The contention surrounding the Advanced Cargo Declaration (ACD)/Cargo and Crude Tracking Note (CTN) scheme has prompted Donnington Nigeria Ltd., along with its foreign partners Donnington international AG, Vortexra UK, and DP World UAE, to consider initiating an international arbitration process. The controversy arose following the federal government appointment of P-LYNE Nigeria Limited to oversee the CTN program in 2023, in place of Donnington Nigeria Ltd, which was already granted the system’s approval from the president in 2021. The firm has subsequently contested the nomination, claiming that improper procurement procedures were followed and that the decisions were impacted by conflicts of interest.
Concerns regarding the government’s nomination of P-LYNE were mentioned in a letter from Donnington’s attorney, Gary Summers of Gray’s Inn in London, to Chief Lateef Fagbemi, Nigeria’s Attorney-General and Minister of Justice. Summers emphasized that the appointment was made amidst a legal dispute over the ACD/CTN scheme that involved Donnington and the federal government. Summers contends that the choice to disregard current legal actions presents severe issues with regard to conflicts of interest, due process, and transparency. The government’s action, according to the company, violates current court orders and undermines the rule of law.
Officials purportedly diverted the scheme using proxies.
According to Donnington and its foreign allies, substantial financial losses were incurred as a result of decisions made by high ranking officials under the previous President Muhammadu Buhari’s administration. The CTN scheme, which the company had won after a rigorous procurement process in compliance with Nigeria’s Public Procurement Act 2007, was purportedly diverted by these officials using proxies. According to Donnington, the Nigerian government would have received billions of Naira in Revenue if the ACD/CTN program had been put into place. However, it was stated that over $4.9 billion in potential revenue goes untapped yearly as a result of the legal issues surrounding the plan.
Lawsuits case (FHC/ABJ/CS/1483/2022 and FHC/ABJ/CS/2351/2022) were filed by Donnington to thwart what it claims is the illegal re-award of the ACD/CTN scheme. The complaints seek declaratory reliefs as well as an injunction. The company maintains that it complied with all procurement regulations and had dedicated significant financial and human resources to the scheme’s implementation. Donnington views the decision of granting the contract to P-LYNE as unlawful and deleterious to the scheme’s credibility, even in consideration of the ongoing legal proceedings.
Mobilization fee paid to P-LYNE was also criticized.
Moreover, the company contends that P-LYNE has a conflict of interest owing to its close relationship to Sahara Energy Group, a key player in the Trade of crude oil. It further argues that the impartiality and efficiency of the ACD/CTN system may be jeopardized if an oil trading company is given control over crude oil tracking. A $21 million mobilization fee paid by the government to P-LYNE was also criticized, which pointed out that this arrangement is significantly less advantageous for Nigeria than Donnington’s initial agreement, which was based on a “No cure, No pay” principle.
Based on Donnington’s envisioned contract, the federal government would have received income sharing from the company depending on performance, and the program would have functioned at no initial cost. Summers cautioned that Donnington is about to initiate arbitration procedures against Nigeria under the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, as contained in his letter to the Attorney-General. These allegations would be supported by violations of Nigeria’s bilateral investment treaty (BITS) with the UK and Switzerland.
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An continuing investigation by Tarique Ghaffur, a former assistant commissioner of the London Metropolitan Police, into possible Fraud and criminal activity connected to the contract award has added to the complexity of this issue. Beyond Nigeria, the investigation focuses on offshore financial activities associated with the scheme. Kroll Associates, a UK-based company that specializes in investigating economic crime and public corruption, is also tracking money trails to identify the real recipients of the contracts. The result of this arbitration may have a big impact on Nigeria’s oil industry, particularly on accountability and the precision of oil Export tracking.