An online court hearing into the appeal by the Federal Government of Nigeria to upturn an arbitration award against it worth close to $10 billion has thrown up new ‘evidence’ that a certain Vera Taiga allegedly received kickbacks from companies related to Process & Industrial Development Limited (P&ID), a British engineering firm based in the British Virgin Islands to facilitate the gas supply and processing deal that has now gone wrong.
In the online court hearing, Nigeria’s government lawyer said it has new evidence of payments from companies related to P&ID to Vera, one 11 days before the deal was signed.
The government said one payment of $4,969.50 was made on December 30, 2009, and a second of $5,000 on January 31, 2012.
As a result of the latest development, Nigeria is seeking permission in the English courts to appeal the award, granted in 2017, despite having missed the 28-day appeal deadline. It says the new information only came to light in late 2019.
Ironically, Vera’s mother, Grace Taiga was a former director, Legal Services in the Ministry of Petroleum Resources. She is also accused of receiving $20,000 as a kickback in ensuring that the deal; a gas supply and processing agreement between Nigeria and P&ID were successful. She is currently standing trial for her role in the deal.
In its defense, P&ID argues the payments were legitimate and for medical expenses.
“Nigeria’s conspiracy theory against P&ID hatched almost a decade after the gas supply agreement was signed relies on speculation and conjecture with no basis in fact,” a spokesman for P&ID said.
The hearing will continue today, and the judge’s ruling will determine whether the government can continue its appeal and present its full case of alleged fraud in the English courts.
Recall that on January 11 2010 P&ID signed a gas supply and processing agreement with the Federal Government of Nigeria that, over 20 years, it would supply natural gas (wet gas) to P&ID’s production facility.
In return, P&ID would process the wet gas by removing natural gas liquids and return approximately 85% of it to the government in the form of lean gas. This lean gas was to be returned at no cost to the Nigerian government.
Based on this agreement, Nigeria was supposed to arrange for the supply of wet gas to P&ID’s gas processing facility which it intended to build in the country’s Cross Rivers State. This required the government to construct pipelines and arrange facilities for transporting the wet gas. The government failed to do this for three years.
P&ID viewed this failure as a repudiation of the contract. In simpler terms, this means that the government renounced its obligation under the contract. Consequently, in March 2013, P&ID began an arbitration action against the government before a London tribunal.
According to clause 20 of the agreement, which both parties signed, provided that any disputes were to be resolved by arbitration with the seat of arbitration being London, England or any other place agreed by the parties. Nigeria tried to contest this, but its appeal to have the tribunal sit in Nigeria failed.
At the tribunal, P&ID claimed that it had invested $40 million in the project even though it had not acquired the land or built any facilities for gas processing. It claimed damages of about $6.6 billion: the amount of the net income it would have earned over the 20 years of the agreement.
In response, the government argued that the damages claimed were not a fair and reasonable consequence of the government’s breach of the agreement. This is because P&ID never commenced building the gas processing facility. It also argued that P&ID should be awarded only three years’ worth of income as, by that time, the company should have found some other profitable investment that would reduce its losses from the breach.
Similarly, the government objected to the measure of estimated expenses and income stream which P&ID used to calculate its damages claim.
In July 2015 the tribunal decided that by failing to fulfill its obligations, the government had repudiated the agreement. As a result, P&ID was therefore entitled to damages.
In January 2017, the tribunal by a majority of two to one made a final award of $6.597 billion together with interest at the rate of 7% starting from 20 March 2013 until payment is made. The 7% interest reflects what P&ID would have paid to borrow the money or earned by investing the money in Nigeria.
Following the tribunal’s award of damages, in March 2018, P&ID brought an action before the Queen’s Bench Division of the English Commercial Court. It wanted permission to enforce the damages awarded by the tribunal. Despite delays by the Nigerian government, on Aug. 16, the court made an order enforcing the tribunal’s final award which now stands at about $9.6 billion.
