Alaska News

Claiming millions of dollars missing, an Alaska exploration company sues 2 former executives

An independent oil and gas explorer with a stake in a big Alaska oil prospect is suing two of its former executives after new management discovered millions of dollars in cash and others assets were missing.

The lawsuits also revealed some celebrity connections to the company, including a supermodel, a famous hair-products promoter and the producers of a London musical.

In the lawsuits, NordAq Energy claims its former CEO, Paul Devine, improperly spent at least $6.5 million, and company founder Johnathon Kidd sometimes assisted him. The suits also charge the men improperly enriched themselves with lavish bonuses and other benefits, and used company money to help friends and family take vacations and pay school tuition.

The allegations were contained in two lawsuits filed by NordAq in November and February in U.S. District Court in Anchorage. The company is a privately held corporation, one of several independents that began operations in Alaska — particularly Cook Inlet — as the state sought through the use of financial incentives to forestall a natural gas shortage looming for Anchorage.

None of the lawsuits allege state money was used by NordAq, and the Alaska Department of Revenue, which administers the incentives, wouldn't identify the companies that got tax breaks or subsidies.

Devine and Kidd were fired in summer 2015 after new investors got involved in the company and a new board began to review company records, said Kevin Clarkson, an Anchorage attorney representing NordAq.

The payments to Devine and Kidd had nothing to do with NordAq's business — exploring Alaska's oil and gas fields — and were never approved by its board, the lawsuits assert.

In addition to its own two cases, NordAq is a defendant in two lawsuits filed in November by companies that claim they are owed large sums of money by NordAq.

One of the lawsuits, for $19 million, was brought by the family trust of John Paul DeJoria, co-founder with Paul Mitchell of a the eponymous hair-products company. The family trust said NordAq owes the money for loans made in 2014 and 2015, plus interest, according to documents filed in a federal district court in New York.

DeJoria is a shareholder in NordAq, according to Alaska business records. Attorneys representing the trust did not return phone calls.

The lawsuits come on the heels of the announcement in October by another independent, Caelus Energy Alaska, of a giant oil discovery at Smith Bay, southeast of Barrow. In 2015, Caelus acquired a 75 percent stake in the leases from NordAq and praised the company's analysis of the area's geologic potential. NordAq holds 17.5 percent of the leases.

NordAq has also drilled exploration wells in the Inlet region. But it faces $771,000 in fines from state regulators for failing to properly seal two exploration wells, sanctions a NordAq representative said recently the company hopes to have removed by completing the work.

Much of NordAq's income has also come from other sources, including a Chinese investment group that agreed to provide NordAq with up to $90 million and other financial support in 2014. Chinanx Investment Group said it was attracted by the state's tax credits, according to the Alaska Journal of Commerce.

Calls to a NordAq representative were not returned.

Kidd and Devine are citizens of the United Kingdom, the lawsuits said, though Devine may have another home in Illinois. Kidd lived either in London or Alberta, Canada, during the 2011-to-2015 period covered by the lawsuits.

Neither man could be located for comment. So far, neither had responded to the lawsuits brought against them.

The lawsuit NordAq brought against Devine also names two other parties as defendants — Lothian Investment Partners and its sole shareholder, Andrew Knott.

Those defendants, also from the United Kingdom, are also plaintiffs in a lawsuit they brought in November in state court in Delaware, claiming they're owed about $14 million from NordAq related to loans and other obligations. NordAq was incorporated in Delaware in 2009.

Attorneys for Lothian and Knott did not return phone calls.

The four cases are "interrelated," said Clarkson, the new attorney. Clarkson hopes to have allegations in the Delaware case heard in federal court in Alaska.

The missing money came to light as NordAq brought on new investors from China, including the Chinanx Investment Group, in 2014. That led to a close look at company records, Clarkson said.

After Devine and Kidd were fired, the new board launched a lengthy forensic accounting investigation, he said.

"These guys didn't just lay out a road map of what they were doing," Clarkson said. "It had to be ferreted out of documents and emails."

Devine's salary was $300,000, but he moved $5.3 million in nearly 200 wire transfers from Nordaq bank accounts to his personal account, Nordaq asserted in its lawsuit.

The Nordaq lawsuit against Devine also asserts that in September 2014, he used $945,000 in Nordaq funds to complete his purchase of a residence in Driftwood, Texas, and then, two months later, he used $331,000 in Nordaq money to buy a house in Auburn, Alabama. Neither purchase was authorized by the NordAq board, the lawsuit said.

"At one time, Devine misappropriated money from NordAq and then transferred the money to finance a stage production called 'Yarico' that Kidd was producing in London, England," the lawsuit against Kidd alleges.

The musical, about a 17th-century female slave, was brought back to the stage by John Kidd and his daughter, former supermodel Jodie Kidd, according to a 2014 story in The Guardian, a British newspaper. The production ran in early 2015 at the London Theatre Workshop, receiving mostly positive reviews.

The lawsuits against Kidd and Divine alleged that company documents and authorizations were "fabricated" documents, sometimes to throw off auditors.

The two also received payments from others after Devine organized the transfer of royalty interests in NordAq's leases, without board approval, NordAq asserted.

"Between 2011 and 2015, Devine made or authorized payments for personal flights for at least fifty friends and family members on NordAq debit cards in an amount exceeding $265,000," one of the lawsuits says.

Devine racked up more than $630,000 in flights for himself and another $200,000 for Kidd, much of which included personal travel, NordAq asserted. Devine paid another $222,000 in unauthorized payments for two apartments in London for Kidd.

NordAq claims that with Kidd's support, Devine made or approved numerous payments to associates and family of Kidd, including "$84,000 to a horse-breeding company owned by Kidd's assistant/associate … $16,088 for a golf outing for Kidd's daughter … $24,000 in support payments to Kidd's ex-wife."

Devine also approved payment of $60,000 to Kidd's cousin, Lord Maxwell Beaverbrook, for unspecified consulting services that NordAq believes provided no benefit to the company, according to the lawsuit.

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or alex@adn.com.

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