Nigeria has lost its $1.7 billion suit against JP Morgan Chase over how the American bank transferred the proceeds from the sale of OPL 245 in that corruption-ridden Malabu oil transaction. Nigeria made a case that the bank was “grossly negligent” for wiring the money paid by oil majors like Eni and Shell into a Dan Etete-controlled escrow account. Nigeria’s core argument was that JP Morgan should have smelt “fraud” in the transaction.
When Nigeria filed this case, I wrote that it was always hard to win a case against banks when the core argument rests on a bank’s inability to decipher intents, under full banking ordinance and approved mandates. In other words, you assume that the bank expects the transaction to be fraudulent even as the bank is meeting legal contractual obligations of its customers.
Consider this: the Central Bank of Nigeria released all the alleged funds which former CSO under President Jonathan was alleged to have mismanaged. When CBN was called to explain why it did not stop those transactions, the apex bank argued before the Senate that it could not have stopped the transactions since the right signatories approved the funds! Simply, CBN was not thinking into the transactions, it was only checking if the approved person is offering the instructions.
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Sure, banks do have obligations to stop transactions when they have overwhelming concerns of fraud but many banks do not like to do that since it means they will lose fees and the customers.
Nigeria expected JP Morgan to smell fraud. JP Morgan actually did. But it did what banks do: it punted. How did it do that? It wrote to Britain’s financial crime agency which signed off for it to make the payment. On that strength, it got a cover: afterall, the UK government approved the transaction and you cannot just blame this bank. It is like a bank in Lagos has concern to execute a customer transfer request, writes EFCC and receives approval to go ahead, and then in the future, a party comes and accuses the bank that it made a mistake to have allowed the transactions.
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Another one that got away. It’s been long they started doing bad things to Nigeria. Tomorrow the perpetrators will return to politics, and we will sit here vouching for their political sagacity, and why you need them to win elections. We lost the case, including legal fees.
It is well.