JPMorgan Chase has won a $1.7bn High Court lawsuit brought by the Nigerian state over its part in facilitating payments to a former Nigerian minister with a money-laundering conviction.
Abuja had sued the US bank, claiming it was “grossly negligent” paying almost $900mn to a company controlled by Dan Etete despite numerous “red flags” regarding the transactions.
The judge at London’s High Court had to decide whether there was fraud, whether JPMorgan was on notice of it and whether it had breached its duty of care by proceeding with $875mn worth of payments and facilitating funds related to a 2011 oil deal.
Justice Sara Cockerill on Tuesday dismissed the lawsuit, ruling that it had fallen at the first hurdle because there was no evidence a fraud had been perpetrated against Nigeria.
The case revolved around transfers from a Nigerian government account to Malabu Oil and Gas, a Nigerian company controlled by Etete, a former oil minister who was convicted in France in 2007 of money laundering in an unrelated transaction.
The payments were linked to the settlement of a long-running dispute over the ownership of the Nigerian OPL 245 oilfield, which had been transferred back and forth between Shell and Malabu. Malabu surrendered its claims in 2011 after Nigeria’s government agreed to pay it $1bn so the oilfield could be developed.
Nigeria had claimed in the lawsuit that it was the victim of a “fraudulent” scheme as payments “were suspected to have flowed” via Malabu “into the accounts of cronies with connections to Nigerian politicians”. Nigeria claimed JPMorgan had breached its duty by allowing bank transactions in 2011 and 2013 despite there being “reasonable grounds” to suspect fraud.
No allegations of wrongdoing were made against JPMorgan staff. However, the US bank had provided a depository account for Nigeria’s government to make the payments, the court heard during the trial earlier this year.
The case was closely watched in the banking industry because the court also examined whether JPMorgan had breached its duty as a bank not to follow a customer’s instructions where it suspects or has been “put on notice” that it may in fact facilitate a fraud.
JPMorgan said: “The 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.”
The Federal Republic of Nigeria said it was “naturally disappointed by the outcome of the judgment and will be reviewing it carefully before considering next steps. The FRN will continue its fight against fraud and corruption and to work to recover funds for the people of Nigeria.”
A Milan court last year cleared oil companies Shell and Eni and their senior and former executives of any wrongdoing in the 2011 oilfield deal, and Etete of corruption charges. They had all denied wrongdoing. Neither the oil companies nor Etete are parties to the High Court case.