Resolve the $9.6bn P&ID judgment debt conundrum

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The recent decision by an English Commercial Court in the United Kingdom to award $9.6 billion judgment debt against Nigeria in a breach of contract case between the country and an Irish company, Process and Industrial Developments Ltd., or P&ID, is a cause for concern among Nigerians, and rightly so.

Converted into our local currency, the Naira, $9.6 billion at the current exchange rate, would amount to over N3 trillion, more than one third of Nigeria’s budget for 2019. That this huge sum of money would be paid to a private company, on the orders of a foreign court, is a fact that not a few Nigerians, are unwilling to accept.

For a country suffering from high infrastructure deficit, N3 trillion +, deployed annually over the next decade, would surely go a long way in fixing our dilapidated social infrastructures like roads and bridges, schools and hospitals, electricity generation and distribution, land, air, water and rail transportation et cetera. Surely, it would create jobs for the teeming population of the unemployed, especially the youth.

The anger the judgment generated in Nigerians, especially officials of the federal government, including ministers and central bank chiefs, in the immediate aftermath of the court decision was such that could have frightened the English judge to change his mind if he were to be here. But then, he is far away in the UK and even more importantly, public opinions have no bearing on court decisions all over the world. As the anger subsides, Nigerians are now asking, how did we get here and how can we get out of this mess?

Nigeria got into the mess when she entered into a contract sometime in 2008, with P&ID to build a plant somewhere in Akwa Ibom state, to convert gas, being flared into the air by the oil majors at the various oil fields scattered all over the Niger Delta, into electric power, to supply electricity to the people of the area and also add some megawatts to the national grid. Nigeria was to pipe the gas to the plant to be built by P&ID.

However, the contract by the company and the Ministry of Petroleum Resources left out the major players in the oil industry; the NNPC and the major oil companies, who between them, produce the gas needed for the project to take off. So, when it was time for Nigeria to deliver on her own side of the contract, the ministry couldn’t (as it had no gas of its own) and P&ID capitalized on that to also not do anything, even though it claimed to have sunk $40 million into the project.

Alleging a breach of contract, the company took the matter to arbitration in London and got $6.6 billion award against Nigeria, the biggest ever a company has won from a sovereign, in 2012. Apparently to give teeth to the award, P&ID approached the English commercial court, which in a landmark judgment last month, added about $3 billion interest to the original $6.6 billion and awarded $9.6 billion to the company. This is what is causing uproar in the country now. Why did we sign this type of contract especially with a company with no track record in that line of business?

Well, the bottom line is corruption which has eaten deep into all facets of our lives. Micheal “Mick” Quinn, the Irish man who was chairman of P&ID until his death few years ago was a man with little education doing all sorts of job in his country including entertainment promotion. The oil boom of the 70s and the massive construction going on in Lagos then attracted him to Nigeria and he never left, so to speak. Cement importation was the main business of that era and he got involved by quickly cultivating the friendship of the powerful people of that era, including top military officers and their accomplices in the civil service. That continued even after the end of the respective military eras into the present democratic dispensation.

When the government in 2008 proposed to end the incessant gas flaring in the Niger Delta by the oil companies by channeling the gas into a project to generate electric power for the local community and the national grid, the civil servants in charge of the project at the Ministry of Petroleum Resources and their powerful collaborators in government obviously had a different idea other than national interest. With no oil major interested and without recourse to the Nigerian National Petroleum Corporation (NNPC), they turned to Quinn, their willing ally, as always, and a contract was signed with his company, P&ID registered in a foreign jurisdiction where business integrity is in short supply. The rest, as the saying goes, is history.

Now, what can Nigeria do to free herself from the obligations of this monumental judgment debt? Though various options have been put forward, there is no consensus yet on the right steps to take, but what is clear is that Nigerians are agreed that the federal government should fight the case. Whether we still have enough legal windows to do this is another matter.

But this notwithstanding, this newspaper would like to commend the steps taken so far by the federal government to resolve the matter and urge it to neither pay, negotiate or settle with P&ID. The contract from conception was intended to defraud the nation. We urge the relevant anti-corruption agencies to investigate it properly and bring those involved in this fraudulent practice to book, whether they are still in service or not. They should be severely punished to serve as deterrent to others. It is about time that the searchlight was focused on corruption in the civil/public service to save the country from this type of embarrassment.

The contract should never have been signed; it was a typical case of insider wheeling, dealing, lawlessness, collusion and reckless disregard of public interest. It should be revoked lawfully. The National Assembly should as a matter of priority pass a law to invalidate the P&ID contract and similar agreements with jurisdiction or venues outside Nigerian courts. Nigeria should never submit to foreign jurisdictions in matters like this or any other matter in future.

To prevent P&ID from seizing any of the nation’s assets as it is currently threatening, the federal government should ring fence all our assets overseas. The government should also test the limits of sovereign immunity in this matter in the British court as we believe that there are no Nigerian assets that P&ID can attach, because they are mostly immune. We agree with renown Professor of International Law and Jurisprudence, Akin Oyebode that Nigeria should take full advantage of the rules pertaining to sovereign immunity that have been well established in international law. According to him, P&ID is disabled from attaching any of Nigeria’s sovereign property without its express consent. “It is true that international law bifurcated sovereign acts (jure imperii) and acts of commercial nature (jure jestionis), but the private party suffers the disadvantage of non-enforcement of judgment against the sovereign. So, a private party that enters into a contract with a sovereign does so at its own risk,” he stated. We agree with him. The government should, however, look for saboteurs within who may want to collude with P&ID to seize our assets as the company on its own is unable to succeed in taking such a step.

Going forward and to prevent a reoccurrence of this type of contract in future, we believe the ministry of Justice must be reorganized and reformed to be responsive to matters like this from the beginning. Foreign jurisdiction and foreign venue in contracts based in Nigeria should be eliminated. The National Assembly must be informed immediately of any claim against the federal government or its agency above N100 million. All existing contracts must be reviewed and all arbitration clauses revoked.

Every existing contract between federal government and any party should be compiled and published for the public to know.

Even though the contract preceded this government, there are lessons for the Buhari administration to learn from it. Perhaps we would not be where we are today on the matter if the government had done a better job with the defence of the case. Poor administrative, policy and investigative actions by this government largely contributed to the conundrum we are faced with now. A more effective defence by this administration could have saved the nation this embarrassment. The Jonathan administration that inherited the contract from the Yar’adua’s government to a large extent should share in the blame as well if it wouldn’t be fair to put the entire blame on its head.

However, as a nation and a people, one lesson we must learn from this $9.6 billion judgment debt is that whatever we do today, especially as public officers, has consequences tomorrow, and as such, we must endeavour to do what is in the best interest of Nigeria and Nigerians at all times and do things in accordance with laid down rules and regulations.

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