Nigeria: Buhari personally responsible for $11bn arbitration defeat, London’s High Court told

By Olivier Holmey, in London

Posted on Tuesday, 31 January 2023 17:20
Nigerian President Muhammadu Buhari in Lagos on January 24, 2023. (Photo by PIUS UTOMI EKPEI / AFP)

An offshore company that won a record-breaking arbitration award against Nigeria, has laid the country’s legal defeat at the feet of outgoing president Muhammadu Buhari.

Process & Industrial Developments Limited (P&ID) has lambasted “endemic, institutional incompetence” within Nigeria’s government, all the way up to President Buhari, as it defends itself against accusations of corruption and fraud in an English court.

The dispute between P&ID and the Nigerian state originated in 2010, when the firm signed a major gas-processing agreement with the ministry of petroleum resources. After the agreement swiftly collapsed, an arbitration tribunal in London ruled that the government owed the company $6.6bn – plus interest now totalling some $4bn – for breach of contract.

Overturn decision

In a trial that began on 23 January in London, Nigeria is seeking to convince Justice Robin Knowles to overturn that decision on the basis that P&ID secured both the original contract and the subsequent arbitration victory by lying and by bribing Nigerian officials and lawyers – accusations denied by P&ID.

The company, which is registered in the British Virgin Islands, has now countered – in court – that Nigeria’s government only has itself to blame for its defeat in arbitration. “Just as the government made a mess of implementing the contract, it made a mess of the arbitration as well,” P&ID’s advocate, Lord Wolfson of Tredegar, said last week. “There was no bribery, no perjury and no collusion.”

This is Pharaoh telling the Israelites: ‘you have to still make bricks but I’m not giving you any straw’

Lord Wolfson instead blamed Nigeria’s “institutional scleroticism and incompetence” saying: “The villain of this piece is not my client or Nigeria’s legal team or another fall guy.”

In particular, P&ID’s advocate said that Nigerian attorney general Abubakar Malami and President Muhammadu Buhari decided to rely on a small, inexperienced Nigerian firm called Upstream Commercial Advisory to provide a key report during arbitration, rather than engage an established accountancy firm, such as KPMG. That decision, allegedly made to save money, dearly hurt Nigeria, Lord Wolfson said, as it meant that the republic was not able to convincingly argue that the award should be much smaller than the billions sought by P&ID.

“Mr Malami and the president wouldn’t write a cheque to engage competent experts,” Lord Wolfson said. “Both of them were told repeatedly and in the clearest terms to pay experts if Nigeria was to have any chance of avoiding a catastrophic defeat.”

“The arbitration was lost on their watch,” Lord Wolfson said.

On Buhari’s desire to win the arbitration while allegedly committing insufficient resources to the legal effort, Lord Wolfson said: “This is Pharaoh telling the Israelites: ‘you have to still make bricks, but I’m not giving you any straw’.”

Lord Wolfson further alleged that Buhari failed on several occasions to respond to urgent requests for instruction from the republic’s lawyers during arbitration, which compounded the problems faced by Nigeria’s legal team.

According to P&ID, the Buhari administration is blaming others so as to distract from its own failings. Lord Wolfson called Nigeria’s legal strategy “a kafkaesque system of buck passing”.

In a September 2019 speech to the UN, Buhari vowed “the vigorous prosecution of the P&ID scam attempting to cheat Nigeria of billions of dollars”. According to Lord Wolfson, that prosecution led to the detainment of suspects in Nigeria under “hellish conditions” and to “appalling indignities and mistreatments”.

The lawyer said that one former Nigerian official’s damning testimony to Nigeria’s Economic and Financial Crimes Commission – alleging that a P&ID employee had bribed him in 2009 with a black bag containing $50,000 dollars in cash – was “undoubtedly fabricated” and obtained only after Nigeria had applied “unacceptable, inappropriate pressure” on the witness. Nigeria denies the allegation.

If Nigeria loses the case, it would be liable to pay P&ID close to a third of its foreign reserves – a financial burden that could threaten Africa’s biggest economy.

The trial’s outcome will also have huge ramifications for those linked to P&ID. Brendan Cahill, the Irish co-founder of P&ID, confirmed in court this week that if Nigeria loses the case, he will be entitled to “riches beyond the dreams of avarice”, while if it won, he could “lose everything”. Likewise, the English lawyer Seamus Andrew, who is a director of P&ID, said he stands to receive some $2bn if Nigeria loses.

If Nigeria’s case were to be successful, Andrew admitted that he might ultimately be struck off as a solicitor and face criminal prosecution. Both men deny any wrongdoing.

The trial continues.

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