A $500,000 payment made by Sunrise Power promoter Leno Adesanya to Jennifer Douglas, the former wife of ex-Vice-President Atiku Abubakar, in January 2003 has emerged as a key issue in the arbitration over the controversial Mambilla hydropower project.
Adesanya told a three-member International Chamber of Commerce tribunal that the payment was part of a foreign-exchange transaction carried out for Atiku, who was vice-president at the time.
The money was transferred on January 30, 2003, through China Castle Investments Limited, an offshore company controlled by Adesanya, to Douglas’s Citibank account in the United States.
The payment came about two weeks after Sunrise presented its tender for the Mambilla project and less than four months before the company was purportedly awarded a build-operate-transfer contract for the project.
The details are contained in the final award issued by the ICC tribunal in the arbitration between Sunrise Power and Transmission Company Limited and the Federal Republic of Nigeria, reviewed and reported by TheCable.
The tribunal ultimately rejected Sunrise’s claims against Nigeria and ordered Sunrise and Adesanya to reimburse the Nigerian government for most of its legal costs.
Adesanya’s explanation
Nigeria had argued during the arbitration that the $500,000 transfer was connected to the disputed award of the Mambilla contract.
Sunrise and Adesanya rejected the allegation, insisting that the payment was unrelated to the project.
Adesanya said he operated a bureau de change business through Moneyline Ventures Limited and that the dollars transferred to Douglas represented foreign currency purchased for Atiku with naira.
“I confirm that I made a transfer of $500,000 to the Abubakars through my company China Castle Investments Ltd in early 2003,” Adesanya said in his fourth witness statement, according to the tribunal’s award.
He also acknowledged under cross-examination that he had transferred the money to Douglas.
But the tribunal found that the explanation was not supported by documentary evidence.
According to the award, Adesanya did not produce records showing the underlying naira payment, exchange rate, instructions from Atiku or his aides, correspondence relating to the transaction or documentation establishing its commercial purpose.
Adesanya said the discussions surrounding the transaction were oral and that, more than 20 years later, he no longer had access to written exchanges that might have existed.
Neither Atiku nor Douglas testified in the arbitration.
The tribunal also noted that Sunrise and Adesanya did not present witness statements or declarations from either of them to corroborate the foreign-exchange explanation.
Adesanya said he had attempted to secure Atiku’s testimony but that the former vice-president was reluctant to participate in a dispute involving former President Olusegun Obasanjo.
He initially suggested that Atiku, through his lawyers, had confirmed that the payment was a foreign-exchange transaction.
Under cross-examination, however, Adesanya said the explanation had been relayed to him by “Dr Ndukwe”, whom he identified as Atiku’s doctor, while a subsequent confirmation came through lawyers.
When asked whether the information actually originated from Atiku, Adesanya described that as his “logical assumption”, saying he did not believe Atiku’s lawyers would have provided the information without consulting him.
The tribunal said Adesanya produced no correspondence, telephone records or other evidence establishing his alleged communications with Atiku’s lawyers, Ndukwe or the former vice-president’s aides.
Tribunal questions Douglas account
Adesanya also explained why he was unable to obtain evidence from Douglas.
He told the tribunal that Douglas and Atiku had gone through a difficult divorce and that she had fallen out with him after he opposed the separation and supported Atiku and another wife.
“She would not even pick my call,” Adesanya said.
The tribunal noted that this account appeared inconsistent with his fourth witness statement, in which he described himself as still being friends with Douglas.
He had also previously described her as a close friend and his first girlfriend in high school.
The tribunal referred to a 2010 report by the United States Senate Permanent Subcommittee on Investigations, which examined offshore transfers into Douglas’s US accounts.
The Senate report recorded a January 30, 2003 transfer of $500,000 from China Castle Investments to Douglas’s Citibank account. It also said Citibank had deemed the transaction “questionable.”
The report further documented other offshore transfers into accounts linked to Douglas, including payments from Siemens AG, LetsGo Ltd., Guernsey Trust Company and Sima Holding.
However, the ICC tribunal’s task was to assess the evidence before it in the arbitration.
It said the absence of corroborating evidence, coupled with inconsistencies in Adesanya’s testimony, meant it could not accept his explanation that the $500,000 was a foreign-exchange transaction carried out for Atiku.
The tribunal also found that Adesanya failed to establish that Moneyline Ventures held a bureau de change licence at the relevant time.
Even if such a licence had been produced, the tribunal said, it would not have resolved the issue because the transfer was made by China Castle rather than Moneyline.
Adesanya acknowledged that China Castle was not licensed to conduct foreign-exchange transactions and that such transactions were outside the company’s stated corporate purposes.
How Mambilla negotiations unfolded
The payment was made against the backdrop of a series of negotiations over the Mambilla project that began in 2001.
On September 12, 2001, Sunrise and North China Power Engineering Company met officials of the National Electric Power Authority and expressed interest in participating in the project.
Sunrise was incorporated in Nigeria on October 9, 2001, with a focus on identifying investment opportunities, particularly in the power sector.
Six days later, North China Power Engineering Company and Lenoil Holdings, a company associated with Adesanya, held discussions on power-sector projects, including Mambilla.
On October 18, Sunrise wrote to then-President Olusegun Obasanjo and Atiku, informing them of its interest, alongside its Chinese partner, in developing the project.
Atiku and his team subsequently met representatives of Sunrise and the Chinese company on November 13.
