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A Hedge Fund Steps into Nigeria’s $9 Billion Corporate Dispute

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  • A Hedge Fund Steps into Nigeria’s $9 Billion Corporate Dispute

Nigeria potentially faces the largest financial liability in its history, and a hedge fund is coming to collect.

The legal and political drama involves a deal between the country and a tiny natural gas company that was scuttled after the sudden death of Nigeria’s president in 2010.

The company, Process & Industrial Developments (P&ID), sued and won a staggering judgment, now worth $9 billion.

But it’s spent years trying to get the country to pay that award, equivalent to almost 2.5 percent of its annual gross domestic product.

Now a hedge fund managed by VR Capital Group has taken a large stake in P&ID. And the gas company is trying to pull levers of power in the U.S. and the U.K. to make Nigeria settle or, failing that, enable the company to start seizing assets.

Two years ago, P&ID won a decision against the government of Nigeria, which reneged on an agreement allowing the natural gas company to harvest hydrocarbons.

Although lawyers for Nigeria say the company never put a shovel in the ground, a London arbitration tribunal in 2017 awarded it $6.6 billion—with more than $1 million in interest accruing daily.

To collect, P&ID, owned by the hedge fund and a firm called Lismore Capital Ltd., late last year hired lobbyists, lawyers, and a public-relations firm.

The attorneys are also trying to confirm the award in courtrooms in Washington and London, which would allow P&ID to start seizing Nigerian assets in the U.S. and the U.K.

Representatives from VR Capital, which is managed by Richard Deitz, didn’t respond to multiple requests for comment.

Dayo Apata, Nigeria’s solicitor general, said in a statement that the country “will ensure that its interests and that of the people of Nigeria are vigorously defended.”

He wrote that the arbitration panel assumed too much confidence in the success of P&ID’s project in calculating the damages, leading to an excessive award.

In a statement, Brendan Cahill, one of P&ID’s founders, said “it is disappointing that Nigeria chose to repudiate the terms of a deal that would have benefited the country by bringing electricity to millions of its citizens.” He said the company, “backed by its investors,” would pursue enforcement of the award.

VR Capital’s bet appears to be the latest example of a tactic used by investors in distressed assets.

Companies including Paulson & Co., Elliott Management, and Pershing Square Capital Management in the past several years have taken stakes in investments that few would touch, and then hired lawyers and lobbyists to change the political winds to make them succeed.

The strategy worked for Elliott and its co-investors when they won a massive settlement on defaulted Argentine debt. The outcome is less certain for some Puerto Rico bondholders and shareholders in U.S. mortgage finance companies Fannie Mae and Freddie Mac.

The Nigerian saga began almost a decade ago and is revealed through court and arbitration filings and other public documents.

Despite the country’s ample natural resources, Nigeria’s state-owned electric and petroleum companies have struggled to power the country.

To help fix the problem, in 2010 then-President Umaru Musa Yar’Adua authorized partnerships with private companies to develop the nation’s energy infrastructure.

The Ministry of Petroleum Resources struck one such agreement in January 2010 with P&ID, which was founded in 2006 by two Irishmen, Michael Quinn and Cahill.

Under the agreement, Nigeria planned to pipe natural gas from two offshore oil rigs to a refinery that would be built by P&ID.

There, P&ID would remove hydrocarbons from the gas and send the fuel to Nigerian power plants. P&ID wouldn’t get paid for the endeavor, but it could keep and sell the hydrocarbon byproducts, which themselves had value, with the government getting a cut.

The company hoped it would make billions of dollars from the arrangement while helping to provide Nigeria with much-needed power.

Quinn, in a statement before an arbitration panel, said he thought the deal would have been “the high point of my own career in Nigerian business.”

He said P&ID spent tens of millions of dollars on preparatory work before winning the agreement.

But the project never got off the ground. In May 2010, Yar’Adua, who’d been suffering from pericarditis, died.

The oil rigs couldn’t provide the volume of natural gas promised in the agreement, and, in any case, the government didn’t construct the pipeline.

After about two years of trying to resolve its dispute with the government, P&ID filed for arbitration in London, where the agreement specified disputes would be handled. The arbiters sided with P&ID.

The Nigerian government appealed the decision in London, arguing that the petroleum ministry didn’t have the authority to enter into the agreement and the arbitration panel used the wrong legal standard.

The government lost there, though it also turned to Nigeria’s court system, where it won.

Then the London arbiters came back with an award amount. P&ID never broke ground on the natural gas refinery, but said it spent about $40 million in the planning stages.

It calculated its damages by estimating the profits it believed it would have earned over 20 years had the project gone forward: about $6 billion.

Two of the three arbiters granted the enormous award. The third also said there should be damages, but set the level much lower.

At some point, the Cayman-based fund, VR Advisory Services Ltd., bought 25 percent of P&ID, according to public records. A P&ID spokeswoman declined to comment on when VR bought its stake or to identify the owner of Lismore Capital.

