A United Kingdom court Tuesday ruled against Nigeria in its $1.7 billion claims against JP Morgan Chase Bank over the transfer of proceeds from the sale of OPL 245 in the controversial Malabu oil deal.
Nigeria had alleged that JP Morgan was “grossly negligent” in its decision to transfer funds paid by oil giants Shell and Eni into an escrow account controlled by a former Nigerian oil minister, Dan Etete.
The Federal Government claimed more than $1.7 billion for the bank’s role in the controversial deal in the suit.
According to reports, the damages include cash sent to Etete’s company Malabu Oil and Gas, around $875 million paid in three instalments in 2011 and 2013, plus interest, taking the total to over $1.7 billion.
Regardless, the bank rejected Nigeria’s claims, maintaining that all due processes were followed and money laundering checks were done, arguing that allegations of fraud only came up after a new government took over in Nigeria.
Judge Sara Cockerill, in the ruling published on Tuesday, noted that the Nigerian government was unable to substantiate that it had been defrauded in the case.
Earlier in February, Nigerian lawyer, Roger Masefield, argued that the nation’s case rested on proving that there was a fraud and JP Morgan was aware of the risk of fraud.
“The evidence of fraud is a little short of overwhelming,” the lawyer told the court.
The judge added that it may be that with the benefit of hindsight, “JPMorgan would have done things differently” but declared that “none of these things individually or collectively amount to triggering and then breaching” the bank’s duty of care to its client.
“Under its Quincecare duty, the bank was entitled to refuse to pay for as long as it had reasonable grounds for believing its customer was being defrauded.”
Quincecare refers to a legal precedent whereby the bank should not pay out if it believes its client will be defrauded by making the payment.
Judge Cockerill added that by the time of the 2013 payments, the bank was “on notice of a risk” of fraud.
“There was a risk – but it was, on the evidence, no more than a possibility based on a slim foundation,” the judge ruled.
“This judgment reflects our commitment to acting with high professional standards in every country we operate in, and how we are prepared to robustly defend our actions and reputation when they are called into question,” a spokesman for the bank said in an emailed statement.