The tribunal’s record showed that the project was then estimated to cost about $6 billion.
Sunrise and its Chinese partner submitted a proposal to the technical committee of the Federal Ministry of Power and Steel on December 12, 2001.
The company requested government participation in the project’s ownership, arguing that this would boost the confidence of its foreign partner to invest more than $4 billion.
It also sought a waiver of the $500,000 processing fee required by NEPA.
In January 2002, Obasanjo and then Minister of Power and Steel Olusegun Agagu invited Sunrise for preliminary discussions.
On March 1, Agagu informed Sunrise that the project would be privately financed and that the Federal Government was considering a minority equity stake of not more than 25 per cent.
He also said an initial $100,000 portion of the $500,000 processing fee should be placed in escrow to cover a non-refundable consultancy charge.
Atiku later led a Federal Government delegation to China in July 2002. Adesanya was part of the delegation.
Nigerian officials and Chinese companies subsequently signed a memorandum of understanding covering several power projects, including the first phase of Mambilla, then estimated to cost $4.5 billion and generate 2,600 megawatts.
By August 2002, Agagu had supplied Sunrise with the proposed principal terms and conditions for Mambilla, which the company completed and returned the following month.
Agagu later left the ministry to contest the Ondo governorship election and was replaced by Olu Agunloye.
On December 9, 2002, the ministry invited Sunrise to a January 15, 2003 meeting to discuss the terms for executing the project.
Sunrise presented its tender to a multi-agency technical committee on January 15 or 16.
About two weeks later, on January 30, China Castle transferred the $500,000 to Douglas’s Citibank account.
Committee recommends Sunrise
On March 12, 2003, the technical committee recommended Sunrise for the 3,960MW project.
Seven international construction companies had expressed interest, but only four — Tafag Nigeria Limited, Lemna International, Sunrise and Propel Consortium — submitted detailed proposals.
After evaluating the proposals and presentations, the committee recommended Sunrise based on cost effectiveness, execution capacity and the project’s economic implications.
The committee proposed further negotiations and recorded that Sunrise had offered a tariff of 2.1 US cents per kilowatt-hour under a 40-year build-operate-transfer arrangement.
On April 7, Agunloye wrote to Obasanjo seeking approval to issue Sunrise a letter of comfort, commence negotiations on the concession and financing, determine how the government’s proposed 25 per cent equity stake would be funded and appoint technical consultants.
Obasanjo endorsed the memorandum on April 9, saying he had no objection but directing the minister to take the matter to the Federal Executive Council.
Agunloye subsequently submitted a memorandum to the council on May 15.
The proposal was considered at the May 21 meeting, but whether the council approved the contract became one of the central disputes in the subsequent arbitration.
Obasanjo maintained that the council did not approve the contract and that he directed the withdrawal of the memorandum.
Sunrise, however, relied on a May 22, 2003 letter issued by Agunloye as evidence that it had been awarded the project under a build-operate-transfer arrangement.
That letter ultimately became the basis of Sunrise’s multibillion-dollar claims against Nigeria.
Tribunal examines Atiku’s role
Sunrise and Adesanya argued that Atiku lacked sufficient political influence to affect the purported May 2003 award.
The tribunal disagreed with that assessment, finding that Atiku had been directly involved in discussions concerning Mambilla from at least 2001.
It noted his meetings with Sunrise and its Chinese partner and his role in leading the Nigerian delegation to China in 2002.
The tribunal also considered a February 2003 US diplomatic cable that described Adesanya as an “Atiku insider” and associate of the vice-president.
The cable reported a conversation in which Adesanya allegedly said Atiku had secured significant concessions from Obasanjo during negotiations over their re-election ticket and would become the “de facto head of government” if they won.
Adesanya did not deny the substance of the conversation, although he said the cable contained only an extract from a longer discussion.
The tribunal concluded that Atiku possessed considerable power and influence within the Federal Government during the first half of 2003.
That finding, however, did not establish that Atiku personally directed the $500,000 transfer. Atiku was not a party to the arbitration and did not testify before the tribunal.
Sunrise loses arbitration
Sunrise launched its first arbitration against Nigeria in 2017, seeking about $2.35 billion over an alleged breach of the 2003 agreement.
The parties later reached a settlement under which Nigeria was to pay $200 million.
A subsequent dispute arose over the settlement, with Sunrise seeking another $200 million as a default payment. Its principal claim in the second arbitration therefore stood at $400 million before interest.
The ICC tribunal ultimately dismissed Sunrise’s claims and rejected its request for orders compelling Nigeria to pay both the $200 million settlement sum and the additional $200 million default amount.
The tribunal also ruled that Adesanya was bound by the arbitration provisions in the settlement agreement and its addendum and that it had jurisdiction over Nigeria’s counterclaim against him and Sunrise.
Sunrise and Adesanya were ordered to reimburse Nigeria for 75 per cent of its legal fees and expenses.
Nigeria’s recoverable costs were assessed at $11.82 million, including $2.5 million to be drawn from funds held in escrow by the ICC.
The remaining approximately $9.32 million is payable by Sunrise and Adesanya, with interest.
TheCable reported that it contacted Atiku’s media adviser, Paul Ibe, and his former senior special assistant on public communication, Phrank Shaibu, for comments on the payment and the tribunal’s findings. Their responses were not included in the report reviewed for this rewrite.
(THECABLE)
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