In the wake of
international and local investigations and court cases, leaked information
reveals the fall from grace of one of Nigeria’s corrupt and super-wealthy oil
In September 2015,
Beyoncé and her husband, Jay Z, paid a reported $900,000 to sail the
Mediterranean Sea on the Galactica Star, a 65-meter luxury private cruiser.
Just after their trip aboard the vessel, the owner of the Galactica Star,
Kolawole Aluko, was accused of defrauding the Nigerian government. Allegations included
that the yacht was bought with profits from illegally diverted crude oil sales.
Held through a shell
company created by the law firm at the heart of the Panama Papers scandal,
Mossack Fonseca, the yacht became caught up in a massive investigation in
Aluko is a petroleum
and aviation mogul who is one of four defendants accused of helping to cheat
the Nigerian government out of $1.76 billion it was owed from oil sales. In a
separate investigation, Nigerian authorities are reportedly probing whether
Aluko helped smuggle millions of dollars out of the country as kickbacks to
Nigeria’s former petroleum minister, Diezani Alison-Madueke.
Aluko is part of a
constellation of Nigerian oil executives, state governors, cabinet ministers,
military officials and tribal chiefs exposed by the Panama Papers leak. Mossack
Fonseca, a law firm with its headquarters in Panama and offices around the
world, worked for three former Nigerian oil ministers who used companies to buy
boats and homes in London, the leaked records show.
anti-corruption organisations indicates Nigeria loses more money from illicit
activity, including graft and corporate tax abuse, than any other African
nation. According to Oxfam, as much as 12% of Nigeria’s annual gross domestic
product is lost to illicit financial flows.
“Our firm, like many
firms, provides worldwide registered agent services for our professional
clients (eg. lawyers, banks, and trusts) who are intermediaries,” Mossack
Fonseca told the International Consortium of Investigative Journalists (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.”
declined to answer specific questions and said that 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 Alison-Madueke, Nigeria’s oil minister between 2010
and 2015, as part of investigations into allegations of bribery and money
laundering. The investigations are ongoing. The former minister, who graduated
with a degree in architecture from Howard University in the US in 1992, is in
London undergoing cancer treatment, her lawyers said.
Media reports have
described Aluko as a key ally of Alison-Madueke, a relationship both have
previously denied. He rose to prominence around 2011, when Nigeria’s government
awarded valuable oil blocks on a no-bid basis to two companies he founded or
owned. One of his companies, Atlantic Energy, was created the day before the
deals to acquire multi-million-dollar oil licences were signed.
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 a combined $70 million for four homes in Santa Barbara
and Beverly Hills.
government won a court order in May 2016 to freeze assets linked to Aluko, two
companies he directed and one of his business partners. The Lagos High Court
order listed 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. In addition, the
court ordered Aluko not to sell or dispose of more than $67 million in four
bank accounts in London and Switzerland, an assortment of watches, or his
collection of 58 cars and three airplanes.
representative, Aluko told the 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.”
relating to the award of oil contracts to his company was “misguided”
“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 Aluko were dropped in June 2016. Media reports
indicate this was as a result of authorities’ inability to locate and serve the
The ICIJ was unable to
reach Alison-Madueke for comment.
News reports in
Nigeria and the UK indicate that the FBI, the UK’s National Crime Agency and
Switzerland’s Attorney General are investigating Aluko for his role in
companies and transactions allegedly used to conceal Alison-Madueke’s transfer
of wealth outside Nigeria.
The office of the
Swiss Attorney General said it had received a request from the UK in relation
to Aluko. UK authorities and the FBI did not confirm or deny the existence of
internal records show 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, Aluko paid $11.05 million to buy Almaty
United Investors Limited, a company registered in the British Virgin Islands
that owned property in Dubai.
Another of Aluko’s
companies, Earnshaw Associates Limited, was directed on paper by a succession
of three companies in Nevis, Switzerland and the British Virgin Islands, all
financial hubs renowned for their secrecy and light tax legislation. The
company was incorporated three weeks after Alison-Madueke was appointed as head
of Nigeria’s 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 Alison-Madueke used during her
time in office.
Slippery Oil Deals
Long before Aluko,
Mossack Fonseca had faced questions about its Nigerian customers. In 2007, when
the firm’s employees realized an offshore company was being used by a former
advisor to Olusegun Obasanjo, Nigeria’s president between 1999 and 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.”
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 leaked file shows a $12 million
loan from a shell company to a Nigerian typed on half a sheet of paper.
In 1995 – 15 years
before Alison-Madueke became Nigeria’s first female petroleum minister – Chief
Dan Etete held the post.
Etete, a mustachioed
power player from the oil-rich Bayelsa State, served as petroleum minister
until 1998. His tenure became the subject of investigations after he left
office. He was convicted of money laundering in France. Authorities in three
countries continue to examine allegations that portions of a billion-dollar oil
deal involving a company linked to Etete were transferred or pocketed as bribes
by political figures and middlemen.
