06 Jul 2020
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.
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 Nigeria 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.
ENPH says the Nigerian government’s recent repudiation of the country’s 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.’s case.
A spokesman for the DOJ 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 ENPH’s application, according to filings at the District Court for the Southern District of Texas. Once a subsidiary of Enron, ENPH was bought out of bankruptcy for $750,000 in 2004 by a Cayman Islands-registered entity.
ENPH’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 ENPH damages of $11.2 million plus interest. U.S. courts later confirmed the award.
While ENPH’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. One of the U.S.’s largest corporations, Enron hid billions of dollars in losses and debt which, when revealed in 2001, propelled the company into insolvency and 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 ENPH 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 law-enforcement authorities.
By William Clowes, Bloomberg, 3 July 2020
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