The Nigerian government lost a $1.7 billion London court action on Tuesday against JP Morgan Chase & Co for its participation in the transfer of millions of dollars to a former oil minister convicted of corruption.
JP Morgan was accused by the federal government of breaching its Quincecare duty
According to the Nigeria government, the action of JP Morgan breaches the rules which obliges banks to disregard a customer’s instructions if following those instructions might actually facilitate fraud against that customer.
A London High Court judge on Tuesday ruled that no such breach took place.
Nigeria contended in a six-week trial that the US investment bank acted carelessly when it transferred $875 million in payments from government accounts to Dan Etete, a former Minister of Petroleum, who had been convicted of money laundering between 2011 and 2013.
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The case looked into the scope of a bank’s duty of care to its customers and whether it should have stopped payments notwithstanding assurances from government officials.
Nigeria was seeking damages of around $1.7 billion including interest due to JP Morgan’s alleged ignorance of “glaring” red flags, including “overwhelming” evidence of fraud and stark warnings from its compliance staff when it authorised the payments.
The judge, however, stated that “With the benefit of hindsight, JPMorgan would have done things differently. But again none of these things individually or collectively amount to triggering and then breaching its duty of care to its client.”
Speaking after the judgement, JP Morgan said, “This judgment reflects our commitment to acting with high professional standards in every country we operate in, and how we are prepared to robustly defend our actions and reputation when they are called into question.”
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