Reno Omokri, spokesman of former President Goodluck Jonathan of the People’s Democratic Party (PDP), has laid the blame of the federal government’s $9bn legal dispute with Irish company, P&ID, at the feet of a cabal he claims is working with President Muhammadu Buhari administration, while exonerating his former boss.
Dayo Apata, Solicitor General of the Federation and Permanent Secretary, Federal Ministry of Justice had on Friday said the court ruling which was as a result of the federal government’s inactions over a gas deal with P&ID was inherited from the previous administration by the present one.
Omokri has however refuted the allegation, blaming instead an “unelected cabal” that took advantage of late President Umaru Yar’adua’s ill health in 2010 to strike shady deals on behalf of the federal government.
Members of that cabal, he claims, are also inside President Buhari’s present administration. He went on to name the late President Yar’adua’s minister for petroleum, also late, Rilwanu Lukman, as the man who packaged and arraigned the signing of the contract with P&ID.
“The transaction occurred in January of 2010, and President Jonathan was not President in January 2010. During that time, he was completely shut out of power by an unelected cabal that ran Nigeria during the period of the ill health of the late President Yar’adua, before the National Assembly courageously intervened on February 9, 2010.
“That cabal not only fought against the ascension of then Vice President Jonathan to the office of acting President, but went beyond that to take documents, including budgets and contracts, to Saudi Arabia, and claimed that the then ailing President Umaru Musa Yar’adua had signed them,” Omoki said.
“Nigerians may recall that the cabal announced on December 28, 2009 that the ailing President Yar’adua had signed a supplementary budget and other documents from his sick bed in Saudi Arabia, without the foreknowledge or acquiescence of then Vice President Jonathan or the Executive Council of the Federation.”
Omokri said the man who packaged and arranged the signing of the contract with P & ID was a member of the cabal and Yar’adua’s minister for petroleum, the late Rilwanu Lukman.
“Lukman and other members of the cabal treated then Vice President Jonathan with disdain and kept him in the dark about their actions because he had no executive authority, as the then President was unable to hand over to him as constitutionally stipulated due to the suddenness of his ill health,” Omokri said.
Omokri explained that the same cabal has resurrected and has now coalesced around President Muhammadu Buhari, with some of them being made either ministers, or formal and informal advisers.” As a matter of fact, the main man behind that cabal is now one of the closest persons to General Buhari.”
“Nigerians may want to note that while this controversial contract was signed in January of 2010, former President Jonathan only became acting President on February 9, 2010.”
“So, if the Buhari administration is looking for someone to blame for this judgment against Nigeria, it should look at its own cabal,” Omokri concluded.
The Federal Government has been urged to set up a high-level crisis response team made up of Central Bank of Nigeria (CBN), Nigeria National Petroleum Corporation and Ministry of Justice in response to Nigeria’s major loss at a British court on Friday over $9 billion damages for failing to honour a contract.
According to stakeholders familiar with Nigeria’s economic situation, the aim of the high-level response team is to calm the nerves of foreign investors, as Process and Industrial Development Limited (P&ID), which won the judgment in London, might resort to going after Nigeria’s Eurobond custodian, a development which could deal a devastating blow to the credit rating of the country, derail the 2019 budget and plunge the economy back into recession.
According to sources, government agencies such as CBN, NNPC and Ministry of Justice need to speak with one voice and calm foreign investors who are currently jittery about the current development and also reassure them they are taking the right steps to resolve the matter as $9 billion is still under the government’s control with respect to Nigeria’s total assets.
Sources tell BusinessDay that the situation in Nigeria is not new as it is similar to what happened in the Republic of Congo in 2017. Congo had a sovereign debt default after the latest coupon payment on its $363 million Eurobond was frozen amid a decades-old legal dispute over a $1 billion debt to a local construction company.
Stakeholders believe it was also foolish for Nigeria’s Solicitor General, Dayo Apata, to claim the current government inherited the situation from previous administrations because government is a going concern. They add that the statement is making Nigeria a laughing stock among international community.
