NordAq sues ex-chair over alleged fraud

Company alleges misappropriation of funds over several years for personal use by Johnathon Kidd and a previous CFO and CEO

ALAN BAILEY

Petroleum News

NordAq Energy Inc., a company that in recent years has been conducting oil and gas exploration in Alaska, has filed suit in federal District Court, suing Johnathon Kidd. The suit alleges that Kidd, a British citizen who was a company founder and erstwhile board chairman, and his friend Paul Devine have bilked the company out of millions of dollars. Devine was NordAq chief financial officer from 2011 to 2013 and chief executive officer from 2013 to 2015. Between 2011 and 2015 Devine, either alone or working in concert with Kidd, had misappropriated more than $6.5 million from NordAq through a variety of schemes, NordAq claims.

Kidd used NordAq funds and properties, without board approval, for the benefit of his and Devine’s families and friends, NordAq claims, NordAq did not discover Kidd’s actions until September 2016, the company says. Devine used money acquired from NordAq to benefit more than 50 of his friends and relatives through payments for homes, personal vacations, college tuition and personal expenses, the company claims. And, with Kidd being an officer and director of NordAq while this misconduct was in progress, Kidd either was aware or should have been aware of what was going on, NordAq says.

NordAq’s court filing also accuses Devine of using a consultancy company which he controlled and which had a consulting agreement with Kidd to misappropriate NordAq funds under the guise of consulting fees, with these funds being transferred to Devine and Kidd. In addition Devine periodically instructed NordAq’s finance personnel to transfer money, beyond his salary, into his personal bank account, and Devine charged unauthorized personal expenses to NordAq debit cards, NordAq says.

Kidd also authorized salary increases and bonuses for Devine without obtaining the necessary approval from the board, NordAq says.

Specific instances of alleged misconduct listed in NordAq’s court filing include more than $5 million in bank wire transfers; $413,000 charged to company debit cards; and an increase in Kidd’s consulting compensation, without board approval, from $25,000 to $40,000 per month. Expenses of $1.3 million transferred through Devine’s consultancy company included $84,000 for a horse-breeding company owned by an associate of Kidd; $16,088 for a golf outing for Kidd’s daughter; support payments for Kidd’s son and daughter; and various payments to Lord Maxwell Beaverbrook, characterized as Kidd’s cousin, the filing says. Some of the payments to Beaverbrook were for unsubstantiated and unjustified consulting services, NordAq claims.

Between 2011 and 2015 unauthorized payments of fringe benefits were used for personal expenses, including $221,961 for two London apartments for Kidd and $107,717 for Devine’s Anchorage apartment, the NordAq statement says.

NordAq’s only line of business is oil and gas exploration in Alaska. The company entered the state in 2010 when it purchased some state acreage in the Cook Inlet basin. The company subsequently pursued natural gas prospects, the Shadura prospect in the northern Kenai Peninsula and the Tiger Eye prospect, near Trading Bay, onshore the west side of the inlet. The company has since dropped both of these exploration programs.

NordAq has a minorityworking interest in an exploration project that Caelus Energy is pursuing in Smith Bay, offshore the National Petroleum Reserve-Alaska. Caelus has announced a major oil find in this exploration program. NordAq also owns some leases in NPR-A.

The Alaska Dispatch News originally broke this story.