Malami's 'debt collectors' demand $1.5bn over terminated contract
by Malik Abdulganiy
18 May 2020
Nigeria may be heading for another billion-dollar arbitration as a debt-recovery firm is demanding $1,501,539,032 from the federal government over a botched contract, TheCable can report.
Little-known Trobell International Limited had been engaged by Abubakar Malami, the attorney-general of the federation (AGF), in April 2018 to help recover an estimated $43 billion unpaid “oil profits” from multinational companies at a commission of five percent.
Effectively, Trobell was to pocket $2.15 billion as commission.
However, federal government decided in October 2019 to step down the recovery process following a meeting of stakeholders — after Trobell had issued demand notices to the oil companies.
Trobell is now claiming 50 percent of the fee, saying it had already done significant work.
Nigeria is currently in international arbitration with P&ID Ltd over a botched oil and gas processing contract in which $9.8 billion including interest has been awarded against the country.
WHAT IS AT STAKE?
Nigeria had, in 1993, signed production contracts with oil companies to explore deep offshore and inland basins, before changing the agreements to production sharing contracts (PSCs) in 1999.
Under various incentives in the novel arrangement, the “profits” payable to the federation were to be automatically reviewed upwards whenever crude oil hit the $20 per barrel mark or after a number of years.
However, these triggers were never activated and after years of campaign, the federal government decided in 2018 to engage Trobell as “recovery agents” on the “additional revenue from profit oil due to the federation from PSCs”.
On the other hand, the attorneys-general of Rivers, Akwa Ibom and Bayelsa states had, in 2016, filed a suit against the AGF at the supreme court and sought to compel the Federal Government of Nigeria to review the PSC Act to recover arrears of revenue which would have accrued to the federation over the years.
On October 17, 2018, the supreme court gave a consent judgment following terms of settlement arrived at by all parties on April 5, 2018.
The apex court asked that a “body” be set up for the recovery of the outstanding profits.
BUHARI APPLIES THE BRAKE
After the supreme court judgment, the AGF set up a “body” made up Trobell International as lead/coordinating consultant and representatives of Rivers, Akwa Ibom and Bayelsa, as well as accounting and legal experts.
However, in March 2019, President Muhammadu Buhari asked that the April 2018 contract with Trobell be terminated because the recovery job could be done by the Department of Petroleum Resources (DPR) and the Federal Inland Revenue Service (FIRS) without any commission.
TheCable had reported that in a letter to Malami dated October 16, 2019, Abba Kyari, the late chief of staff to the president, said Buhari had directed that the minister should immediately “comply with Mr. President’s directives of March 4, 2019, and terminate the Recovery Contract which the Ministry of Justice had signed with Trobell International Limited regarding the purported recovery of $43.747b from the PSCs pursuant to the consent judgement of the Supreme Court of April 5, 2018”.
Six months after Kyari’s letter, Malami wrote to Trobell to inform them that the demand notices to the oil companies had been withdrawn.
“Following the 3rd October 2019 meeting, various Federal Government stakeholder agencies has (have) held various consultations and meeting which resulted in the Federal Government of Nigeria making a collective decision to step down the recovery process for the time being,” Malami wrote in the letter dated April 3o, 2020 and seen by TheCable.
“Consequent upon these decisions and bearing in mind the ongoing litigations in relation to the subject matter under reference, the Office of the Honourable Attorney-General of the Federation and Minister of Justice of Nigeria has issued notices to the oil companies withdrawing the demand notices issued by Trobell International Limited in its capacity as recovery agent for the Federal Government.
“Accordingly, I write in line with collective decision taken, to inform that the Federal Government of Nigeria is not inclined at the moment to pursue the recovery under reference.”
TROBELL GOES ON THE OFFENSIVE
In Trobell’s reply to Malami dated May 4, 2020 and signed by Lawal Garba, its chairman, the firm said following the setting up of the “body” by the government as mentioned in the consent judgment, it had already started work.
Garba wrote: “Since the inauguration of the ‘Body’ on 7th November, 2018 and up to the time of the receipt of your above referenced letter of 30th April 2020 suspending the engagement, the ‘Body’ has worked assiduously towards executing our mandate and we have effectively performed and delivered the following tasks:
Lawal said the “body” has successfully computed the amounts of additional revenue accruing to the federation and sent out demand letters to the respective operators, meaning it has “significantly performed and delivered over 80% of the key tasks within the scope of our mandate”.
“Accordingly,” he said, “the said decision of the Federal Government of Nigeria to suspend or forego the recovery at this stage cannot in any way vitiate the work so far done by the ‘Body’.
“It should also be noted that Trobell International Nigeria Limited, in its capacity as the lead consultant, has incurred significant expenses in terms of legal cost, logistics expenses for hosting several meetings of the ‘Body’, and payment of interim fees/remuneration for most members of the body as well as other consultants from the time of our engagement in April 2018 to date.
“Consequently and in view of the circumstances leading to Federal Government’s decision to suspend the recovery process at this stage due to overriding national interest, we hereby demand payment of our agreed remuneration of 5% of Additional Revenue computed and recoverable of US$55,871,219,798 less 50% rebate i.e. (50% of 5%), which amounts to US$1,396,780,494.95.”
He also added $104,758,537 as 7.5% VAT, bringing the total due to $1,501,539,032.
Lawal also said if the government decides to revisit the matter at any time in the future, “we shall be entitled to claim our agreed remuneration in full and shall accordingly issue our Fee Note for the difference of the amount receivable at the rate of 5% of Additional Revenue recovered”.
ENTER TROBELL INTERNATIONAL LTD
According to information on its website, Trobell International Nigeria Limited was incorporated on June 17, 1987 as an engineering company.
Its areas of specialisation are:
There is no record of the company having been involved in debt recovery or accounting services before it was engaged by Malami.
Sources: The Cable