Foreign investors see the response from the permanent secretary, Federal Ministry of Justice, as “suicidal and unintelligently arrogant”.
Investors were quite surprised about government’s silence and denial of the matter since the issues first began only to start responding after the court had given its judgment.
Lawyers representing Nigeria, Africa’s largest economy, had argued that the arbitration award should not be enforced because it was “manifestly excessive and penal”, and that the UK was not the right jurisdiction for the case.
Justice Butcher rejected the government’s arguments.
The Nigerian government has yet to make any payment, and “has not applied to set it aside in any jurisdiction”, according to the ruling.
Sources say the immediate past Attorney General of the Federation and Minister of Justice, Abubakar Malami’s uncharacteristic handling of the case may be why Nigeria has lost a $9 billion judgment.
BusinessDay recalls that P&ID had in 2013 won a $6.6bn arbitration case but that figure rose to $9bn when the estimate of what the company could have earned over the course of the 20-year agreement was calculated.
According to sources, portfolio managers all over the world are now in crisis/emergency mode wondering how to manage imminent Nigerian default on Bonds and other debts service obligations.
Other sources believe the London court decision is expected to raise concerns among foreign investors and could deal a devastating blow to the credit rating of the country, which has in the last three years plus relied heavily on borrowing to sustain its annual budgets.
Already, under Buhari, Nigeria has grown its debt portfolio to $25.6 billion, statistics available from the Debt Management Office (DMO) show. In essence, the nation’s debt is about where it was in 2005-06, just before Nigeria benefited from massive debt relief as part of a programme coordinated by the Paris Club, IMF, World Bank and the African Development Bank under the Olusegun Obasanjo administration.
Compounding Nigeria’s debt problem are its Nigeria’s significant contingent liabilities, such as the recent P&ID judgment, which have exposed the government to billions of dollars of liability.
“Perhaps most worryingly of all, the damage being done by a range of investor disputes where basic property and contractual rights are being violated seems to be on the increase,” said Shanker Singham, CEO of The Competere Group, a legal and trade advisory firm in London. “The erosion of Nigeria’s commitment to the rule of law is highly worrying, both from a political and an economic perspective.”
Singham estimates that the P&ID dispute will cause “a significant threat to investor confidence” if not settled.
“Is there the political will in a new Buhari government? It might just be more of the same,” said Singham.
Ayodele Oni, partner at Bloomfield Law Practice and a doctorate degree holder in Energy Security, said the implementation of the London ruling will depend on the contractual regime as many countries have sovereign immunity, so it’s difficult to take assets.
“However, if the contract Federal Government signed with the P&ID says the contract outweighs its sovereign immunity, then P&ID can take Nigeria assets,” Oni said.
Oni explained that in cases like this, the affected parties would like to take Nigeria’s assets in foreign land. However, he is sure government would be able to negotiate with P&ID and find a commercial position on this matter.
“Nigeria’s chances are very weak,” an experienced lawyer close to the proceedings told BusinessDay.
Lawyers representing the Nigerian government argued the award should not be enforced because England was not the correct place for the case, and even if it were, the amount awarded was “manifestly excessive”.
Justice Butcher, the Judge of London Court rejected these arguments and said he would “receive submissions from the parties as to the precise form of order appropriate”.
“The London judgment means a lot of investors dealing with Nigeria will start to internationalise their contracts, and make it beneficial under international bilateral treaties,” Oni told BusinessDay.
Another court case against FG
Another court case Malami’s lackadaisical attitude is costing Nigeria is the Mambilla power project in Taraba State. The Federal Government is at risk of a $2.3 billion fine in arbitration over an alleged breach of contract for the $5.8 billion Mambilla power project with Sunrise Power and Transmission Company Limited (SPTCL).
The project, a 3,050-megawatt hydropower facility, stalled owing to legal and funding crises. SPTCL, which claimed to have been awarded the Build, Operate and Transfer (BOT) contract in 2003, has dragged the Federal Government and its partners before the International Chamber of Commerce (ICC) in Paris, France.
