(Bloomberg) --
Nigerian authorities moved to seize assets belonging to one of the nation’s largest banks to recoup damages owed by Royal Dutch Shell Plc to a local community over a decades-long dispute.
Federal court officials and police visited First Bank of Nigeria Ltd.’s main branch in the southern oil hub of Port Harcourt on Jan. 12 to enforce an order to confiscate its property, Nigeria’s third-biggest lender said Wednesday in an emailed statement. The action, which resulted in unspecified properties being taken, was “unjustified, illegal and a reckless misuse of the machinery of justice,” it said.
The intervention stems from First Bank’s decision to guarantee damages a judge ordered Shell to pay 10 years ago which, with interest accrued, a Nigerian court said last year are calculated at more than 183 billion naira ($479 million). Shell contests that valuation.
Shell is involved in a long-running legal battle with the Ejama-Ebubu community, which in 2010 successfully sued the company for millions of dollars in damages for polluting its land. The community has defeated several appeals filed by Shell, most recently at the Supreme Court in November.
READ: Shell Oil Site Seized by Nigerian State Over Unpaid Damages
Eight years ago, at Shell’s request, First Bank provided a guarantee to the community for the original 17 billion-naira award. The Supreme Court verdict last year means the “coast is clear for enforcement of the judgment of 2010,” Lucius Nwosu, a lawyer for the community, said by phone on Jan. 13. “First Bank will not honor their guarantee because they, at their own peril, failed to get a cash backing from Shell before they issued the guarantee.”
The seizure ignored an interim court ruling obtained by Shell in December that restrains First Bank from paying out any money toward the judgment debt and prevents the community from taking steps to compel the bank to do so, according to the bank’s statement. First Bank has filed its own pending motion seeking to cancel the decision permitting the confiscation of its property, it said.
The community shouldn’t seek to enforce the award while the injunction is in place, a spokesman for Shell’s Nigerian unit said in a statement emailed Friday. Its current valuation of the size of the debt is “overstated” and “remains in dispute” in other court proceedings, he said.
Those other cases cannot take precedence over the Supreme Court, according to Nwosu. The community wants assets belonging to Shell and First Bank to be confiscated and sold to help settle the judgment debt.
Civil War
The origin of the community’s grievance against Shell dates back a rupture in one of the firm’s pipelines 50 years ago. Shell doesn’t accept responsibility for the spill, which it blames on “third parties” during Nigeria’s 1967-70 civil war, and says the affected sites have been cleaned up.
The government of Rivers state, where the community is located, said last month a court order had allowed it to lawfully take over one of Shell’s facilities in Port Harcourt as well as the company’s share of the oil block at the heart of the dispute.
The facility has since been returned to Shell after the head of the state-owned Nigerian National Petroleum Corp. intervened, while the federal minister of petroleum resources hasn’t yet approved the transfer of the oil permit.
(Updates with Shell comment in seventh and ninth paragraphs)