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.”