A US court granted Nigeria permission to request documents from VR Capital Group, the part owner of a company that received a $9.8 billion arbitration award the government is trying to overturn.
US District Judge Paul Engelmayer ordered in New York on May 14 that Nigeria can subpoena information from London-based hedge fund VR Capital, four subsidiaries and three of its directors. Nigeria’s anti-graft agency plans to use the data in its probe of British Virgin Islands-registered Process & Industrial Developments and allegedly corrupt government officials.
A Cayman Islands-registered unit of VR Capital acquired a 25% interest in P&ID about two years ago and will have conducted due diligence on the firm that is “highly relevant” to the ongoing investigation, according to a court filing submitted by Nigerian Attorney General Abubakar Malami on May 12.
The successful court application is part of Nigeria’s efforts to show that a 2010 gas-supply contract with P&ID was a sham designed to fail by the company and government officials. P&ID denies any wrongdoing, saying that Nigeria invented the allegations to evade its legal obligations.
The dispute between the government and P&ID became a crisis for Africa’s biggest oil producer in August, when a UK judge ruled P&ID could enforce a 2017 arbitration tribunal’s decision that Nigeria breached the gas-supply contract. The resulting award now totals $9.8 billion including interest and is equivalent to about 30% of the country’s foreign reserves.
An investigation by the Economic and Financial Crimes Commission (EFCC) has already resulted in criminal charges in Nigeria and will form the basis of the government’s appeal against the ruling.
The contract and arbitration award are P&ID’s “sole assets,” according to Nigeria’s filings to the District Court for the Southern District of New York. The company was supposed to build a gas-processing plant, while the government was to supply the raw material. “The only thing P&ID engineered was a fraudulent arbitration claim,” the country said.
Nigeria wants VR Capital to hand over documents concerning the company’s purchase of P&ID shares as well as the contract and arbitration proceedings, according to court filings. Nigeria’s financial crimes agency said its investigations showed that P&ID acknowledged destroying records “in or around January 2017” and VR Capital is “a logical source” for recovering such information, according to the filing.
VR Capital can still seek to quash the subpoena.
Malami’s spokesman declined to comment. Questions sent to VR Capital were referred to a spokesman for P&ID.
Nigeria’s “efforts to seek information on a crime that never occurred from a party that was never involved with P&ID until years after the alleged events is prima facie evidence that it has no case at all,” London-based iNHouse Communications, representing P&ID, said by email. “The claim that P&ID deliberately concealed documents by destroying them is totally false.”
VR Capital, which has offices in New York, London and Moscow, is an asset manager that focuses on distressed securities and “event-driven/special situations investments,” according to its website. Malami described the firm as a “vulture fund” in December in a statement to a UK court.