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| Aluko |
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.
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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.”
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| Alison-Madueke |
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.”
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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''
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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.
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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.
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