JPMorgan Must Turn Over U.S. Compliance Records in Nigerian Oil License Case: UK Court
12 May 2021

The UK High Court has ordered JPMorgan Chase to turn over compliance documents ahead of a trial in which the bank stands accused of enabling the misappropriation of $875 million from the government of Nigeria, the Financial Times reported on Tuesday.

The decision stems from an application by the Federal of Republic of Nigeria to secure records from JPMorgan executives and compliance officers involved in the signing off of payments related to the controversial and long-contested OPL 245 oil license deal, the newspaper said. Last week, lawyers representing Nigeria said that they had identified “serious issues” with the U.S. lender’s legal disclosures to date, including the bank’s alleged attempt to focus largely on documents and interactions involving its staff in Europe, the FT reported.

In a judgment issued on Tuesday, Justice Neil Calver said that “a key issue in these proceedings is what JPMC knew and when it knew it”, adding that certain records from the bank’s U.S.-based compliance department were “likely to be relevant to the case on gross negligence”.

The trial, slated to begin in February, will determine whether JPMorgan is liable for processing payments between 2011 and 2013 from an escrow account held for the Nigerian government to Malabu, an oil company backed by former Nigerian official Dan Etete. The transfers followed a 2011 agreement between the Nigerian government, Malabu, Shell and Eni that was intended to resolve a decade-long dispute over ownership of the license, according to Reuters.

Nigerian officials have since contended that the transfers to Malabu were part of a “fraudulent and corrupt scheme” involving bribe payments to former and current Nigerian politicians and oil executives, the FT said. JPMorgan breached its duty-of-care by processing the payments to Malabu despite having reason to believe that the transfers were part of a fraud scheme, according to the government of Nigeria.

In court hearings, the African government has highlighted the fact that JPMorgan not only notified the UK’s Serious Organised Crime Agency of the proposed transactions but also filed four related suspicious activity reports in 2011. A U.S.-based compliance officer at the bank separately raised a red flag in a 2013 memo that has since been submitted in court, the FT said.

Drafted for JPMorgan’s global head of financial crime compliance, Pamela Johnson, the memo states that “in light of Malabu’s reported connection to the alleged Nigerian corruption scheme, there would be great risk presented if JPMC continues to process wires involving Malabu”.

Under the UK High Court order, the banks must now share additional documentation linked to Johnson and other US executives, including Lester Pataki and John Gibbons, the FT reported.

JPMorgan has previously asserted that it had “no responsibility” to look behind the payment instructions and that it had no reason to doubt that the requests to make the transfers were improper.

Read the Financial Times article here

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