In September 2015, Beyoncé sat on a yacht drinking
sparkling wine with her legs wrapped under a striped, earth-toned blanket as
the Faraglioni rocks, near Capri on Italy’s west coast, passed by.
The singer and her husband, Jay Z, paid a reported
$900,000 that week to sail the Mediterranean Sea on the Galactica Star, a
65-meter private cruiser with a helipad, 10 dining areas, Jacuzzi and sun deck.
Unknown to the celebrity couple, the yacht’s owner
was soon to be a wanted man.
Held through a shell company created by the law
firm at the heart of the Panama Papers scandal, Mossack Fonseca, the yacht is
now caught up in a massive investigation in Nigeria. The government claims the
yacht was bought with profits from crude oil sales that were diverted and never
paid to authorities.
The Galactica Star’s owner is Kolawole Aluko, a
petroleum and aviation mogul who is one of four defendants accused of helping
to cheat Nigeria out of nearly $1.8 billion owed to the government on massive
sales of oil. In a separate investigation, Nigerian authorities are also
reportedly probing whether Mr. Aluko helped smuggle millions of dollars out of
the country as kickbacks to Nigeria’s former petroleum minister, Diezani
Alison-Madueke.
Mr. Aluko is part of a constellation of Nigerian
oil executives, state governors, cabinet ministers, military officials and
tribal chiefs within the Panama Papers. Mossack Fonseca, a Panama-headquartered
law firm with offices around the world, worked for three former Nigerian oil
ministers who used companies to buy boats and homes in London, the records
show.
The prevalence of Nigerians within the Panama Papers
may be no coincidence. Nigeria loses more money from illicit activity,
including graft and corporate tax abuse, than any other African nation,
research by anti-corruption groups indicates. As much as 12 percent of
Nigeria’s annual gross domestic product is lost to illicit financial flows,
according to Oxfam.
“Our firm, like many firms, provides worldwide
registered agent services for our professional clients (e.g., lawyers, banks,
and trusts) who are intermediaries,” Mossack Fonseca told ICIJ. “As a registered
agent we merely help incorporate companies, and before we agree to work with a
client in any way, we conduct a thorough due-diligence process, one that in
every case meets and quite often exceeds all relevant local rules, regulations
and standards to which we and others are bound.”
Mossack Fonseca declined to
answer specific questions and said, in providing its services, “we follow both
the letter and spirit of the law. Because we do, we have not once in nearly 40
years of operation been charged with criminal wrongdoing.”
In October 2015, London
police questioned Mrs. Alison-Madueke, Nigeria’s oil minister from 2010 to
2015, as part of investigations into allegations of bribery and money
laundering. The investigations are ongoing. The ex-minister, who graduated with
an architecture degree from Howard University in Washington, D.C., in 1992, is
in London undergoing cancer treatment, her lawyers said.
Media reports have described
Mr. Aluko as a key ally to Mrs. Alison-Madueke, a relationship both have
previously denied. He rose to prominence around 2011 when Nigeria’s government
awarded two companies he founded or owned valuable oil blocks on a no-bid
basis. One of his companies, Atlantic Energy, was created the day before it
inked the deals to acquire multimillion-dollar oil licenses.
Mr. Aluko is part of a
circle of oil traders who are the subject of frequent media speculation in
Nigeria. His lifestyle has earned him the reputation of being Nigeria’s
playboy. He bought an apartment in Manhattan for $8.6 million and, according to
The New York Times, paid more than $70 million to buy four homes in Santa
Barbara and Beverly Hills.
The Nigerian government won
a court order in May freezing assets linked to Mr. Aluko, two companies he
directed and one of his business partners. The Lagos High Court order listed
Mr. Aluko’s yacht along with property in London, four homes in California, two
penthouses in Manhattan, one in Dubai, 132 houses and apartments in Nigeria and
land in Canada and Switzerland. The court also ordered Mr. Aluko not to sell or
dispose of more than $67 million in four bank accounts in London and
Switzerland, an assortment of watches, a 58-car collection and three airplanes.
Through a representative,
Mr. Aluko told ICIJ that “I have never been prosecuted and convicted in any
country. I am aware that a criminal investigation was started in the UK.
