Founder of offshore company backed by Priti Patel in legal battle involved in arms deal

The arms deal involved the sale of £6.2m worth of weapons

Priti Patel had backed P&ID on three occasions in a long and bitter legal action over a gas processing plant in Nigeria (PA)

One of the founders of an offshore company backed by Priti Patel in a $10bn legal battle with Nigeria in British courts was caught up in an illegal arms deal that led to a jail sentence for a business associate.

Gary Hyde, a weapons dealer, was sentenced to seven years imprisonment over his part in the sale of 40,000 AK-47 assault rifles, 30,000 rifles, 10,000 pistols and 32 million rounds of ammunition from China to Nigeria in a contact worth £6.2m.

Brendan Cahill, of P&ID (Process & Industrial Development), the company backed by Ms Patel, was acting for the Nigerian purchaser in the transaction.  Mr Cahill was not accused of any unlawful action, and faced no charges. Selling arms by a company based in the UK was illegal under the circumstances, but helping to buy them in Nigeria did not break UK laws.

Hyde arranged the sale through offshore companies in Virgin Islands and Liechtenstein without a UK arms export licence. The court case in 2012 heard that it was “likely” that Hyde did not apply for a licence because he thought he wouldn’t get one, but “the prospect of enormous profits led him to make unlawful deals”.

Hyde claimed he had done the business away from the UK so the licence was not necessary, but phone records proved he had been in the UK during key parts of the contract. In June 2013 he was ordered by the court to repay £782,142, the profit he had made from the deal, or have another four years added to his sentence.

Ms Patel had backed P&ID on three separate occasions in a long and bitter legal action over a gas processing plant in Nigeria.

Ms Patel’s intervention in the court case took place before she was appointed home secretary by Boris Johnson. She was joined in supporting the company by Shanker Singham, a prominent fellow Brexit advocate, who is now a government trade advisor.

P&ID had an agreement with Nigeria to build a massive plant to process natural gas. No work, however, was carried out on the plant. The company blamed the government for not supplying the gas; the government claims the contract was part of a fraudulent scheme.

P&ID initially won compensation of $10bn over the failed deal. But the Nigerian government are appealing against the judgment, claiming that massive bribes had been paid to secure the contract.

P&ID denies any wrongdoing and holds that the Nigerian government had invented the corruption allegations in an effort to avoid paying compensation and to delay the seizure of assets.

In September a judge in London granted the Nigerian government the right to appeal. He ruled that “Nigeria has established a strong prima facie case” that the contract was “procured by bribes paid to insiders as part of a larger scheme to defraud Nigeria”.

Sitting in the High Court earlier this month, Sir Ross Cranston added that there was “also a strong prima facie case” that one of the firm’s directors, and a main witness in the court case “gave perjured evidence”.

The Nigerian government had a separate ruling in their favour when the Court ordered the release of £200m it had put in place as security while the appeal is being heard. Judge Cranston had rejected the request by P&ID to increase the security level to £400m.

Neither Ms Patel nor Mr Singham have responded to questions from The Independent about whether they knew of Mr Cahill’s involvement in the weapons case.

P & ID did not respond to questions about Mr Cahill and the arms case. However, it had said previously “to be absolutely clear, P&ID had no involvement in any such transaction”. The company’s business activities was the gas plan and “it would be wildly inaccurate to make any connection between Mr Hyde’s activities and P&ID.”