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
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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
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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