However, to date I have not been made aware of any law enforcement action to be
undertaken against me.”
Aluko told ICIJ that the
information relating to the award of oil contracts to his company was
“misguided” speculation.
“As a private citizen I
organise my business and family matters to maximise convenience, as well as
operational and administrative efficiency. My companies operate in accordance
with the laws and regulations of the relevant jurisdictions and, insofar tax
liabilities arise, they pay taxes in the jurisdictions in which taxes are due
to be paid.”
Criminal charges for
alleged crude oil fraud against Mr. Aluko were dropped in June as a result,
according to media reports, of authorities’ inability to locate and serve the
Swiss resident.
ICIJ was unable to reach a
lawyer or representative of Mrs. Alison-Madueke.
News reports in Nigeria and
Britain indicate that the U.S. Federal Bureau of Investigation, the U.K.’s
National Crime Agency and Switzerland’s Attorney General are investigating Mr.
Aluko for his role in companies and transactions that were allegedly used to
conceal Mrs. Alison-Madueke’s transfer of wealth outside Nigeria.
Switzerland’s Office of the
Attorney General confirmed to ICIJ that it had received a request from the
United Kingdom in relation to Mr. Aluko. U.K. authorities and the FBI did not
confirm or deny the existence of an investigation.
Mossack Fonseca’s internal
records show that Mr. Aluko owned four companies in the British Virgin Islands,
one of the world’s busiest offshore havens. He was director of another, Fragola
Ltd, in the Seychelles. In May 2013, Mr. Aluko paid $11.05 million to buy
Almaty United Investors Limited, a BVI company that owned property in Dubai.
One of Aluko’s companies,
Earnshaw Associates Limited, was directed on paper by a succession of three
companies in Nevis, Switzerland and the BVI, financial hubs prized for their
secrecy. The company was incorporated three weeks after Mrs. Alison-Madueke was
appointed to head the Ministry of Petroleum Resources in April 2010.
In March 2014, Earnshaw
Associates registered a Bombardier Global Express jet in Malta, according to
documents sent through Mossack Fonseca. The 18-seat Bombardier is the same
model of aircraft that Nigerian media reported Mrs. Alison-Madueke used during
her time in office.
Oil Chief
Long before Mr. Aluko,
Mossack Fonseca had faced questions about its Nigerian customers. In 2007, when
the firm’s employees realized that an offshore company was being used by a
former advisor to Olusegun Obasanjo, Nigeria’s president from 1999 to 2007,
Jürgen Mossack reminded his staff that “in this firm, everyone knows that
dealing with Nigerians always gives you headaches. It’s inevitable that this
case involves a crime or fraud.”
Other suspect Nigerian
deals seemed to have passed unnoticed.
One crude oil sale contract
between three offshore companies, for example, provided for commissions so high
that, one expert consulted by ICIJ said, the most obvious explanation is that
the oil was stolen. Another file is a $12 million loan from a shell company to
a Nigerian typed on half a sheet of paper.
“I had to sign dozens of
pages of paperwork for my home loan,” said Aaron Sayne, a financial crimes
lawyer and expert witness in dozens of oil fraud cases in Nigeria, after
looking at the document. “And my home certainly isn’t worth $12 million.”
In 1995 – 15 years before
Mrs. Alison-Madueke became Nigeria’s first female petroleum minister – Dan
Etete was sworn into the same office.
Mr. Etete, a mustachioed
power-player from the oil-rich Bayelsa State, served as oil minister until
1998. His tenure became the subject of investigations after he left office. He
was convicted in France of money laundering, and authorities in three countries
continue to examine allegations that portions of a billion-dollar oil deal
involving a company linked to Mr. Etete were transferred or pocketed as bribes
by political figures and middlemen.
