A U.S. court granted Nigeria permission to subpoena London based hedge fund, VR Capital Group Ltd., four subsidiaries and three of its directors for documents. The company is part of a company that received a $9.8 billion arbitration award the Nigerian government is trying to overturn. District Judge Paul Engelmayer reportedly gave the order in New York on May 14.
The Nigerian government is hoping to use the data in its probe of British Virgin Islands-registered Process & Industrial Developments Ltd. and allegedly corrupt partners in Nigeria, including officials. A Cayman Islands-registered unit of VR Capital acquired a 25 per cent 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.
Although experts say that VR Capital can still seek to quash the subpoena, 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. But P&ID denies any wrongdoing, claiming that Nigeria manufactured the allegations to evade its legal obligations to the company.
Nigeria’s current road towards securing justice started in August last year, shortly after a U.K. judge ruled that 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 Nigeria’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. Officials in Nigeria insist that “the only thing P&ID engineered was a fraudulent arbitration claim.”
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. EFCC said 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.
London-based iNHouse Communications, representing P&ID, said in an email that Nigeria is “seeking 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. 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 U.K. court.
By Chibisi Ohakah, Abuja
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