Malabu scandal: UK Govt approved $875m payment to Etete- JP Morgan

The banking giant, JP Morgan Chase, has revealed that the United Kingdom (UK) anti-money laundering unit, Serious Organised Crime Agency (Soca), now renamed the National Crime Agency gave authorisation for the transfer of $875 million to accounts linked to Dan Etete, a former Nigerian Minister of Petroleum Resources in the controversial Malabu scandal.

JP Morgan Chase also acknowledged it knew that former Nigerian oil minister convicted of money laundering would benefit when it transferred over $875 million of government funds to a company he controlled, according to a court document.

The bank made the acknowledgement in its legal response to a lawsuit filed by Nigerian Government in UK in 2017 over transactions made by the United States bank when Royal Dutch Shell and ENI bought offshore oilfield OPL 245 from Malabu Oil and Gas in 2011.

The $1.3 billion deal has spawned legal cases spanning several countries and involving Nigerian government officials and senior ENI and Shell executives, a number of whom face trial in Italy on corruption charges next month.

Malabu is controlled by Dan Etete, who was Nigeria’s oil minister at the time of the deal and was convicted of money laundering in France in 2007. He could not be reached for comment.

The lawsuit against JP Morgan accuses the bank of negligence over the transfer of funds from a Nigerian government escrow account into which Shell and Eni had deposited money to secure OPL 245. It claims $875 million from the bank.

The Malabu deal, involving OPL245, has Shell; Italian oil company, ENI; Etete; former oil Minister, Dieziani Alison-Madueke, former Attorney General of the Federation, Mohammed Adoke all fingered in the deal in a suit before the Federal High Court in Abuja.

Beside the suit lodged at the Federal High Court in Abuja that has disappointingly not progress beyond mention, the Nigerian government, had in November 2017, sued the bank for $875 million (N315 billion) in London courts over its alleged failure to block payments made from the massive Malabu oil deal that is subject to a string of international corruption investigations.

The Nigerian government argued that JP Morgan had been “grossly negligent” when it was banker to a previous government alleging that there was an “abuse of the banking system” and therefore, demanded that the bank repay $875 million it paid out to Etete, plus interest.

But in its counter claim, JP Morgan claimed that it repeatedly sought consent from Soca and instead of being told to block the transfers, it was given the green light to proceed.

The green lights to make the payments in two tranches in 2011 and 2013 were reportedly given by Soca at the time the UK’s main anti-corruption unit was reporting to the then Home Secretary, Theresa May, now Prime Minister.

In its written defence, filed in a British court last week, JP Morgan said Britain’s Serious Organised Crime Agency (SOCA), now renamed the National Crime Agency, had approved the transfers to Malabu. It denied negligence.

The bank had previously said only that it “considers the allegations made in the claim to be unsubstantiated and without merit”.

JP Morgan did not provide a comment on the filing. Lawyers representing Nigeria did not respond to requests for comment.

It was not immediately clear whether JP Morgan’s acknowledgement that it knew of Etete’s links with Malabu will have any impact on the trial starting in Milan in May. Italian prosecutors were not immediately available for comment.

Eni’s chief executive is among those on trial in Milan on charges of paying bribes to Etete and others, including sums that went to Malabu. Shell and Eni deny wrongdoing in relation to OPL 245.

Shell said in April last year that it “always knew” the Nigerian government would compensate Malabu and that Etete was involved.

Denying negligence, JP Morgan said in its response that the transfers were authorised by designated government signatories for the Depository Account — the then finance minister and the African country’s accountant general.

The bank also said it knew Etete was the beneficiary of Malabu by July 2011, one month before it made the transfers, and that by July 14, 2011, it “was aware of Etete’s conviction”.

“It is admitted that the order referred to Etete as Malabu’s principal. It is admitted that by 15 July 2011 JPMC (JP Morgan Chase) was aware of Etete and of his association with Malabu,” it said in the court filing.

JP Morgan also denied that it had acted in breach of Nigeria’s constitution or owed the government or state any further due diligence.

“It is denied that ‘the utilisation of the Depository Account’ was contrary to the constitution… It is denied that JPMC ‘should have been aware’ that this was (allegedly) the case,” the bank said.