The Panama Papers reveal
that Mr. Etete and the company, Malabu Oil & Gas Limited, signed a
consultancy agreement with an offshore company created by Mossack Fonseca to
negotiate the sale of oil blocks to China, a deal that never proceeded. Others
documents appeared under Etete’s reported alias, Omoni Amafegha. Amafegha’s
company, Pentrade Securities Inc., featured the signature of Richard
Granier-Deferre, a French oil trader who was fined approximately $200,000 in
2007 by a Paris court as an accessory to Mr. Etete’s money laundering. The company
was incorporated in 1998 when Mr. Etete was oil minister and opened a bank
account in Gibraltar. Mr. Amafegha also owned Henkel Investments Ltd, which
bought a boat in January 1998.
Mr. Etete denied using
Amafegha as an alias and said he had never heard of Pentrade Securities Inc. or
Henkel Investments. He denied owning or having owned Malabu. “It’s all just
enemies that created this misinformation,” said Mr. Etete.
“I have nothing to do with
any Panamanian companies,” Mr. Etete told ICIJ. “I have never been there or
sent anyone there to open an account.”
The fall
At his peak, the oil
magnate and luxury yacht owner Mr. Aluko was a globetrotter whose round face
regularly graced celebrity Instagram pages and entertainment tabloids. When he
was spotted in Paris in October 2013, Nigerian media trilled at the suggestion
he was dating supermodel Naomi Campbell. That same year, he launched a $500
million infrastructure development fund alongside Hollywood actor Jamie Foxx
and partied in New York City at Leonardo DiCaprio’s 39th birthday bash. He was
snapped at the side of rapper P Diddy in Ibiza, Spain, the following summer.
The music star tweeted a photo of himself alongside a smiling Mr. Aluko with
the caption “NIGERIA I LOVE YOU.”
At the same time, tongues
wagged back home. Mr. Aluko was regularly cited in Nigerian media as one of
“the minister’s men,” a clique of Nigerian oil traders who had burst onto the
scene and secured a string of oil licenses from Minister Alison-Madueke’s
office with startling ease. In 2011 and 2012, Aluko’s Atlantic Energy, which
boasted of “strong government relationships,” grabbed eight crude oil licenses
in the Western Niger Delta. Atlantic sent tens of millions of dollars of crude
oil to Italy, the United States, Germany, the Netherlands and elsewhere
throughout 2012 and 2013, according to documents seen by ICIJ.
In September 2014, however,
rumours floated in Nigerian media suggesting that Mr. Aluko and his companies
had fallen out of favour with Mrs. Alison-Madueke. By September, Atlantic defaulted
on its loans and owed Nigeria $1.3 billion in cash and other obligations. The
Nigerian government and banks sent out confidential pleas to would-be angel
investors in the hope they would be willing to step in with $700 million and
fill the hole left by Atlantic’s bankruptcy.
Two months later, Mossack
Fonseca employees doing a routine background check on Mr. Aluko discovered
online news articles claiming that Nigerian authorities might ask Interpol, the
world’s police body, to help extradite the magnate. Interpol has denied it ever
sought the Nigerian. And while the Internet chatter was enough to spook some of
Mossack Fonseca’s employees, the firm remained at Mr. Aluko’s service.
It wasn’t until June 2015
that Mossack Fonseca took a second look at Aluko, after it received a demand
from the British Virgin Islands Financial Investigation Agency to produce
documents about Earnshaw Associates.
Mossack Fonseca told BVI
authorities that “we do not have information about any bank accounts or assets
held by” Earnshaw, despite having signed documents more than a year earlier to
help Mr. Aluko’s company register a private jet.
In August 2015, the situation
grew worse when the law firm realized it had no contact or personal
documentation for Mr. Aluko. One Mossack Fonseca employee worried that this was
a potential breach of the BVI’s requirement that offshore middlemen keep such
information for at least five years after a company is mothballed.
An employee sought help
from Mr. Aluko’s Swiss wealth manager, Johnnie Ebo Quaicoe, and shared links to
four unflattering online news articles.
“I’m dumbfounded that
Mossack Fonseca will print excerpts from tabloids,” Mr. Quaicoe wrote from
Geneva.
“If Mr Aluko is truly a
wanted person,” Mr. Quaicoe chided Mossack Fonseca, “he would not be difficult
to find because he is a resident in Switzerland.” Swatting the concerns aside,
Mr. Quaicoe instead asked Mossack Fonseca to assist with a “major” $30 million
mortgage with a Luxembourg bank. The loan was to be provided by Banque
Havilland S.A. The collateral securing the loan would include the Galactica
Star, the boat that Beyoncé and Jay Z had rented for their Mediterranean
cruise.
