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Nigeria Loses $1.7B Negligence Suit Against JPMorgan

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Nigeria on Tuesday lost its claim accusing   JPMorgan of $1.7B of negligently transferring hundreds of millions of state funds from an oil deal to the country’s former oil minister after a judge held the country failed to prove it had been defrauded. The High Court has dismissed Nigeria’s lawsuit, finding that JPMorgan Chase hadn’t breached its duty to protect its client from fraud and the country failed to prove the payments were the result of bribes. (Chris Ratcliffe/Bloomberg via Getty Images) High Court Judge Sara Cockerill rejected the Federal Republic of Nigeria suit against JPMorgan over the bank’s decision to release. . .

A High Court judge today ruled in favour of JP Morgan, after dismissing
Nigeria’s $1.7bn (£1.4bn) lawsuit against the bank, over claims it acted
negligently by transferring $875m to convicted money launderer and former
Nigerian oil minister Dan Etete.

The ruling comes after Nigeria first sued JP Morgan in 2017, over claims the
bank breached its duties by transferring millions to a company controlled by
the former oil minister, during a long running dispute over the ownership of
Nigeria’s OPL245 oilfield.    

The lawsuit alleged that JP Morgan had been “grossly negligent” in sending
$875m to an account controlled by Etete’s own company, Malabu Oil and Gas,
despite “red flags” around the transaction.

Specifically, Nigeria had claimed JP Morgan had breached its Quincecare
duties, which require the bank to ignore customers instructions, if those
instructions are likely to result in fraud.    

The country had also claimed it had been a victim of fraud, as it alleged
the funds were later siphoned off to Etete’s “cronies,” after they were paid
into Malabu’s accounts via three separate transactions between 2011 and 2013.

However, High Court judge Mrs Justice Sara Cockerill today dismissed
Nigeria’s claim, as she ruled the country had failed to prove a fraud had
actually taken place.

The payments came after European oil major Eni and Shell struck a deal to
buy the OPL245 offshore oilfield in 2011. Last year, a Milan court cleared both
firms and their senior executives of any wrongdoing through their involvement
in the sale of the Nigerian resource.   

A JP Morgan spokesperson said: “This judgment reflects our commitment to
acting with high professional standards in every country we operate in, and how
we are prepared to robustly defend our actions and reputation when they are
called into question.”

The Federal Republic of Nigeria said it is “naturally disappointed” by the
judgement, as the country said it will be “reviewing it carefully before
considering next steps,” according to the Financial Times. “The FRN will
continue its fight against fraud and corruption and work to recover funds for
the people of Nigeria.”   

Helen Taylor, a legal researcher at Spotlight on Corruption, said the
verdict comes as a “huge setback in the fight against corruption” as she argued
the ruling will give “a free pass to banks who choose to ignore financial
crime.”

 

About Charles Igbinidu

Charles Igbinidu is a Public Relations practitioner in Lagos, Nigeria

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