P & ID: Lessons not Learnt
By Tahir Ibrahim Tahir Talban Bauchi
Nigeria had successfully won an arbitration challenge to an award granted against it, in favor of P & ID (Process and Industrial developments Ltd). The arbitration award had grown to about 11 billion dollars. This was after a decade of legal tussle between Nigeria and the hedge fund backed entity P & ID. In his judgement, Sir Robin Knowles CBE stated that P & ID had obtained the award only by “practising the most severe abuses of the arbitral process”. In response to the judgement, the Nigerian lead counsel, Mark Howard KC, said, “P & ID was exactly the kind of entity that was prepared to engage in bribery to achieve its aims, and to undermine the administration of Justice in Nigeria in the pursuit of riches beyond the dreams of avarice”. Details of the case had unraveled how corrupt Nigerian officials were used to obtain and share privileged Federal Republic of Nigeria’s (FRN) privileged documents through bribery. They were willing to plunge Nigeria into a financial darkness just to enrich themselves, and to enrich foreign entities who would be carting away the nation’s fortunes.
A similar case has come to light, this time at the subnational level, between Ogun State government and a Chinese company, Zhongshan Fucheng Industrial Investment Company Ltd, which led to the seizure of three Nigerian presidential jets. A contract between the two for the development of the Ogun Free Trade Zone had fallen through and was terminated by the Ogun State government. An arbitration award in favor of Zhongfu to the tune of 74.5 million dollars is being disputed by Ogun State and they have not honored the award. The Ogun state governor at the time, Sen. Ibikunle Amosun has said that, Zhongfu got appointed as interim zone managers through sharp practices, undermining the lawful zone managers, China Africa Investment FXE. This was discovered after due diligence was carried out in consultation with the Chinese government, who had clarified that China Africa Investment FXE is the legal and rightful manager. This led to the termination of Zhongfu’s appointment and contract as managers.
The Zhongfu situation must be treated and handled like the P & ID situation. P & ID had not paid for a single stretch of land in Calabar, where it is contracted to build and operate a gas processing plant. It didn’t make any Investments in the project at all. But it had made bribe payments to government officials to the tune of 3.5 million dollars, with pledges of 750 million dollars in bribes if the arbitration goes through in their favor. P & ID for all intent and purposes, never had the intention nor wherewithal to actually build a gas processing plant. The entire project was a scam, surreptitiously put together by fraudulent businessmen and thieving government officials. The Federal Ministry of Justice was put in the dark over the agreements signed. They were also in the dark over the arbitration proceedings at the initial stages, as the Petroleum ministry handled the case. Due diligence was lacking and the rightful organs of government were not carried along in the entire contractual agreements, as well as the arbitration proceedings. The Federal Ministry of Justice took over only after the initial award of 6.6 billion dollars to P & ID.
Now we have Zhongfu sneaking in through the back door to seize the Free Trade Zone contract, in a well orchestrated scheme to strip China Africa Investments of its businesses in state owned assets of Guangdong Province, China, the original joint venturer. The Zhongfu Free Trade Zone contract was a scam afterall as they are not the true joint venture partners. They misled Ogun State govt and took away the deal from China Africa Investments. Zhongfu, without any Investments are now laying claim to 74.5 million dollars of Federal Government money. Ofcourse Ogun state on its part was sloppy in its due diligence over the project. They ought to have sought the counsel of the Chinese government, in resolving the alleged dispute between the two Chinese companies. They would have been rightfully guided as to the true Guangdong Province asset managers. Now 1 or 3 of the presidential jets earlier detained by the Zhongfu arbitration have been released. But they have laid claim to another Nigerian choice property at Liverpool which in another twist, is not registered in Nigerian Government name. They intend to raise 2.2 million dollars from the sale.
The legal team and public officers that handled the P & ID case must be sent to the Zhongfu arbitration. They must challenge it vociferously. They should also as a matter of expediency, sought the support of the Chinese government in the matter. It should also be one of the front burner issues in Mr. President’s visit to China. The case must be made that Zhongfu is a fraudulent outfit, out to strip Nigerians of their commonwealth. 74.5 million dollars is no joke in today’s economy. Losing it to fraud makes it worse. Legal frameworks that provide more scrutiny and safeguards for the Nigerian State, against these kinds of contractual agreements that only seek to exploit us, must be put in place for future use. Contracts involving multinationals must go through series of legal processes, especially from the subnational level, to ensure that due diligence is carried out on not only the clauses, but the international partners or investors. Any contracts involving foreign exchange/ foreigners must be vetted by the Federal Ministry of Justice. Foreign entities coming in to set up shops in their briefcases, should no longer be allowed to have any cases with us whatsoever. It may boil down to our Nigerianness and the loyalty of our civil and public servants, but, proper and diligent legal frameworks can help stem these contraption contracts.
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