NIGERIA: PFIZER SIGNES A $75 MILLION SETTLMENT AGREEMENT

UNCLAS ABUJA 001465 SENSITIVE SIPDIS DEPT PASS TO USTR-AGAMA DEPT PASS USAID AFR/SD FOR CURTIS AND ATWOOD TREASURY FOR PETERS, IERONIMO AND HALL DOC FOR 3317/ITA/OA/KBURRESS AND 3130/USFC/OIO/ANESA/CREED E.O. 12598: N/A TAGS: ECON EINV EAID ETRD PGOV NI SUBJECT: NIGERIA: PFIZER SIGNES A $75 MILLION SETTLMENT AGREEMENT WITH KANO REF: ABUJA 671 SENSITIVE BUT UNCLASSIFIED NOT FOR DISSEMINATION OUTSIDE USG ¶1. (U) On July 30, Pfizer and the Kano State Government signed a $75 million settlement and non-prosecution agreement, effectively terminating the longstanding litigation stemming from Pfizer's Trovan medical tests (oral vaccines) on children during a 1996 meningitis epidemic. TRUST FUNDS FOR VICTIMS AND HEALTHCARE PROGRAMS -------------- -- ¶2. (U) Under the terms of the settlement agreement, signed in Abuja in the presence of former Nigerian Head of State General Yakubu Gowon, Pfizer agreed to establish a $35 million Meningitis Trust Fund to compensate qualified study participants. In addition, Pfizer agreed to underwrite healthcare initiatives worth $30 million to benefit the people of Kano and to reimburse the state $10 million in legal costs and other expenses. In return, Kano agreed to institute court and administrative proceedings to terminate its civil and criminal complaints against Pfizer before the Kano High Court. ¶3. (SBU) The Meningitis Trust Fund and the Healthcare Initiative Fund will be administered by separate boards whose members will be jointly chosen by the parties. Each trust fund will be run by an executive secretary accountable to its respective board. The boards must approve all major projects, and the executive secretaries cannot authorize major expenditures without the approval of their respective board. Pfizer lawyers insisted on this arrangement to ensure the transparent and proper dispensation of funds. ¶4. (SBU) Both parties thanked Gowon and the Ambassador for helping the parties reach an amicable solution. According to Adams, Pfizer's Assistant General Counsel, Gowon was instrumental in convincing Kano State Governor Mallam Ibrahim Shekarau to reduce the settlement demand from $150 million to $75 million. ¶5. (SBU) Kano Attorney General Umar stated that the settlement would help efforts to combat polio in Kano, the epicenter of the polio epidemic in Nigeria. Umar noted that many parents are reluctant to have their children vaccinated because of people's negative experience with the Trovan tests, but that the settlement will help convince parents to reconsider vaccinating their children against polio and other diseases. PFIZER OPTIMISTIC SETTLEING FEDERAL CASES OUT OF COURT -------------- -------------- ¶6. (SBU) According to Pfizer's lawyers, Gowon also convinced President Yar'Adua to drop the two federal high court cases against Pfizer. Negotiations are underway and Pfizer lawyers are optimistic that their settlement of the case with Kano would help them reach an expedited accord with the federal government. Pfizer's management considers Nigeria a major growth market for its products. Having the Trovan case behind it will help Pfizer rebuild its corporate image as well as expand its presence in the Nigerian market. ¶7. (U) This report was coordinated with Consulate Lagos. SANDERS