions of time and make the necessary apologies and explanations to the court.

AG Malami’s ongoing media tour is a clear effort to cover-up a failure to negotiate a settlement. Instead, he personally took the decision to gamble on the arbitration and what could have been an amicable $850 million settlement into a $9.6 billion arbitration loss for Nigeria.

Despite this, the Buhari Administration continues to show no willingness to negotiate in good faith, in order to find a reasonable resolution to the debt. As a result, P&ID will continue its efforts to identify and seize Nigerian assets to satisfy the debt as soon as possible.