Nigeria has succeeded in an effort to force JPMorgan Chase to disclose more documents ahead of a trial in which the US bank stands accused of enabling the misappropriation of almost $900m in state funds.
The UK High Court on Tuesday granted the African nation’s application to secure records from top US executives and compliance officers involved in signing off $875m in payments between 2011 and 2013 relating to the controversial OPL 245 oil licence deal.
Lawyers for the Federal Republic of Nigeria said last week there had been “serious issues” with the US bank’s approach to disclosure, arguing its focus on documents and interactions between staff in Europe was “unduly narrow”.
In Tuesday’s judgment Justice Neil Calver said “a key issue in these proceedings is what JPMC knew and when it knew it”. He ruled that certain US compliance documents — the significance of which JPMorgan played down at last week’s hearing — were “likely to be relevant to the case on gross negligence”.
The trial is due to start next February after the bank failed in a 2019 attempt to have the lawsuit dismissed.
The 2011 deal was an attempt to end a multiyear battle over the ownership of the lucrative OPL 245 oil licence. However, it ensnared European oil majors Royal Dutch Shell and Eni in corruption investigations in Italy.
The licence, in the years prior, was shuffled back and forth between Shell and Malabu, a Nigerian oil company backed by former official Dan Etete that was first awarded development rights in 1998, when he was Nigeria’s petroleum minister.
A Milan court in March cleared the oil companies and their senior and former executives of any wrongdoing, and Etete of corruption charges. But Nigeria is pushing ahead with its case in London against JPMorgan. It is seeking compensation of $875m plus interest from the bank for facilitating two payments in 2011 totalling $801.5m and one in 2013 for $74.2m.
The country alleges it is the victim of a “fraudulent and corrupt scheme” involving bribes paid to former and current Nigerian politicians and oil executives through the transfer of funds via Malabu accounts.
JPMorgan has argued that it received sufficient approvals from Nigerian authorities before allowing the transfer of funds from a government account to those controlled by Etete.
Nigeria has also argued that JPMorgan breached its duty of care by going ahead with payments out of the government account despite having reasonable grounds to believe they were intended to defraud it. JPMorgan, the government said in court, “took the irrevocable step of paying vast sums away to Malabu”.
It highlighted that JPMorgan had not only notified the UK’s Serious Organised Crime Agency of the proposed payments, it had filed four “Suspicious Activity Reports” in 2011.
A US-based compliance officer for JPMorgan also raised a red flag in 2013, saying in a memo revealed in court that “in light of Malabu’s reported connection to the alleged Nigerian corruption scheme, there would be great risk presented if JPMC continues to process wires involving Malabu”.
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The memo was intended to prepare Pamela Johnson, the bank’s global head of financial crime compliance, for a meeting with then chief operating officer Matt Zames, indicating the matter had escalated to the highest ranks of JPMorgan.
The bank is now obliged to share further documentation linked to Johnson and other top US executives including Lester Pataki and John Gibbons.
In previous hearings, even as the bank said it had “no responsibility” to look behind any payment instructions, the judge said this was not consistent with the agreement the bank had with its client.
After the ruling, a representative of the Nigerian government said: “It is high time JPMorgan gave a clear and unambiguous account of exactly how the decisions to make these huge payments were made when it was on notice that to pay out risked its customer, Nigeria, being defrauded.”
JPMorgan declined to comment.