(Bloomberg) --

A bitter faceoff between Nigeria and an offshore company over an $11 billion arbitration award intensified this week as lawyers traded accusations of corruption and ineptitude in a London court room.

Africa’s largest economy is seeking to overturn a 2017 ruling which ordered it to pay billions in damages after a gas deal with Process & Industrial Development Ltd, or P&ID, went sideways. The contract in question was struck in 2010, when Nigeria agreed to provide two decades’ worth of free gas to a facility P&ID would build in the country in exchange for processed gas for electricity generation. The British Virgin Islands-registered firm claims that the government failed to provide it with natural gas, and so it never built the planned refinery. 

Nigeria says the deal was fraudulent from the start, and that the company conducted a years-long campaign of bribery and lies involving former government officials to win the contract and compromise the state's defense in the arbitration — allegations which P&ID staunchly denies. 

The firm initiated arbitration in 2012, and five years later, a UK court ordered Nigeria to pay P&ID $6.6 billion — an amount that has ballooned to more than $11 billion with interest.

The fraud trial opened on Jan. 23 and is due to run for another six weeks.

Nigeria is taking “this necessary legal action to show the world” that the contract was gained through corruption and the facts presented in court so far demonstrate how P&ID “has paid bribes on an industrial scale,” a government spokesman said by email.

P&ID “does not accept that there is any basis for the awards in its favor to be set aside,” Nick Marsh, a lawyer representing the company, said.

The two sides’ legal teams clashed in court over the following five points:

Same Payments, Different Explanations

Nigeria alleges that P&ID founders Michael Quinn and Brendan Cahill used bribery as their "modus operandi for making money" since at least the early 2000s. The company rejects this claim as "avowedly inferential." At issue are payments to former Nigerian government officials, which each side has a starkly different explanation for.

Quinn and Cahill made payments to Grace Taiga, the legal director of the country’s petroleum resources ministry at the time the deal was signed, and to her daughters over the course of almost two decades. Nigeria says that these transfers — which include a $5,000 payment made 12 days before the contract was signed — amounted to hundreds of thousands of dollars. 

This was a “corrupt relationship” in which Taiga was “illicitly paid for her benefit in return for her help,” Mark Howard, Nigeria’s lawyer, said in court.

Not so, according to P&ID, which claims Quinn was in an intimate, likely romantic, relationship with Taiga. In a document prepared for the case, the company argues that the payments were not made on P&ID’s behalf, but were from Quinn personally. “It is lawful in Nigeria for a public officer to accept customary personal gifts or benefits from personal friends … Quinn’s benevolent gift-giving was not unusual, but part of Nigerian socio-culture,” it said.

P&ID also acknowledged that Cahill continued to support Taiga financially with her legal and medical expenses following Quinn’s death in 2015. She is a “a very sick woman” who has suffered “cruel and violent treatment” at the hands of Nigeria’s anti-corruption agency, P&ID lawyer David Wolfson told the court. Taiga was detained for three weeks in 2019 “in the harshest of conditions and subjected to relentless questioning” by the Economic and Financial Crimes Commission, which had “the clear intent of obtaining false evidence from her that would incriminate P&ID,” the company said in the document. 

Taiga retired from government in late 2010. An email to a Nigerian law firm representing her was not answered, and Cahill did not reply to requests for comment. What Taiga did with the money she received was immaterial, Nigeria’s lawyer countered. “It does not matter how an official spends a bribe,” said Howard. “It could be on champagne, new cars, holidays, a child’s university bills or expensive medical treatment in a Harley Street clinic. A bribe is a bribe.”

Nigeria also alleges that P&ID colluded with the lawyer that the government had hired to represent it during the first phase of the arbitration. It claims that the company “corrupted” Olasupo Shasore, who then paid $200,000 on behalf of P&ID to two senior legal officials at the petroleum resources ministry and the state-owned energy company. This allegedly happened in late 2014, while the three were urging the state to settle the dispute for $1.1 billion.

Those negotiations were ultimately unsuccessful. Just over two years later a British tribunal awarded P&ID six times as much after determining that the contract’s arbitration clause gave it jurisdiction to decide the matter. 

In P&ID’s telling, Shasore paid the civil servants from his own earnings from the government, and could have been thanking them for helping him settle his invoice. While “it may be that the payments were not legitimate,” the company granted, “there is no need to resort to the convoluted theory” that Nigeria is advancing. Shasore did not respond to a request for comment.

Seamus Andrew’s High Stakes

Another point of contention is the role of British lawyer Seamus Andrew, who represented P&ID in arbitration from 2012 until acquiring a majority stake in the company in October 2017 – an arrangement Nigeria has characterized as “extremely odd.” Andrew currently controls 75% of P&ID via a Cayman Islands-registered litigation funding firm. The hedge fund VR Capital Group owns the rest.

Andrew stands to “become extraordinarily wealthy” and potentially make more than $2 billion if the company collects on the award, Howard said during cross examination of P&ID’s owner. If Nigeria wins, however, he could face criminal proceedings and “kiss goodbye” his legal career, Howard added. Andrew, who is in the middle of giving evidence in court, declined to comment.

Shell or Serious Company?

P&ID “could and would perform its obligations” to build a gas facility if the Nigerian government had “upheld its side of the bargain,” the firm said. Its lawyers allege that the government’s failure to supply the required gas undermined the company’s exploratory discussions with potential financiers and technical partners.

In response, Nigeria describes the company as a “skeletal operation” that refused to spend money and couldn’t even pay its sole employee on time. “P&ID was not a company on the verge of construction of a $500 million gas processing plant,” Nigeria stated in its written opening argument. “It was selling second-hand cars to keep the lights on.”

It’s Actually Your Fault

Nigeria’s sitting president, Muhammadu Buhari, assumed office in May 2015 after defeating the political party that had held power for 16 years. His attorney general, Abubakar Malami, has built the government’s case against P&ID around the notion that the company thoroughly corrupted several of the previous administration’s officials. He did not reply to requests for comment. 

P&ID, in turn, has said that Nigeria’s enormous liability is the result of the incompetence of Malami, who oversaw the final stage of the arbitration. During discussions between the two parties about the size of the damages, Wolfson said, Malami ignored advice to recruit internationally recognized experts capable of challenging P&ID’s calculations.

“Just as the government had made a mess of performing the contract, it made a mess of the arbitration as well.”

(Updates with government, company comments from sixth paragraph.)

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