HeadlineEnron Fights American, Nigerian Governments For Proceeds Of Kola Aluko’s $80m Galactica...

Enron Fights American, Nigerian Governments For Proceeds Of Kola Aluko’s $80m Galactica Star

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Almost two decades after the collapse of Enron Corp., a former unit of the energy-trading giant is sparring with U.S. and Nigerian authorities over the proceeds of the sale of a luxury yacht.

The dispute pivots on the Galactica Star — a 213-foot vessel once worth more than $80 million. The boat features a glass-bottom jacuzzi, a sky lounge bar and marble bathroom fittings.

U.S. authorities seized the Galactica in 2018 after filing a lawsuit to recover assets it said were acquired by Nigerian businessman Kolawole Aluko. Prosecutors alleged in a forfeiture complaint that Aluko bought the yacht with the spoils of bribes paid to Diezani Alison-Madueke — the first female president of OPEC and a former Nigerian oil minister.

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To defray the costs of maintaining the Galactica while the case progressed, the boat was auctioned for $37 million in 2019 and then renamed Illusion. In May, after the Nigerian government dropped its own claim to the funds, a Texas court agreed that the proceeds should be retained by the U.S. government.

Enron Nigeria Power Holding Ltd. says it’s entitled to part of the takings and is demanding $22 million. The company is trying to collect on an arbitration award issued against the Nigerian government after the state suspended a contract signed with Enron in 1999 to build and operate a power plant.

The Nigerian company says the Nigerian government’s recent repudiation of its claim to the yacht constitutes an attempt to fraudulently transfer assets to prevent its creditors from accessing them. The U.S. Department of Justice said in court filings that Nigeria’s shift was “simply a recognition of the factual and legal basis” of the U.S.’ case.

A spokesman for the Justice Department declined to comment, while a spokesman for Nigeria’s Justice Ministry didn’t respond to calls and messages.

The U.S. and Nigeria have so far successfully opposed Enron Nigeria Power’s application, according to filings at the District Court for the Southern District of Texas. Once a subsidiary of Enron, the company was bought out of bankruptcy for $750,000 in 2004 by a Cayman Islands-registered entity.

Enron Nigeria Power’s claim to the yacht stems from the Nigerian government’s decision to reject a request by the company’s new owners to revive the power contract that was suspended before Enron’s demise. An arbitration tribunal ruled in 2012 that Nigeria had breached the agreement and awarded Enron Nigeria Power damages of $11.2 million plus interest. U.S. courts later confirmed the award.

While Enron Nigeria Power’s current shareholders aren’t publicly disclosed, some are former Enron officials who were involved in negotiating the power plant deal with Nigeria, the company’s lawyer Kenneth Barrett said in an interview. Once one of the U.S.’ largest corporations, Enron hid billions of dollars in losses and debt which, when revealed in 2001, propelled the company into insolvency and sent top executives to prison.

“None of the principals of ENPH have ever been implicated in any of the criminal activities or criminal proceedings pertaining to Enron Corp.,” Barrett said.

The legal tussle pitting Enron Nigeria Power against the U.S. and Nigeria over the yacht is an offshoot of a protracted saga centering around Alison-Madueke, who served as Nigeria’s oil minister from 2010 to 2015. The country’s anti-graft agency has accused her of corruption and says it’s trying to extradite her from the U.K., where she’s also being investigated by authorities. While a lawyer for Alison-Madueke didn’t respond to questions, she has previously denied wrongdoing.

The Justice Department says Aluko and his business partner Olajide Omokore funded “a lavish lifestyle” for Alison-Madueke in exchange for lucrative contracts from Nigeria’s state oil company that generated more than $1.5 billion. The two “laundered their illicit revenues into and through the U.S.,” according to the complaint filed in 2017.

Tokunbo Jaiye-Agoro, Aluko’s lawyer, declined to comment on Enron Nigeria Power’s lawsuit. Jaiye-Agoro added that he can “say very little at this stage” about the contracts his client secured when Diezani-Madueke was minister because they are subject to an ongoing court case in Nigeria.

Omokore wasn’t involved in the purchase of the yacht, isn’t party to the case before the Texas court and can’t comment on it, his lawyer Rafiu Lawal-Rabana said in an emailed response to questions. He declined to comment on the Justice Department allegations.

The vessel, which the Justice Department says Aluko bought for $82 million in 2013, was sold last year to avoid monthly maintenance costs of $170,000 that were eroding the sum that stood to be recovered from the vessel, according to court filings. The overarching forfeiture claim against $144 million of assets the Justice Department says were acquired by Aluko is currently on hold pending the resolution of a criminal investigation into related allegations, the filings show.

The Texas court in May granted a joint motion filed by the two nations’ governments to withdraw Nigeria’s longstanding counterclaim to the yacht and to vest ownership of the proceeds from its sale in the U.S. The states plan to use the proceeds “for the benefit of the Nigerian people,” according to the motion.

Enron Nigeria Power will seek the court’s permission to appeal that decision, Barrett said.

*** Bloomberg writer Thomas Hall contributed to this story. Culled from the LATimes.

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