London Court of International Arbitration orders Tinubu and Boyo to pay $680m compensation to oil partner

NIGERIAN oil company officials Wale Tinubu and his deputy Mofe Boyo have been asked by the London Court of International Arbitration (LCIA) to pay Panamanian company Ansbury Investments $680m as compensation for breaching a legal agreement between them.

Mr Tinubu, the chief executive of Oando and Mr Boyo have been under pressure of late after they were accused of breaching an agreement their company had with Ansbury. They are also facing accusations by aggrieved shareholders of attempts to suppress the report of the ongoing forensic audit of Oando's operations.

This latest judgement by the three-member LCIA presided over by David Midon gave a partial award against the two embattled top officials of Nigeria’s indigenous oil company. They have to pay Ansbury, a company incorporated in Panama as part of a family trust by an Italian-Nigerian businessman, Gabriele Volpi.

In the ruling, affirmed by two other co-arbitrators, Marco Frigessi di Rattalma and Harry Matovu, the tribunal upheld Mr Volpi’s application that Ocean and Oil Development Partners (OODP) was indebted to Ansbury by about $600m. OODP, incorporated in the British Virgin Islands, controls a 55.96% equity in Oando Plc through a holding company, Ocean and Oil Development Partners (OODP) Nigeria.

OODP was established at a time Oando Plc was preparing to acquire ConocoPhillips’ upstream oil and gas assets in Nigeria. In addition, the court also held that Whitmore Asset Management, a company incorporated in the British Virgin Islands as a single purpose investment vehicle, belongs to Messrs Tinubu and Boyo and was liable for another debt of $80m.

Documents tendered in court showed an initial agreement signed on June 17, 2013 which gave a 60% equity in the venture to Ansbury and 40% to Whitmore. However, the source of dispute was whether there was a legally binding agreement for Ansbury to transfer a 20% share of its equity in the venture to Whitmore, such that the OODP equity would change to 60% for Whitmore and 40% for Ansbury.

Besides, the court was confronted with the decision whether the parties made a legally binding agreement to convert an outstanding loan of $150m into shares in Oando E&P Holdings Limited. In its ruling, the court said the draft amended loan agreement as well as the draft put and call option agreements never became effective.

Mr Midon ruled: “Whitmore is in breach of the repayment obligation in the First Loan Agreement. The alleged oral agreement to switch the parties’ respective shareholdings in OODP BVI is not binding on the parties and the alleged oral agreement to extend the term of the loans to 1 January 2020 is not binding on the parties.”

A final award is expected to follow in the next few days whereby the tribunal would make definite pronouncements on accrued interests on the debts owed and legal expenses. Details of the award have since been communicated to all the parties concerned but the ruling is subject to appeal.