Nigeria Sought a $1.7 Billion Refund From JPMorgan. A London Judge Said No.

By Emily Flitter New York Times.

Lawyers for the country’s government tried to convince a court that the bank had violated its duty to protect Nigerian funds from fraud.

An effort by the Nigerian government to force JPMorgan Chase to restore funds that it claimed former officials had looted from a government bank account failed on Tuesday when a judge in London ruled in favor of the bank.

Sara Cockerill, the judge overseeing the case in London’s High Court, said she could not conclude that the Nigerian officials who had ordered the money transfers, which were made to companies linked to a former Nigerian oil minister in connection with an offshore drilling license, had committed fraud. She added that, although JPMorgan had flagged the transactions to regulators as potentially related to criminal activity, it had not breached its duty under British law to protect its customer by completing them.

“This was a transaction which had unattractive features; but unattractive features and an association with past corruption cannot be enough,” she wrote in her decision.

The decision is a setback in the Nigerian government’s efforts to recover money that it claims former officials, including former President Goodluck Jonathan, who was voted out in 2015, improperly moved out of government coffers. Nigeria alleged that a JPMorgan subsidiary had enabled former officials to extract nearly $900 million between 2011 and 2013 from a government bank account in London. It was seeking an award of $1.7 billion, which would have accounted for lost interest on the original sum.

“While the past history of public sector corruption was well known, there was at that time a perception that this was improving, following the election of President Jonathan,” the judge wrote, adding that JPMorgan’s customer during the relevant period “was a sovereign state now operating under a democratically elected government.”

Nigeria argued that JPMorgan had not done enough to safeguard the country’s money. Under British law, a bank is required to act in its customers’ best interests, even if someone connected to a customer tries to get that bank to do otherwise. Even as it tried to send money to various banks, a few of which rejected the funds and cited the suspicious nature of the deal governing their transfer, JPMorgan reported to British regulators its concerns that it might be transferring funds to a convicted money launderer. It made the transfers anyway.

JPMorgan had said it was following instructions it received from senior Nigerian government officials, including the country’s attorney general, who wrote a letter attesting to the legitimacy of the instructions.