P&ID: Nigeria Obtains U.S Court Order To Access VR Capital Group Documents In $9.8bn Lawsuit

The Nigerian government has received a court order from a United States court to obtain documents from VR Capital Group Ltd, which will enable Nigeria access to records believed to have been destroyed by Process & Industrial Developments Ltd (P&ID). The document is vital to Nigeria's plan to overturn the $9.8 billion arbitration award won by P&ID, but VR Capital Group can still seek to quash the ruling.

It was reported that since a Cayman Islands-registered unit of VR Capital acquired a 25% interest in P&ID about two years ago, the Hedge Fund will be in possession of conduct it could have acquired during due diligence before the acquisition. The ruling by U.S. District Judge, Paul Engelmayer, means Nigeria can subpoena information from VR Capital, four subsidiaries and three of its directors.

What led to the US court order

AllNews recalls that Nigeria and P&ID are involved in a lawsuit that had the company accusing Nigeria of breaching a gas-supply contract. P&ID was contracted in 2010 to build a gas-processing plant, while the government was to supply the raw material. But according to P&ID, Nigeria renege on the agreement. This led to a lawsuit that saw a London arbitration court, in 2017, award P&ID $9.8 billion; including interests over the years.

The $9.8 billion is worth about 30% of the country’s foreign reserves. After the arbitration order, Nigeria has been on the defensive, moving to prove the deal was a sham and developed to fail from the onset. Although, P&ID denied the allegation brought against it by Nigeria, the country's government stated in the court ruling that “The only thing P&ID engineered was a fraudulent arbitration claim.”

Why is the ruling important to Nigeria?

Nigeria is currently investigating the contract within the country, probing officials involved in the matter in order to find evidence to prove its claim against P&ID. The subpoena orders won by Nigeria, according to the country's Attorney General, Abubakar Malami, in a court filing on May 12, will help Nigeria access information important to the investigation.

According to the Economic and Financial Crimes Commission (EFCC) which is spearheading the investigation in Nigeria, investigation showed that P&ID admitted to having destroyed records “in or around January 2017”, so VR Capital Group becomes “a logical source” for recovering the destroyed information since they would have conducted due diligence on P&ID's records. It was stated that such information will assist Nigeria in appealing the $9.8 billion arbitration award to P&ID.

VR Capital Group could quash the subpoena

While the court has already given a subpoena order in favour of Nigeria, VR Capital Group - a firm with interest in distressed securities and “event-driven/special situations investments - could seek to quash the subpoena, Bloomberg reported. According to the spokesman for P&ID, London-based iNHouse Communications, Nigeria has no case, stating that P&ID didn't destroy any documents.

According to the representative of 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 are prima facie evidence that it has no case at all,” iNHouse Communications added that, "The claim that P&ID deliberately concealed documents by destroying them is totally false.”