By Lionel Faull & Oladeinde Olawoyin
(This story was first published by the Premium Times in Nigeria).
Serious disruption to court systems around the world caused by the global Covid-19 crisis is having a major impact on Nigeria’s struggle to claw back billions of dollars it claims was looted from the country via one of the most “corrupt” oil deals in corporate history.
As much as $5.5 billion could be at stake for Nigeria in its efforts to seek justice over the notorious OPL245 deal dating back to 2011, which it claims consists of allegedly stolen funds and damages.
But delays in a key criminal trial in Milan involving Shell, Eni and a host of other officials and corporate executives has led to the postponement of several months, with a verdict now expected early next year.
Shell, Eni and the other co-accused have denied any wrongdoing.
In the UK, where other important asset recovery cases are underway, the pandemic is also creating logistical challenges for court hearings – while Nigeria has locked down its courts and closed its international airports.
Africa’s most populous nation, which has also been hit by plummeting crude oil prices, is desperate for funds that could provide essential medical equipment as the coronavirus threatens to overwhelm health systems across the continent.
The court delays come as an investigation by Premium Times and its London partner Finance Uncovered into the Nigerian government’s asset recovery programme reveals details of vital decisions that have taken place behind closed doors.
- shines a light on the opaque process which has seen a potentially lucrative contract for OPL245 asset recovery awarded to a relatively unknown Lagos law firm without a clear tender process;
- reveals that the Lagos firm, Johnson & Johnson has also done a deal with a US funder, Drumcliffe Partners, to help fund the recovery of the country’s assets;
- and that together they hope to land tens, if not hundreds, of millions of dollars as their own success fees for recovering the bounty.
There is no suggestion of any wrongdoing by Johnson and Johnson and Drumcliffe, but experts have questioned the Buhari government’s approach to recovering assets allegedly plundered under previous administrations.
This includes a perceived lack of transparency and a reluctance to fund the difficult and costly work of asset recovery itself. Our findings have prompted calls for the Nigerian government to review the programme and to make its decisions more transparent.
Matthew Page, a former top Nigeria expert in the US State Department and now an associate fellow with the Africa Programme of UK’s Chatham House research think tank, said: “The government should be issuing monthly reports, or making clear what decisions are being implemented, but they’re not. Given how important asset recovery is to Nigeria’s fiscal bottom line it suggests that the government’s decisions are being based on personal and political calculations, rather than in the public interest.”
OPL245 is not the only asset recovery case underway, but it is the most high-profile one.
It concerns a deal signed for $1.3bn in 2011 which saw Shell and Eni secure the rights to a massive offshore oil block, OPL245.
The two oil giants had been negotiating with Dan Etete, who, while oil minister in 1998, had awarded the rights to Malabu, an obscure shelf company that he secretly owned.
After years of legal wrangling, Shell teamed up with Eni of Italy and, with the help of Goodluck Jonathan’s government, eventually secured the rights.
It triggered a major scandal as Etete walked away with the best part of $1 billion, much of which is alleged to have been redirected in bribes, while a vast sum also funded his own opulent lifestyle with money spent on luxury hotels, armoured Cadillacs and a private jet. A previous Finance Uncovered investigation suggested that additional funds may have been spent on property in Dubai. Etete has always denied wrongdoing.
Prosecutors in Milan charged Eni, Shell and other named parties three years ago and the trial was close to completion just before the Covid-19 outbreak in Italy in February.
Nigeria had been admitted to the trial as an “injured party” and a guilty verdict could unblock a damages award worth billions of dollars.
Shell, Eni, Etete and the other co-accused have denied any wrongdoing and are defending themselves in the Milan trial.
Shell has said it “does not believe that there is a basis to convict Shell or any of its former employees”.
Eni maintains it has “full confidence in the legality/appropriateness of its activities in acquiring OPL 245”, which it says was “a completely legal and legitimate transaction conducted directly with the government of Nigeria”.
Jonathan, who has not been indicted, has also denied any wrongdoing.
Jonathan’s successor, Muhammadu Buhari swept to power on an anti-corruption mandate in 2015. Immediately after being sworn in, his deputy, Vice-President Yemi Osinbajo (pictured below and in main image) set up a committee to guide the recovery of Nigerian assets that it believes have been stolen and stashed abroad
Osinbajo, a career lawyer and former attorney general for Lagos State, chaired the committee which promptly sought proposals from hopeful local and international asset recovery firms.
Very little information has reached the public about this committee’s makeup, decision-making and track record. It is thought to have later evolved into the inter-agency Presidential Committee on Asset Recovery (PCAR).