Mossack Fonseca agreed to
process the paperwork needed to pull off the loan.
But concerns continued.
In September 2015, a
Mossack Fonseca employee discovered new media reports that alleged Mr. Aluko
was “on the run from the law over several controversial and fraudulent dealings
in the petroleum industry.” Employees handling the loan deal asked colleagues
for “comfort to proceed without being seen as facilitators to money laundering
activities and corruption.”
By October 2015, Mossack
Fonseca had had enough – almost.
It cut its final ties with
three of Mr. Aluko’s four companies, which had been inactive since 2014, and
prepared a memo for BVI authorities outlining the law firm’s concerns about Mr.
Aluko’s activities.
Before sending the memo,
however, Mossack Fonseca certified the $30 million loan for Mr. Aluko’s
Earnshaw Associates. A Mossack Fonseca employee justified decision to help push
through the paperwork by noting that the firm had already been working on the
same loan transaction for months.
Mr. Quaicoe told ICIJ he
could not discuss his work with Mr. Aluko. “I conduct business in accordance
with the laws of the relevant jurisdictions pursuant to the contracts of
services concluded with my clients,” Mr. Quaicoe said.
Ross S. Delston, a
Washington, D.C., attorney and anti-money laundering expert, said that in
general, banks, other financial institutions and financial intermediaries such
as law firms, real estate agents and trust and company service providers should
be skeptical whenever they’re dealing with clients who are involved in the oil
business, are rumoured to have close connections to politicians, have been
subjects of negative news stories and come from countries, like Nigeria, that
are considered high-risk geographies for corruption, money laundering and other
financial crimes.
“Taken together, these
indicators and risk factors present not just red flags for money laundering or
other financial crime but rather can be characterized as fireworks on the
Washington, D.C., Mall on the Fourth of July,” Mr. Delston said.
As Mr. Aluko was securing
his loan, the heat on Mrs. Alison-Madueke and her friends was increasing. In
October 2015, a small number of Mrs. Alison-Madueke’s family members appeared
in a London court on bribery and corruption charges, and police seized some of
the minister’s assets, including $39,000 in cash. Nigerian authorities have
continued to arrest and arraign other alleged Mrs. Alison-Madueke confidants.
Mrs. Alison-Madueke could not be reached for comment.
In May 2016, the Federal
High Court in Lagos granted the Nigerian government’s request for an order
freezing assets linked to Mr. Aluko and three others. The four owed Nigeria
$1.76 billion dollars in unpaid dues from crude oil sales, the government’s
court filings alleged, and had shuffled “large sums to offshore accounts.”
The amount “is equal to the
combined 2016 budgets of about 4 States in Nigeria which monies would be
utilized to cater for about 13 million” people, the government noted. Nigeria
had suffered “immense losses and damage” thanks to the failure by Mr. Aluko and
the others to pay what they owed.
The court has frozen both
of the assets used by Mr. Aluko to secure his $30 million loan in late 2015 –
the luxury yacht and the Manhattan apartment in the 157 W. 57th Street
skyscraper known as “The Billionaires Building.”
Mr. Aluko and the three
other defendants “could use phony companies to dispose or dissipate their
assets” out of Nigeria’s control, the government argued in an effort to keep
Mr. Aluko and the others from selling off their assets before authorities could
confiscate them. The government pointed to the sale, in April 2016, of Mr.
Aluko’s 15,000- square-foot home in Beverly Hills as a sign “of desperation,”
an indication of his desire to avoid “the long arms of the law.”
In July, Nigeria’s Economic
and Financial Crimes Commission laid charges in court against several Nigerians
with alleged ties to former minister Alison-Madueke. In a last-minute change,
Mr. Aluko’s name was dropped from the charge sheet after government prosecutors
admitted they had been unable to serve him with documents.
Contrary to his wealth
manager’s claims, it seems, Mr. Aluko remains difficult to find
..Premiumtimes
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