© Reuters. FILE PHOTO: A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015. REUTERS/Mike Segar/File Photo
By Sinead Cruise and Estelle Shirbon
LONDON (Reuters) -JPMorgan Chase has won a London High Court battle against Nigeria, which was seeking $1.7 billion in damages over the U.S. bank’s role in a disputed 2011 oilfield deal.
JPMorgan (NYSE:JPM) said the judgment reflected its commitment to acting with high professional standards everywhere it operates, while Nigeria said it was disappointed and would review the judgment carefully before considering its next steps.
The civil case, which was heard earlier this year, relates to the purchase by Shell (LON:RDSa) and Eni of Nigeria’s OPL 245 offshore oilfield.
Nigeria had alleged JPMorgan was “grossly negligent” in its transfer of funds paid by the energy majors to a company linked to the country’s disgraced former oil minister Dan Etete, as per instructions received from Nigerian government officials.
Nigeria now says those officials were party to a fraudulent scheme.
According to Nigeria’s legal argument, the transactions put JPMorgan in breach of its Quincecare duty, which obliges banks to disregard a customer’s instructions if following those instructions might facilitate a fraud against that customer.
JP Morgan rejected the legal argument, putting the emphasis on its primary duty to comply promptly with payment instructions from its customer, and also contested some of the factual elements put forward by Nigeria.
London High Court Judge Sara Cockerill said in a 137-page ruling issued on Tuesday that no Quincecare breach had occurred.
JPMorgan said the outcome reflected “how we are prepared to robustly defend our actions and reputation when they are called into question”.
The Nigerian government said it would continue its fight against fraud and corruption and work to recover funds for the people of Nigeria.
Campaign group Spotlight on Corruption described the ruling as “a huge setback in the fight against corruption”, saying it gave a “free pass” to banks who ignored red flags.
The damages sought included cash sent to Etete’s company Malabu Oil and Gas, around $875 million paid in three instalments in 2011 and 2013, plus interest, taking the total to over $1.7 billion.
Nigerian military ruler Sani Abacha had awarded licence OPL 245 to a company Etete owned in 1998.
Subsequent Nigerian administrations had challenged Etete’s rights to the field over many years until a deal to resolve the impasse via a sale to Shell and Eni was struck in 2011.
The transaction is also at the centre of ongoing legal action in Italy.
Source: Investing.com
