Nigeria Fends Off $11 Billion Award as UK Judge Finds Fraud

(Bloomberg) -- Nigeria’s government dodged having to pay out as much as $11 billion after a London judge ruled that the arbitration award over a failed gas deal handed to a hedge-fund backed firm was won fraudulently.

The judge found that the massive arbitration award in favor of Process & Industrial Development Ltd. was tainted by bribes. “The awards were obtained by fraud,” judge Robin Knowles said in a ruling on Monday. 

The case highlights “what some individuals will do for money,” the judge said. “Driven by greed and prepared to use corruption; giving no thought to what their enrichment would mean in terms of harm for others. Others that in the present case include the people of Nigeria.”

The ruling, which can be appealed in the UK, will come as some relief to Africa’s biggest crude producer’s economy that’s fighting double digit inflation and falling oil revenues. An adverse ruling could have added a debilitating liability on the country, where over the past eight years debt has increased almost eight-fold to more than $110 billion.

At the heart of the case is a failed 2010 gas deal between Nigeria and P&ID, a British Virgin Islands-registered firm founded by two Irish businessmen. A resulting arbitration led to a $6.6 billion award for P&ID that’s now swelled to over $11 billion with interest. 

Nigeria alleged “bribery of epic and industrial scale” first for the gas deal and then to buy off lawyers representing the country to win the arbitration award in 2017. 

“Brazen fraud”

“The brazen fraud perpetrated by P&ID has finally been revealed,” Nigeria’s spokesperson said in an emailed statement. The verdict will also ensure “that any parties who think African nations are an easy target for exploitation are forced to think again.”

Not all of Nigeria’s allegation were accepted by the court, the judge said. The African nation was, however, successful in showing irregularity in the award that can pave the way for the court to declare the award will have no effect.

P&ID “is considering the steps available to it in the light of the judgment,” its lawyer Nick Marsh said in an emailed statement. The company has consistently denied all the allegations made by Nigeria. 

Richard Deitz-led hedge fund VR Capital Group Ltd., two lawyers in the UK and P&ID’s founder were among those who stood to gain billions of dollars if P&ID had won."

“The court did not make any findings of wrongdoing on the part of VR,” its spokesperson said. The court’s finding relate to events before VR acquired an interest in P&ID and they “contradict representations on which VR relied during its acquisition process.”

VR Capital had entered a $45 million deal for a 25% stake in P&ID after the arbitration ruling. VR Capital had a fall out with the other owners of P&ID and had commenced its own arbitration case against it in 2020, according to US court filings. 

Two lawyers, Seamus Andrew and Trevor Burke lost a chance to get as much as $3 billion from the verdict. The court said the UK’s regulator for lawyers will receive a copy of the judgment. Andrew didn’t respond to an email seeking comments.

Burke and Andrew said in separate statements that they do not accept the criticisms made of them. “I am confident that my conduct will in due course be vindicated by my regulator,” Andrew said in an emailed statement. 

“I am confident that my conduct will be exonerated” by the regulator, Burke said.

(Updates with comments from Seamus Andrew in the thirteenth paragraph. An earlier version of the story corrected the size of VR Capital’s stake in P&ID.)

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