Nigeria Sues JP Morgan for $1.7 Billion Over Oil Deal

The Nigerian government has sued the US bank JP Morgan Chase in a London court for ‘gross negligence’ in its controversial sale of Oil Prospecting Licence (OPL) 245, an oil field reputed to be one of Africa’s biggest, worth about $1.3 billion.

The Malabu oil scam, which has been under investigation for over six years, relates to the billions of dollars paid by oil giants, Shell and ENI, into a Federal Government account, for OPL 245, considered the richest oil block in Africa.

In the court documents seen by Reuters, Nigeria alleges that JP Morgan was “grossly negligent” in its decision to transfer funds paid by the energy majors into an escrow account to a company controlled by the country’s former oil minister Dan Etete instead of into government coffers.

The damages sought include cash sent to Etete’s company Malabu Oil and Gas, around $875 million paid in three instalments, plus interest, taking the total to over $1.7 billion. The Nigerian government at the time asked JP Morgan to make these transfers as part of the oilfield sale, court documents show.

“J.P. Morgan is confident that it acted appropriately in making these payments, which were authorised by senior representatives of the Nigerian government, and only processed following extensive engagement with law enforcement and other agencies and courts. We will robustly defend against this claim,” a spokesman for the bank said.

The bank’s London offices deal with business for Europe, Middle East and Africa, including Nigeria.

The deal dates back to 2011 when Royal Dutch Shell and Eni paid $1.3 billion to purchase an offshore oil field (OPL 245) from Malabu Oil and Gas, a company in which Dan Etete, former petroleum minister, held majority shares.

It is alleged that about $1.1 billion was syphoned off to politicians and middlemen.

Both Shell and Eni have strongly denied that they knew of any corruption linked to the deal, and have said they don’t think bribes were paid at all.

Nigeria’s OPL 245 is one of the biggest sources of untapped oil reserves on the African continent with reserves estimated at 9 billion barrels, equivalent to nearly one quarter of Nigeria’s total proven reserves. Experts claim that the deposit can power the whole of Africa for twenty years.