Nigeria has succeeded in compelling JPMorgan Chase to disclose additional documents ahead of a trial that accused the US bank of enabling nearly $ 900 million in misappropriating government funds.
The UK High Court on Tuesday granted the African nation’s motion to secure records of senior US executives and compliance officers involved in the signing of $ 875 million payments between 2011 and 2013 in connection with the controversial OPL 245 oil license agreement.
Attorneys for the Federal Republic of Nigeria said last week there had been “serious problems” with the US bank’s disclosure approach, arguing that the focus on documents and employee interactions in Europe was “overly narrow”.
In Tuesday’s ruling, Judge Neil Calver said, “A key issue in this case is what JPMC knew and when it knew”. He ruled that certain US compliance documents – the importance of which JPMorgan downplayed at last week’s hearing – “are likely to be relevant in the case of gross negligence.”
The trial is slated to begin next February after the bank failed in a 2019 attempt to dismiss the lawsuit.
The 2011 deal was an attempt to end a multi-year battle for possession of the lucrative OPL 245 oil license. However, it embroiled the European oil companies Royal Dutch Shell and Eni in corruption investigations in Italy.
The license had been mixed back and forth in previous years between Shell and Malabu, a Nigerian oil company supported by former official Dan Etete, who received development rights for the first time in 1998 as Nigerian petroleum minister.
A Milan court in March cleared the oil companies and their senior and former executives of any wrongdoing and Etete of corruption allegations. But Nigeria is pushing its case against JPMorgan in London. The bank is seeking compensation of $ 875 million plus interest for easing two payments in 2011 totaling $ 801.5 million and one in 2013 totaling $ 74.2 million.
The country claims it fell victim to a “fraudulent and corrupt system” of paying bribes to former and current Nigerian politicians and oil managers by transferring funds through Malabu accounts.
JPMorgan has argued that it received sufficient approvals from the Nigerian authorities before allowing funds to be transferred from a government account to those controlled by Etete.
Nigeria has also argued that JPMorgan violated its duty of care by making payments from the government account, despite reasonable grounds to believe that they were intended to defraud it. JPMorgan, the government said in court, “has taken the irrevocable step of paying Malabu huge sums”.
It was highlighted that JPMorgan not only notified the UK Serious Organized Crime Agency of the proposed payments, but also filed four “Suspicious Activity Reports” in 2011.
A US-based compliance officer for JPMorgan also hoisted a red flag in 2013, stating in a memo released in court that “given Malabu’s reported connection to the alleged Nigerian corruption system, there is a high risk if JPMC continues to process cables with Malabu “.
The memo was intended to prepare Pamela Johnson, the bank’s global director of financial crime compliance, to meet with then Chief Operating Officer Matt Zames and to indicate that the matter had escalated to the highest echelons of JPMorgan.
The bank is now required to release additional records related to Johnson and other top US executives such as Lester Pataki and John Gibbons.
In previous hearings, the judge said while the bank had “no responsibility” to look behind money orders, it was inconsistent with the agreement the bank made with its client.
Following the verdict, a Nigerian government official said: “It is high time JPMorgan made it clear how the decisions were made regarding these huge payments when it became known that the payout posed a risk to its customer Nigeria being defrauded . “
JPMorgan declined to comment.