Malabu oil deal: Nigeria loses $1.7bn JP Morgan case

Nigeria on Tuesday lost its $1.7 billion claim against JP Morgan Chase Bank over the transfer of proceeds from the sale of OPL 245 in the controversial Malabu oil deal.

A London Court Judge, Sara Cockerill ruled Tuesday that the Nigerian government were unable to substantiate that it had been defrauded in the case.

In its suit, Nigeria claimed more than $1.7 billion for the bank’s role in the controversial deal. Nigeria also alleges that JP Morgan was “grossly negligent” in its decision to transfer funds paid by oil giants Shell and Eni into an escrow account controlled by a former Nigerian oil minister, Dan Etete.

Earlier in February, Nigerian lawyer, Roger Masefield, argued that the nation’s case rested on proving that there was fraud and JP Morgan was aware of the risk of fraud.

“The evidence of fraud is little short of overwhelming,” the lawyer told the court.

“Under its Quincecare duty, the bank was entitled to refuse to pay for as long as it had reasonable grounds for believing its customer was being defrauded.”

Quincecare refers to a legal precedent whereby the bank should not pay out if it believes its client will be defrauded by making the payment.

Judge Cockerill said Tuesday that by the time of the 2013 payments, the bank was “on notice of a risk” of fraud.

“There was a risk – but it was, on the evidence, no more than a possibility based on a slim foundation,” the judge ruled.

The ruling was published today.

“This 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,” a spokesman for the bank said in an emailed statement.

The damages sought include cash sent to Etete’s company Malabu Oil and Gas, around $875 million paid in three instalments in 2011 and 2013, plus interest, taking the total to over $1.7 billion. Vanguard