• Friday, March 29, 2024
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Etetegate: Nigeria can sue JP Morgan – rules London court

JP Morgan

JPMorgan Chase has failed in its attempt to avert a London lawsuit brought by the Nigerian government, which alleges the bank enabled the misappropriation of state funds totalling $875m.

Judge Andrew Burrows said on Thursday that Nigeria had “reasonable grounds” for bringing a claim to the commercial division of the High Court, meaning it can now proceed to trial.

“The defendant bank has failed to establish that the claimant has no real prospect of success,” he said. 

JPMorgan argued at a hearing this month that the case should be dismissed as it had received sufficient approvals from Nigerian authorities before allowing the transfer of funds from a government account to those controlled by Dan Etete, a former official convicted of money-laundering.

The payments, after a 2011 settlement, aimed to end a multiyear battle over the ownership of a lucrative but controversial oil licence that has ensnared Royal Dutch Shell and Eni in corruption investigations in Milan.

The licence for the OPL 245 block was shuffled back and forth between Shell and Malabu, a Nigerian oil company backed by Mr Etete and which was first awarded development rights in 1998 when he was also petroleum minister.

Mr Etete has denied any wrongdoing. Abuja is now seeking compensation, saying it was “the victim of a serious fraud” as a result of bribes made to former and current Nigerian politicians and oil executives through the transfer of funds via Malabu accounts.

It alleges that although JPMorgan had reasonable grounds to believe the payments out of the government account were intended to defraud the customer, the bank went ahead in breach of its “duty of care”.

Even as the bank had said it had “no responsibility” to look behind any payment instructions, the judge said this was not consistent with the agreement the bank had with its client.

“While today’s judgment is disappointing, it does not address the underlying claim, which we continue to believe is completely without merit,” the bank said on Thursday.

“JPMorgan complied with its legal and regulatory obligations in respect of the payments concerned and will defend the claim robustly at trial.”

The Nigerian government said it was now “moving forward” with its claim and had “full confidence that JPMorgan will be held to account for its actions”.

Nigeria has filed a separate $1.1bn legal claim against Shell and Eni to “recover the very significant sums lost to corruption and the unlawful activity” of the two energy majors.

Shell and Eni have said their deal with the federal government was legal and that the payment was made to the state and they had no part to play in what happened to the money afterwards.

 

FT