Last fall two firms registered with the U.S. Senate to lobby Congress and the Trump administration on behalf of the energy company.

One of them, Kobre & Kim, which also represents P&ID in the District of Columbia courtroom, has a history of attempting to enforce judgments against foreign governments.

The other, DCI Group, has made a specialty of public-relations work for Wall Street companies that attempt to use public pressure to make bets pay off. DCI in January said it had made $80,000 in fees in the fourth quarter from P&ID and lobbied the U.S. Department of State.

Black Diamond Strategies LLC, which is stocked with conservative lobbyists, has also disclosed that DCI hired it for lobbying work on P&ID’s behalf.

The battle made headlines in Nigeria, where President Muhammadu Buhari was campaigning for a second term. (He won in the February election.)

In November, when Nigerian officials visited the U.K. to pitch an offering of bonds, columnists there said Nigeria had to pay P&ID if it hoped to raise money from British investors.

This prompted some in the Nigerian press to accuse commentators of being hired to attack Buhari. Cheta Nwanze, an analyst at Lagos-based risk advisory firm SBM Intelligence, says the government should have resolved the dispute and moved on.

He says the president’s decision not to do so “has now caused a liability far exceeding any the country has ever incurred.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Envoy Considers Establishment Of Chinese Banks In Nigeria To Boost Economy

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Chinese Ambassador to Nigeria- Investors king

Mr Cui Jianchun, the Chinese Ambassador to Nigeria, says he is in talks with Chinese owned Banks to establish operations in Nigeria.

This, the envoy said, is to boost Nigeria’s economy and expand trade relations between the two nations.

Cui made this known on Tuesday in Abuja while addressing Journalists during the commemoration of the 2021 Chinese Moon Festival and China-Nigeria Cultural week.

According to Cui, the establishment of Chinese Banks in Nigeria will also be one of the key areas of discussion during the China-Nigeria Binational Committee meeting, which he is also pushing for the establishment.

He said that an efficient financial institution was a key driver to achieving a strong economy, one Nigeria can learn from China’s experience.

“Before my departure from Beijing to Abuja, I talked to several banks in China. When you list the World’s 10 big banks, six are in China.

“The Banking sector is very important, because, without money, we cannot build our industries.

“What I am thinking here is best to talk to the governor of Central Bank and how we can allow the Chinese Banks to run office here and now, they are doing the feasibility studies on that.

“I am working hard that in the Bi-national meeting, I hope we can make a big decision and give a big push to let the banking industry and insurance industry because financial integration and institutions are key.

“If you go to China, you will find our banking industry is very powerful, not only for business but the change in the way of life.

“Because of the COVID-19, the Banking Industry is a little hesitant, but I told them Nigeria has a lot of human resources and as long as we work together, we can do big things.

“And that is why it is important to invest in the banking industry, to solve this problem,” Cui said.

Extolling the extant China-Nigeria trade relations, Cui noted that the volume of trade between China and Nigeria is nearly 20 billion US Dollars, with an increase from 2020’s 19.2 billion dollars.

Cui said the Chinese economy is restoring to the normal post-COVID-19 pandemic and both governments are working hard on how to expand imports and exports.

Speaking on the event, Cui said the China’s moon festival is a very important and significant one for China as it symbolises family reunion, national peace and social harmony.

The envoy said the 2021 celebration is also a special one as it coincides with the 50th Anniversary of China-Nigeria’s bilateral relations.

He said that both countries also share Oct. 1 as their National Days.

He said it is also on that note that the Chinese Embassy is honouring 50 Nigerian employees of Chinese Companies in Nigeria for their outstanding performance and contribution to strengthening diplomatic ties.

Dr Ifeoma Anyanwutaku, the Permanent Secretary, Federal Ministry of Information and Culture, also lauded the Nigeria-China relations.

She said the relations had recorded great successes over the past five decades.

“The five decades of co-operation had since witnessed several cultural activities and exchanges in the spheres of arts, music, dance, exhibition, cultural administration, training and capacity building of cultural officers.

“And recently, the development of Cultural Industries centres in Nigeria, among others.

“I must add that China, through the youth-oriented programmes such as the photos competition and similar activities in the past is surely a dependable ally.

“In redirecting the energy and mind of our youth to creative ventures, thereby furthering the Nigerian government’s policy of lifting a hundred million Nigerians out of poverty in the next 10 years”, Anyanwukatu said. (NAN)

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Lagos Prohibits Open Cattle Grazing, Sanwo-Olu Signs Bill Into Law

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herdsmen

Lagos State Governor Babajide Sanwo-Olu, on Monday, assented to the bill prohibiting Open Cattle Grazing and Trespass of Cattle on Land, signing the legislation into law 11 days after it was unanimously passed by the State House of Assembly and transmitted to the Executive arm for authorisation.

By implication, it is now criminal in Lagos for cattle rearers to occupy unapproved public areas and private land with their livestock for grazing. The law also prohibits the act of moving cattle round public places by herders.

