EARLIER this month a firm registered in the British Virgin Islands, Process and Industrial Developments Ltd (P&ID), successfully sued the Nigerian government in a British court for $9bn (20 percent of the country’s currency reserves) for a failed gas project. It is one of the largest financial penalties imposed on Nigeria.
The Nigerian government says it will do ‘whatever it takes’ to protect its economy but has not ruled out a settlement with the firm.
Actions of this nature are not uncommon in Africa, especially against governments of resource rich countries. The question is: why should governments in the region be forced by courts to fulfil their contractual obligations to foreign firms. In most cases the answer is not farfetched as in the case of APR Energy, a well-respected international company that provides turnkey power generation solutions for public and private projects worldwide.
In 2017 APR, whose two largest shareholders are funds backed by former US secretary of state Madeleine Albright and investor George Soros, sued two ministries in Angola – the ministry of finance, and the ministry of energy and water, in the company’s Jacksonville, Florida base.
In the $45 million suit, APR stated that in 2012, APR and the ministry of energy and water (MINEA) entered into the Morro Bento Agreement for APR to supply power generation equipment and services to meet urgent power needs of the people in and around Luanda, the capital city of Angola. The deal was later extended to another site – Rocha Pinto.
APR duly executed the projects but payment became problematic. The company was tossed between MINEA, the finance ministry (MIFIN) and RNT (the agency responsible for the power grid), who blamed each other for the situation.
The ministries agreed in January 2016 that they owed APR $49.4 million and agreed to pay it in instalments, according to the complaint. But APR says only one payment of $89,000 had been made by March 2016. That payment was made after APR threatened to turn off the power plants on April 1 2016 if payment was not received by then.
APR and Greentech-Angola Environment Technology, its agent in Angola, met with officials and bank representatives just before that deadline. According to the complaint, the then treasury secretary at the finance ministry, Edson Vaz, told APR and Greentech that ‘he would transfer $36 million to satisfy the payments owed at that time to APR.’
Based on those promises that the money had been set aside and would be paid, APR extended its deadline for another month.
But it was stiffed again, APR says.
‘APR later learned that the defendants’ representations regarding the segregation and transmission of funds were false and were made for the purpose and intent of inducing APR to provide additional power generation services, when in fact defendants had no intention of making the agreed upon payment.’
In fact, when APR asked where the money was, the company was told, ‘the person assigned with the task of locating the funds did not know where the money had gone.’
And that, APR said, was the last it heard from treasury secretary Vaz. It is worth noting that Vaz was arrested and detained by the Criminal Investigation Service (SIC) in November 2017 on accusation of embezzlement. It is not known if his arrest was in connection with the APR saga.
Two more demand notices sent by APR’s lawyers did not yield the expected outcomes.
During all this time the minister of energy and water, wanted a piece of the cake ‘to help sort out the mess.’ He was alleged to have explicitly made this clear to representatives of APR.
APR said the entities’ repeated failure to pay its bills not only caused ‘obvious and substantial financial harm’ to APR, but created rifts between APR ‘and its banks and auditors, which are now of the belief that the ministries will not fulfil its payment obligations.’
This left APR with no option but to instigate legal action to get paid. It filed two legal actions in the US against the three entities and threatened to expose the whole sordid matter to the press. Africa Briefing has a copy of the draft APR press statement.
To avoid public exposure, payments were immediately authorised by MINEA and released to the company, because the minister was aware that APR had proof of the bribery attempts he made.
Such blatant acts of rent seeking and corruption by public officials do no credence to Africa. Until those in responsible positions discharge their duties with integrity, judgement debts will continue to be the norm rather than exceptions.