The Panama Papers
reveal that 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. That deal never proceeded. Other
documents appeared under Etete’s re-ported alias, Omoni Amafegha. Amafegha’s
company, Pentrade Securities, featured the signature of Richard
Granier-Deferre, a French oil trader who was fined approximately $200,000 in
2007 by a Paris court for being an accessory to Etete’s money laundering. The
company was incorporated in 1998 when Etete was oil minister and opened a bank
account in Gibraltar.
Amafegha also owned
Henkel Investments Ltd, which bought a boat in January 1998.
Etete denied using
Amafegha as an alias and said he had never heard of Pentrade Securities or
Henkel Investments. He denied owning or having owned Malabu. “It’s all just
enemies that created this misinformation,” he said.
“I have nothing to do
with any Panamanian companies,” Etete told the ICIJ. “I have never been there
or sent anyone there to open an account.”
Fall From Grace
At his peak, Aluko was
a globetrotter whose face regularly graced celebrity Instagram pages and
entertainment tabloids. In 2013, he launched a $500 million infrastructure
development fund along-side Hollywood actor Jamie Foxx and partied in New York
at Leonardo DiCaprio’s 39th birthday bash. He was photographed with rapper P
Diddy in Ibiza, Spain, the following summer. The music star tweeted a photo of
himself alongside a smiling Aluko with the caption “NIGERIA I LOVE YOU.”
At the time, Aluko was
regularly cited in Nigerian media as one of “the minister’s men”, a clique of
Nigerian oil traders who had secured a string of oil licences from
Alison-Madueke’s office with startling ease. In 2011 and 2012, Aluko’s Atlantic
Energy, which boasted “strong government relationships”, was awarded eight
crude oil licenses in the Western Niger Delta. Atlantic Energy sent tens of
millions of dollars of crude oil to Italy, the US, Germany and the Netherlands
throughout 2012 and 2013, according to documents seen by ICIJ.
In September 2014,
however, rumors in the Nigerian media suggested that Aluko and his companies
had fallen out of favor with Alison-Madueke. By September, Atlantic Energy
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
potential angel investors in the hope they would be willing pay the $700
million deficit left by Atlantic Energy’s bankruptcy.
later, during a routine background check on Aluko, Mossack Fonseca employees
discovered online news articles claiming that Nigerian authorities might ask
Interpol to help extradite the businessman. Interpol has denied that he was in
its sight, and Mossack Fonseca continued to provide services to Aluko.
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 British Virgin Islands authorities that it did not have
information about any bank accounts or assets held by Earnshaw, despite having
signed documents more than a year earlier to help Aluko’s company register a
In August 2015, the situation grew worse when the law firm realized it had no
contact or personal documentation for Aluko. One Mossack Fonseca employee
worried this was a potential breach of the requirement that offshore middlemen
keep such information for at least five years after a company is mothballed.
An employee sought help from 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,”
Quaicoe wrote from Geneva.
“If Mr Aluko is truly a wanted person,” Quaicoe chided Mossack Fonseca, “he
would not be difficult to find because he is a resident in Switzerland.”
Brushing the concerns aside, 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 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 finally cut its ties with three of Aluko’s four companies, which had been
inactive since 2014, and prepared a memo for British Virgin Islands authorities
outlining the law firm’s concerns about Aluko’s activities.
Before sending the memo, however, Mossack Fonseca certified the $30 million
loan for Earnshaw Associates. A Mossack Fonseca employee justified the decision
to help push the paperwork through by noting that the firm had already been
working on the loan transaction for months.
Quaicoe told the ICIJ he could not discuss his work with Aluko. “I conduct
business in accordance with the laws of the relevant jurisdictions pursuant to
the contracts of services concluded with my clients,” he said.
High Risk For
Ross S. Delston, an attorney and anti-money laundering expert in the US, said
that in general, banks, other financial institutions and financial
intermediaries such as law firms, real estate agents and company service
providers should be skeptical when dealing with clients 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.
“Taken together, these indicators and risk factors present not just red flags
for money laundering or other financial crime, but rather can be characterised
as fireworks,” Delston said.
As Aluko was securing his loan, the pressure on Alison-Madueke and her
associates was building. In October 2015, a small number of Alison-Madueke’s
family members appeared in a London court on bribery and corruption charges. Police
seized some of the minister’s assets, including $39,000 in cash. Nigerian
authorities have continued to arrest and arraign other alleged Alison-Madueke
In July 2016, Nigeria’s Economic and Financial Crimes Commission laid charges
in court against several Nigerians with alleged ties to Alison-Madueke. In a
last-minute change, Aluko’s name was dropped from the charge sheet after
government prosecutors admitted they had been unable to serve him with
- News 24