The signing of the anti-open grazing law by the Governor followed the decision of Southern Governors’ Forum last August, setting the September deadline to pass the law across member States.

There have been crises witnessed in some States, resulting from alleged open grazing.

Although farmer-herder crisis is not pronounced in Lagos, the anti-open grazing law is expected to prevent the spillover of the menace into the State.

Sanwo-Olu, who assented to the bill during the State’s Executive Council meeting in Alausa, directed the security agencies to swing immediately into action and enforce provisions of the law.

He said: “By the powers vested in me as the Governor of Lagos State, I am signing the bill on Open Cattle Grazing and Trespass of Cattle on Land into law to prohibit issues associated with open grazing of livestock.”

The Governor also signed legislation transforming the Lagos State Domestic and Sexual Violence Response Team (DSVRT) into a full-blown agency.

The development coincided with the commemorative month dedicated to raising awareness on gender-based violence in the State. The Governor and members of the State’s cabinet wore attire with purple shades to support the campaign against sexual violence.

The DSVRT legislation provides for the establishment of Sexual Offenders’ Register that would help the State efficiently tackle violations in the communities.

After signing the law, Sanwo-Olu said: “Raising awareness about domestic and sexual violence is an important piece of working to end the cycle of violence. It is important to reiterate the State Government’s zero tolerance to all forms of sexual and gender-based violence. We will not rest on our oars until the menace is reduced to the barest minimum in Lagos.”

The Governor appointed Mrs. Titilola Vivour-Adeniyi as the Executive Secretary of the new agency.

Vivour-Adeniyi was the coordinator of the response team before the legislation was signed into law.

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ECOWAS Imposes Sanctions on Guinea Junta Over Coups

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ECOWAS Bans Junta-Investors King

West African leaders have decided to impose travel bans and freeze the financial assets of members of Guinea’s ruling junta and their families after a coup more than a week ago.

The decisions were announced Thursday after an Extraordinary Summit on Guinea in Ghana’s capital, Accra. Mediators with the regional group had traveled to Guinea to meet with junta leaders and check on the condition of deposed President Alpha Conde.

ECOWAS president Jean Claude Brou said the West African leaders have also insisted that there should be no “need for very long transition for the country to return to democratic order.”

The targeted sanctions come after Guinea’s coup leaders set a number of conditions for releasing Conde, according to the foreign minister of Ghana.

ECOWAS had already warned it will impose penalties on the junta in Guinea unless it immediately releases Conde, who has been held at an undisclosed location since being detained during the Sept. 5 coup in Conakry.

“We are coming to address a burning issue in the region,” said Ghana’s President Nana Addo Dankwa Akufo-Addo, the current chair of the regional bloc, ahead of the summit. He was joined by presidents or high-ranking officials from eight of the other 15 ECOWAS countries.

Members of the ECOWAS delegation that visited Conakry after the coup presented their reports at Thursday’s meeting, said Ghanaian Foreign Minister Shirley Ayorkor Botchway. The junta has set a number of conditions for complying with the demands of regional mediators, she said but declined to disclose what they are.

The delegation has spoken with Conde’s doctor “who ascertained that indeed physically, he’s very well,” she said. However, she said, the ex-president is still coming to terms with the fact that his government has been toppled after more than a decade in power.

“For anybody who has gone through such a traumatic experience like he did, mentally, it’s not the best, not to say that mentally we found anything wrong, but he was quite shocked; he’s still in a state of shock,” she added.

Meanwhile, in Conakry, junta leaders were also set to meet with mining company representatives on the third day of a special summit to chart Guinea’s political future. Junta leader Col. Mamady Doumbouya has sought to reassure the country’s most vital economic sector that the political changes will not impact existing mining projects in the country, which has the world’s largest reserves of bauxite.

Guinea’s coup leaders have yet to make public their proposed timeframe for handing over power to a civilian transitional government, nor have they outlined how quickly new elections can be organized.

Conde had sparked violent street demonstrations last year after he pushed for a constitutional referendum that he used to justify running for a third term, saying term limits no longer applied to him. He ultimately won another five years in office last October, only to be toppled by the coup 10 months later.

At the time he came to power in 2010, he was Guinea’s first democratically elected leader since independence from France in 1958.

The regional bloc also planned to tackle concerns over whether a second member state, Mali, is making enough progress toward a return to democracy more than a year after a military takeover there.

In Mali, the ruling junta led by Col. Assimi Goita has committed to holding new elections by February 2022, though mediators who recently visited have expressed concern about whether that deadline now can be met.

Goita overthrew Mali’s president in August 2020 and then agreed to a civilian transitional government and an 18-month timeframe for holding a vote. However, only nine months after the first coup he effectively staged a second one, firing the civilian interim leaders and ultimately naming himself as president of the transition.

ECOWAS has not reinstated Mali’s membership in the bloc, marking the first time since 2012 that two of the 15 member states are suspended concurrently.

ECOWAS President Brou said there was the need to revisit the organization’s 2001 protocol on good governance “because a lot of things have changed or improved.”

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