Although the fines emanated from the contractual actions of three previous administrations – the Olusegun Obasanjo, Umaru Yar’Adua and Goodluck Jonathan regimes – so far, these two disputes alone have easily led to more than $11 billion in international legal awards against the Buhari government.
“The last four years, Malami constituted himself as the ‘barrier-in-chief’ to the President’s corruption campaign, failing to provide much-needed leadership, frustrating several high-profile corruption cases, blocking requests for international cooperation for the prosecution of high-profile cases and frustrating civil society’s effort to elicit compliance with the Freedom of Information legislation,” said a coalition of 11 civil society groups called SAY NO CAMPAIGN NIGERIA.
The coalition of 11 civil society organisations expressed utter disappointment in the nomination of Abubakar Malami for a ministerial position in President Buhari’s second-term administration.
“We are convinced that with Malami as minister, in whatever capacity, the fight against corruption is doomed,” the group said.
A settlement ignored
According to sources, Nigeria could have paid less than 10 percent of the $8.9 billion award if the present administration had acted in line with the recommendation passed to it by the former President Goodluck Jonathan.
Sources familiar with the case said a government negotiation team constituted by former President Jonathan successfully negotiated an out-of-tribunal settlement with P&ID and got the company to accept an $850 million payment, about 9.6 percent of the $8.9 billion award.
At the end of negotiations on November 20 and 21, 2014, a government team recommended the payment of $1.5 billion to P&ID. However, former President Jonathan asked the team to press for reduction of the settlement amount. The team then achieved a further concession to about $1.1 billion to allow for taxes, salaries and other remunerations to P&ID workers if the contract agreement had been executed.
On April 29, 2015, P&ID agreed to the government’s final proposal to pay $850 million to settle the matter once and for all. Although the government expressed discomfort over the $850 million settlement, wishing it was about $500 million or less, a payment schedule was agreed. Initial payment of $100 million was to be made immediately after the Deed of Settlement is signed by the two parties.
However, the present administration ignored that settlement and rather asked its lawyers to return to the tribunal to further contest the engineering firm’s claims.
“President Jonathan reasoned that since his administration was already a few days away from its exit on May 29, 2015, it was proper not to approve the payment of $850 million to avoid unnecessary suspicion,” one lawyer who was close to the case said, asking not to be named because of the sensitivity of the matter.
Arguments of P&ID
In January 2010, P&ID submits that it entered a gas supply and processing agreement with Nigeria’s Ministry of Petroleum Resources to build a gas processing plant in Calabar, Cross River State. Pursuant to the agreement, P&ID claims that it would build the necessary facilities and then refine natural gas into non-associated natural gas for a period of 20 years.
The natural gas would be used by Nigeria to power its electrical grid. Nigeria was to supply P&ID with all necessary pipelines, related infrastructure and agreed-upon quantities of wet gas, at first 150 million, and eventually, 400 million standard cubic feet (SCF) per day for a 20-year period at no cost.
P&ID alleges that Nigeria failed to secure the agreed-upon quantity of gas and failed to complete the construction of the infrastructure and as a result suffered a loss of 20 years’ worth of profits from the potential sale of natural gas liquids.
After series of failed negotiation attempts, P&ID commenced arbitration against Nigeria and the Ministry of Petroleum Resources in London.
Nigerian government’s reaction to the ruling
Dayo Apata, Solicitor General of the Federation and permanent secretary, Federal Ministry of Justice, said the Federal Government’s counsel has been instructed to pursue an appeal on the judgment of the English Court dated 16 August, 2019 and at the same time seek for a ‘stay of execution’ of the said judgment.
“In view of the above, please be informed that the Federal Government of Nigeria is making vigorous efforts to defend its interest in this matter and would not relent in exploring every viable option in doing so,” Apata said in a statement.
Malami, then Nigeria’s Attorney General (AGF), had said in May that P&ID never began the construction of the project facility, although the company claims it incurred about $40 million in preliminary expenses.
“It is entirely proper for Nigeria to raise and to strongly assert all available and proper defences to the claims brought by P&ID,” Malami said in May 2019.
DIPO OLADEHINDE
