JPMorgan accused of ignoring fraud warnings in Nigeria trial

On Wednesday, a London court will begin to hear a case filed by Nigeria against JPMorgan Chase, alleging more than $1.7 billion in damages for its participation in a disputed 2011 oilfield sale.

According to Nigeria’s attorneys, JPMorgan behaved carelessly in moving $875 million from escrow accounts to Dan Etete, who had been convicted of money laundering, between 2011 and 2013. According to them, the situation “had gone directly to the top of the business,” according to an email from JPMorgan’s senior country representative.  

The accusation is “baseless,” according to the bank, and Nigeria has yet to establish that a fraud was committed. 

The six-week trial will look into the scope of a bank’s duty of care to its customers, as well as whether the company should have stopped payments despite assurances from government authorities. According to JPMorgan, Nigeria’s assertion implies that its bankers were supposed to be aware of the fraudulent payments. 

The present administration of Nigeria claims that a contract given by one of its predecessors to explore the deep seas off the coast of the Gulf of Guinea, as well as a series of subsequent deals, was corrupt.  

Nigeria’s lawyer Roger Masefield told the court that the agreements enabling payments to Etete and his company Malabu Oil and Gas Ltd. over the oil field didn’t simply “forgive” the disgraced oil minister. “A flagrant act of unscrupulous self-dealing was affirmatively satisfying on a gigantic scale.” 

The west African country is demanding $1.7 billion in damages, plus interest.  

The purchase of the oil license in Africa’s greatest crude producer by Eni SpA and Royal Dutch Shell Plc a decade ago has been the subject of litigation in European and Nigerian courts. While JPMorgan was recently cleared of corruption charges in Milan, a judgment that prosecutors are appealing, Nigeria’s government is still seeking reparations from the oil giants. 

Throughout the two-year period of the payments, JPMorgan fell short of what a “reasonable and honest banker” should have done, according to Masefield. According to him, some of the first transactions in 2011 were laundered through shell businesses and converted to cash at Nigerian bureaux de change.