Controversially for the asset recovery firms appointed, the committee is thought to have taken the policy decision some time after 2016 to set a relatively low cap on any success fees paid to the firms it appointed: 5% of funds recovered. This policy is not widely known in Nigeria. Sources have indicated that Osinbajo has had a difficult working relationship with the Ministry of Justice, headed by Attorney General Abubakar Malami, which is responsible for appointing recovery agents and overseeing their work. It is understood there have been major disagreements between the two politicians over policy and implementation, further complicating the asset recovery process.
The Vice President and Attorney General were unavailable for comment.
Explaining how the appointment process works, Solicitor General Dayo Apata told the Premium Times that “engagement of recovery agent[s] is based on [a] proposal written to the Attorney-General on the specific recovery to be pursued. If the recovery has prospect [then the] agents are engaged”.
Nigeria’s OPL245 team
One of the first firms out of the blocks to submit a proposal was the Lagos law firm Johnson & Johnson, whose principal partner is Babatunde Olabode “Bode” Johnson
In 2016, Johnson & Johnson was jointly appointed as the government’s agent for OPL245-related recoveries, together with Verdant, a north London law firm, whose solicitors were licensed to practice in the English courts where the first asset recovery battle was expected to be fought.
Enquiries by Finance Uncovered and Premium Times have suggested that Johnson and Johnson, which does not have a website, is a generalist law firm that does not specialise in asset tracing and recovery.
Babajide Ogundipe, a lawyer who has known both Osinbajo and Johnson since law school, and who considers Johnson a good friend, said that Johnson is “a very bright lawyer” but that in his opinion he “didn’t have any real experience” in asset recovery.
Ogundipe, who has two decades’ experience in this field and is the only Nigerian member of ICC Fraudnet, an elite global asset tracing and recovery network, recounted how his own initial interest in the new government’s asset recovery work soon cooled.
“When I found out what was on offer, it was clear to me they did not understand what is required. If you tell people, ‘We will pay you 5% of whatever you recover, and we don’t give you any money upfront,’ it’s not going to work. I have known this for more than 20 years. You cannot recover assets from people who are well-financed and extremely well resourced if you don’t have money. It costs money,” he said.
Ogundipe later learned that his friend Johnson was self-financing his own firm’s work on OPL245, and said he offered to introduce him to a number of litigation funders he knew.
Litigation funders are investors who take a bet on promising cases by contributing money towards legal costs in return for a portion of any winnings. If the case loses then they lose their money and potentially pay some, or all, of the other side’s legal costs. But if it wins then they expect to get their money back plus a multiple of anything between two- and five-times their original investment. It is a high-risk, high-reward business.
In 2017, Ogundipe’s contacts book paid off when niche American funder Drumcliffe Partners agreed to fund Johnson & Johnson.
Drumcliffe is a Washington DC-based, Delaware-incorporated investment fund headed by private equity specialist James ‘Jim’ Little.
Before entering the private equity business in 2004, Little worked as a private contractor to the US defense and national security industries, according to an online profile.
Drumcliffe’s one-page website simply says it “oversee[s] portfolios of high-value claims involving aspects of commercial fraud, insolvency, asset recovery, and third-party liability”.
But Little bangs the drum for Drumcliffe on the conference circuit, including one in Miami in 2017 at which he was filmed on a panel of litigation funders explaining that one of his fund’s specialist areas is “sovereigns [governments] who have fallen prey to corruption, in their efforts to repatriate assets for their people”.
Drumcliffe is also a “strategic partner” of ICC FraudNet, where Little is said to have told a gathering of network members in Colombia last year that he had raised more $100 million from investors to fund cases.
But in general, Drumcliffe prefers to keep details of its involvement in specific cases under wraps for commercial and legal reasons.
It even hired hard-hitting London media, libel and privacy law firm Carter-Ruck in an attempt to dissuade publication of its name and role in this story.
The only other publicly known case it has backed is a US undersea mineral exploration company’s multi-billion dollar claim against the Mexican government for refusing it the right to exploit an environmentally sensitive seabed.
Drumcliffe works hand-in-hand with Halcyon Law Group, a multijurisdictional asset recovery law firm based in Washington DC represented by Christopher Camponovo, which manages the fund’s asset recovery cases.
Like Little, Camponovo has ties to the US security establishment: he previously worked as a legal advisor to the state department and to the White House National Security Council under President George W. Bush, according to his LinkedIn profile.
All to play for
In December 2017, the asset recovery team had its first major success when a UK judge ordered that funds linked to OPL245, and which had been frozen, be returned to Nigeria. The balance of $73m was repatriated to the Nigerian government the next year
Johnson & Johnson is understood to have later received a 5% success fee from the government, or just over $3.6 million, to be split with Verdant.
And in July 2018 the presiding judge in the OPL245 trial in Milan admitted Nigeria as a civil party to the case, opening the door for it to potentially receive billions of dollars in compensation in the event that a guilty verdict against Shell and Eni leads to a damages award. Shell and Eni have denied any wrongdoing.
