How Ex- VP Osibanjo Saved Nigeria From $11.4bn P&ID Case
Nigeria has achieved a monumental legal victory, successfully overturning an $11 billion damages bill associated with a collapsed gas project. This remarkable success is attributed, in large part, to the vigilant and unwavering intervention of former Vice President Prof Yemi Osinbajo.
In a case that exemplified the devastating impact of greed and corruption, Nigeria had been ordered to pay Process & Industrial Developments (P&ID), a company based in the British Virgin Islands, a sum equivalent to around one-third of the nation’s foreign exchange reserves.
The pivotal moment in this case came when it was revealed that P&ID had engaged in bribery with a Nigerian oil ministry official during the gas contract’s signing in 2010. Crucially, P&ID had failed to disclose this corrupt act when initiating arbitration against Nigeria over the contract’s collapse.
Nigerian President Bola Tinubu expressed profound satisfaction with this judgment, emphasizing that it signifies a turning point where nation-states will no longer be subjected to economic conspiracies involving private firms and corrupt officials. He declared it a triumph for Africa and the developing world, which have borne the brunt of unjust economic malpractice and exploitation for far too long.
The core of this legal battle revolved around P&ID’s 20-year gas supply and processing contract, which fell apart in southern Nigeria. In 2017, P&ID was awarded $6.6 billion for lost profits, a sum that subsequently inflated to over $11 billion, equivalent to ten times Nigeria’s 2019 health budget.
P&ID vehemently denied these allegations, instead blaming the collapse of the gas deal and Nigeria’s arbitration loss on institutional incompetence within the country. Despite these disputes, Judge Robin Knowles allowed Nigeria’s challenge, leading to the landmark victory.
In addition to the legal proceedings, the involvement of former Vice President Yemi Osinbajo played a crucial role in exposing the fraudulent nature of the P&ID case. Osinbajo’s unwavering commitment and astute judgment were pivotal in shifting the tide of the case in Nigeria’s favor.
Osinbajo’s involvement commenced in 2017, prompted by the Attorney General of the Federation and Minister of Justice, Abubakar Malami. Upon being alerted to the case, Osinbajo recommended a range of scenarios for addressing the matter, including negotiations, investigations by the Economic and Financial Crimes Commission (EFCC), and challenges to the award’s recognition and enforcement.
“Following a meeting, on 13 March 2017, Mr Malami wrote to Vice President Osinbajo, who was acting president at the time, exploring five “scenarios” and making recommendations on each.
“The first was to negotiate a reasonable settlement. The second was to undertake a “forensic and extensive examination of the original contract, Award and other Processes to discover loopholes to upset or vary the Award.” The merits were said to be that a loophole might be discovered, for example, fraud, technical grounds or a conflict of interest of the arbitrators.
“The other options were to inquire whether there was the possibility of an appeal, an investigation by the EFCC, and a challenge to the recognition and enforcement of the award.
The former Vice President’s determination led to the reopening of negotiations with P&ID, even after initial settlement discussions had broken down. Throughout the process, Osinbajo remained resolute in his view that the underlying transaction was “a fraud on the nation” and advocated for a diligent investigation.
The judge explained that Mr Malami wrote further to the Vice President on 17 March 2017, following a meeting on 13 March where the scenarios in the 13 March letter were “extensively deliberated”.
“Scenario 1 was now expressed as “the urgent need” (emphasis in original) to negotiate a settlement. The scenario about involving the EFCC was that it should be directed to undertake a discreet investigation of the matter.
