JPMorgan Chase & Co. was warned by its compliance team over the “great risk” of corruption just days before it made the last of three transfers that totaled $875 million to former Nigerian oil minister Dan Etete.
The internal memo is set to be scrutinized in a London lawsuit brought by the West African nation. The U.S. bank is accused of ignoring red flags when it transferred funds between 2011 to 2013 from government accounts to Etete, who had been convicted of money laundering.
The current government says a contract awarded by one of its predecessors to explore the deep waters off the Gulf of Guinea was corrupt.
European and Nigerian courts have been raking over the purchase by Eni SpA and Royal Dutch Shell Plc of the oil license in Africa’s largest crude producer a decade ago.
While the energy giants were recently acquitted of corruption charges in Milan in a decision prosecutors could appeal, Nigeria’s government is continuing to seek compensation from JPMorgan.
The memo disclosed at a London court hearing this week shows what JPMorgan managers knew about the oil contract and when, lawyers for the Nigerian government said in court documents. A spokesperson for the investment bank declined to comment.
The government claims Etete distributed a portion of the funds received via the bank from the oil majors to corrupt former and serving senior public officials.
The bank has denied any wrongdoing and says it’s being held responsible for not protecting the Nigerian people from their own government.
The government says that by 2013 JPMorgan’s internal concerns over payments to Malabu Oil and Gas Ltd. — a firm controlled by Etete — were escalating to more senior members of the bank.
“In light of Malabu’s reported connection to the alleged Nigerian corruption scheme, there would be great risk presented if JPMC continues to process wires involving Malabu,” a compliance officer based in the U.S. wrote in a memo dated Aug. 23, 2013.
Just six days later, JPMorgan made a payment of $75.2 million to the Malabu account.
Lawyers for the Nigerian government said in court Wednesday it wants to know how the memo was compiled and asked a judge for more emails and documents from the compliance team.
It’s seeking details on how compliance monitored and placed controls over questionable payments including a so-called “interdiction list” — a tool to prevent transfers from being automatically cleared. Malabu was placed on the list in November 2013.
Bloomberg
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