Around this time, Johnson & Johnson dispensed with Verdant, and hired Reynolds Porter Chamberlain (RPC), a top London law firm.
RPC is understood to instruct counsel on behalf of the Nigerian government in cases underway in Italy, Switzerland and the UK.
Premium Times and Finance Uncovered are aware of four OPL245-linked asset recovery cases currently underway, seeking amounts which could top $5.5 billion. This figure comprises:
- damages linked to the outcome of the criminal trial in Milan. The Nigerian government is hoping for an award of up to $3.5 billion — a calculation based on its expert witness’s valuation of the oil block’s market value in 2011 — but a judge might also be inclined to award “symbolic damages” of a much lower amount in the event of any guilty verdicts;
- a civil claim against Shell and Eni in London, which intends to defend the claim ($1.1 billion).A judge is hearing an application by Shell and Eni this week to have this case dismissed on jurisdictional grounds. The oil companies argue that Nigeria’s claim in London is duplicating proceedings in Milan, Nigeria is opposing the application;
- a civil claim against JP Morgan in London, which intends to defend the claim ($875 million); and
- a claim against funds frozen in the Swiss bank account of a middleman convicted in Italy in connection with OPL245, who is appealing his conviction ($112 million)
The outcome in each case is by no means certain. They are contested at every turn by a phalanx of top legal teams commanding eye-watering sums in defence of their clients — and Nigeria has suffered recent setbacks in both the criminal and civil cases against Shell and Eni.
Any damages award in Italy may be far lower than hoped, and a British judge may be reluctant to double up on any damages award potentially under consideration by an Italian court.
But calculated on a 5% success fee basis, Johnson & Johnson could be in line for a payout amounting to tens, and potentially even hundreds, of millions of dollars.
Drumcliffe would also hope to recoup its upfront investment several times over.
A top panel of funders who addressed the Offshore Alerts conference in London late last year agreed that the industry expects, on average, a 3x rate of return on an investment.
This means that were Drumcliffe to invest $10 million, they would aim to recoup their original investment plus potentially another $30 million on top.
The terms of its funding agreement with Johnson & Johnson are confidential.
It is understood the Nigerian government considered funding further legal expenses for the OPL245 cases itself after the successful recovery of the $73 million from the UK, but opted not to do so for unclear reasons.
In response to questions for this article, Solicitor General Dayo Apata confirmed that “agents are only entitled to a percentage (not more than 5%) of actual recoveries as success fees after remittance of the recovered monies has been confirmed by the Central Bank of Nigeria”
Apata said neither the Ministry of Justice or the Attorney General’s office had “entered into any agreement with any funders,” and was therefore “not in a position to address issues relating to a funding agreement which [it] is not privy to”.
He referred further questions to Johnson & Johnson.
Johnson & Johnson, Drumcliffe, Halcyon and RPC all declined to comment for this article.
However, it is understood that Drumcliffe has no direct contractual relationship with the Nigerian government.
Verdant has since closed down.
Rosetta Offonry, a former Verdant partner, and Anthony Igbiniyesu, a Solicitor Advocate with Verdant at the time, said: “For the record, Verdant was never funded by Drumcliffe. We are proud of our conduct in the recovery on behalf of the Nigerian government and remittance to them of the sum of $73.2 million which remains as far as we are aware the only funds from OPL245 recovery to have been successfully secured by Nigeria to date.”
Calls for transparency
Reviewing Nigeria’s asset recovery effort as a whole, Matthew Page of Chatham House said: “I don’t fault the Nigerian government for using private firms to undertake asset recovery because it has very few lawyers on its payroll. But with some of these recovery cases, the firms taking them on are not household names in Nigeria, which begs the question: why give this lucrative and important work to them?”
A consortium of anti-corruption groups who have spent years investigating OPL245 said this shows why there needs to be full transparency.
The group, comprising Corner House and Global Witness in the UK, HEDA Resource Centre in Nigeria and Re:Common in Italy, called for all agreements that have been entered into by recovery agents acting for the government to be made public, including any agreements with third-party funders. “This is so that the Nigerian public and the international community can have confidence that recovery claims are being handled with competence, integrity and in the interests of Nigerians rather than law firms and their backers.”
“It is worrying that so little public information is available on the status of asset recovery cases,” they added. “The public needs to know what recoveries have been made, how much they cost and how much money has actually been returned to Nigeria.”
The firm, which in the course of our joint investigation had been fielding questions related to Drumcliffe, Johnson & Johnson, and RPC, asked if we could delay publication until after an important court hearing linked to OPL245, which started in the UK today.
Finance Uncovered and Premium Times declined the request.
When we asked Montfort who had made that request, the PR firm did not respond.
- Editing by Ted Jeory and Nick Mathiason