As Nigeria continues to enjoy a court victory against Process and Industrial Developments (P&ID) Ltd. in the long-running P&ID v. Federal Republic of Nigeria case, the Federal Government is concerned that Nigeria will become embroiled in legal proceedings as well. Mechanisms should be consciously introduced to prevent this. due diligence. On 23 October 2023, the London Business and Property Court, presided over by Mr Justice Robin Knowles, announced the $11 billion award originally awarded to P&ID by the London Court of International Arbitration (LCIA) on 31 January 2017. The execution of the arbitration case has been officially concluded. ), ruled that the arbitral award had been obtained by fraud and that the method of procurement thereof was contrary to public policy.
The roots of the legal battle date back to January 2010, when the then Umaru Yar’Adua administration entered into a 20-year agreement known as the Gas Supply and Processing Agreement (GSPA) to refine natural gas for Nigeria’s power generation. grid. However, the contract was terminated by August 2012 as P&ID did not achieve the desired results. P&ID cited reasons for the failure and accused Nigeria of failing to provide the necessary gas supplies for the project. It subsequently took legal action against Nigeria alleging breach of contract. We won against Nigeria. Initially, the arbitration award was $6.6 billion, but interest later accrued, making the award $11.5 billion as of the judgment date.
However, enforcement of the award was stalled by Nigeria for obvious reasons. During the administration of President Goodluck Jonathan, the Ministry of Petroleum Resources appointed former Attorney General and Minister of Justice, Bayo Ojo, as a party-appointed arbitrator to form an arbitration tribunal to resolve judgment debts. Jonathan’s government was about to step down when the $850 million settlement was finally agreed to in May 2015. Rather than pay the agreed amount, the Jonathan administration cleverly pushed the issue to the administration of President-elect Muhammadu Buhari. Under President Buhari’s administration, several meetings were held with Abubakar Malami, former Attorney General of the Federation and Minister of Justice, on the negotiated settlement of judgment debts.
However, former Vice President Yemi Osinbajo subsequently discovered and announced in June 2018 that the entire P&ID contract was tainted with fraud. As a result, Nigeria subsequently filed an appeal against the enforcement of the award. At the appellate court hearing, Nigeria argued that there was substantial evidence of fraud in the procurement of the contract and arbitration award. Nigeria stressed that some of the individuals involved in the case were on trial for money laundering and corruption and prayed the court to set aside the verdict.
In his judgment dated October 23, 2023, Judge Knowles not only agreed that the award was obtained by fraud, but also found that the manner in which it was obtained was contrary to public policy. Although Nigeria secured a legal victory in this case, thereby saving Nigeria a huge $11.5 billion that would have been paid to it in arbitration awards, the government should ensure that P&ID fraud is not repeated. This fraud exposed the damage that official corruption can be causing in this country. Theft of government funds by public servants cannot be an act of state in Nigeria. As Justice Robin Knowles rightly pointed out in her judgment, “This case is also, sadly, a combination of examples of what some individuals will do for money.” Driven by greed , ready to exploit corruption. They have no idea what their wealth means in terms of harming others. ”
As rightly pointed out by former Minister of Justice and Attorney-General of the Federation (AGF), Mr. Michael Aondoaka, the P&ID scam is a wake-up call for the government to muster the political will to consider other similar cases like the Ajaokuta case. It is. In steel companies and elsewhere, some Nigerian officials rushed overseas to fabricate arbitration awards that they sought to enforce against Nigeria.
The P&ID scandal should checkmate the government’s reckless spending of public funds overseas. Nigeria has spent significant financial and human resources to protect P&ID. The then Central Bank of Nigeria (CBN) was forced to deposit $200 million in court in 2020. At the time, former central bank governor Godwin Emefiele had hired a new British lawyer to represent Nigeria for a huge professional fee. . The CBN has so far spent about $40 million on legal services on this issue. The origins of the contract terms and the key parties involved were unclear. The Ministry of Finance, the Federation’s Attorney General, and the Office of the President do not appear to be involved in overseeing the contract.
Nigeria must not only rejoice in the ego boost of a P&ID contract litigation victory, but also put in place consistent contracting practices and national arbitration policy. The repeated policy changes and contract cancellations by successive Nigerian governments are a major national embarrassment.
Apart from corruption, the P&ID scandal resulted from mismanagement and incompetence of Nigerian officials involved in P&ID contract negotiations. As Judge Knowles rightly stated, “This case is a case where legal representation did not meet the required standards, experts failed in their duties, and politicians and public servants failed to ensure that Nigeria as a nation properly participated in arbitration. This is an example of a failure to do so.” Even without the dishonesty of P&ID, Nigeria was at risk. ”
Therefore, the government should invest in improving the skills of government employees involved in contract negotiation and management so that they can continue to demonstrate a strong sense of responsibility when entrusted with decision-making powers. This includes providing training in international business practices, negotiation skills, and contract management.
Among other things, before entering into any potential international contracts in the future, Nigeria should conduct thorough due diligence on potential partners and ascertain the credibility and financial capabilities of the companies involved. It is time for Nigeria to establish an independent oversight body or agency responsible for monitoring and auditing government contracts. These agencies must have the power to investigate and report potential wrongdoing.
Governments need to review and update existing laws and regulations related to contracts and international agreements, ensure the legal framework is robust, and provide mechanisms to hold accountable those involved in wrongdoing. . There is nothing to prevent Nigeria from collaborating with international organizations and partners to share best practices and receive assistance in building an effective system for international contract management.