Todd Kozel is said to be one tough American.
There are stories of how, shortly after the fall of the Saddam Hussein regime, the one-time George-Cheney campaign contributor marched into the deserts of northern Iraq to negotiate huge oil deals with Kalashnikov-wielding Kurds. Mr Kozel didn't blink.
True or not, he gained a certain mystique from such tales. His Kurdistan-focused company, Gulf Keystone Petroleum (GKP), has fascinated the City, and shares have surged on some of the most extraordinary finds the oil market has seen in years.
Just this month, the estimated oil reserve of GKP's Shaikhan discovery went up more than 150 per cent to 4.9bn barrels. This is a conservative measure, but still makes the find a massive, world-class asset.
GKP is now worth more than £1.2bn, making it one of the biggest companies on the junior AIM market and a likely contender for promotion to the main board of the Stock Exchange. One day, the company, at which Mr Kozel is both executive chairman and chief executive, could be an oil major.
But the company has occasionally frustrated as much as it has wowed. There have been questions over the identities of certain partners, while advisers are known to have told GKP that it should provide the market with more information over several issues, including details of trusts that hold significant stock.
This has led to several clashes. The reason RBC Capital Markets stopped acting as broker in autumn 2009 was due to "poor communication" and "personality clashes", according to an industry source. Jeremy Asher, a non-executive director, is understood to have left last April as he was angered by the lucrative remuneration awards that executives were receiving.
If only the critics had known it, much of the information they wanted has been publicly available for months in a Florida courthouse. Since August, swathes of motions and testimony related to a $100m divorce fight have been placed with the Sarasota circuit court.
Which is a shame, because they make for a rip-roaring read: there's a Lithuanian mistress, a socialite wife, strip clubs, some of the world's most glamorous bars and restaurants, extraordinary shopping bills, lawyers who have represented the world's greatest golfers, and, of course, one tough American.
Juicy though the details of this divorce might be, the case's importance is that it is slowly shedding light on the ownership structures of those trusts, and the way that GKP goes about its business.
The socialite and the mistress
Ashley Kozel started divorce proceedings against her husband last August after 18 years of marriage. She is represented by Jeff Fisher, who clearly likes to hit the fairways. He previously acted for Greg Norman in a divorce that cost the former world number-one golfer a reported $105m. Mr Fisher is also thought to have at least given advice to Tiger Woods in his well-publicised divorce. Another attorney at his Palm Beach-based firm, Fisher & Bendeck, once defended a newspaper in a defamation case brought by the high-spending golfing star John Daly.
Mrs Kozel seems to be something of a fixture at Sarasota's grandest events, and last year she was photographed attending a gala dinner that raised $300,000 for the Conservation Foundation of the Gulf Coast.
Mr Kozel, meanwhile, was spending much of his time in Europe building up GKP. The couple lived separately and grew apart.
He is now in a relationship with a Lithuanian woman in her mid-20s, called Anna. According to his deposition, Mr Kozel lavishes gifts on his girlfriend. In October 2007 alone he spent $10,320 at some of Milan's top fashion houses, including Prada and Versace.
This spending, Mrs Kozel's lawyers claim, is just one example of "marital waste" – money spent of which she argues she is still entitled to half. The couple have assets that can be easily valued and divided, such as properties, three jet skis, and a wine collection worth more than $700,000.
What are more difficult to value are Mr Kozel's business assets. In total, Mrs Kozel is fighting for $100m and is demanding extensive records of trusts and shareholdings that her husband's team argue are already in the public domain.
US companies that Mr Kozel has or had interests in – Texas Keystone (TKI), Falcon Drilling and Falcon Partners (FP) – are named as defendants. In one motion, TKI and FP say of the information requests: "This is a proverbial 'fishing expedition'. For example, Husband as a shareholder in TKI has a very limited right to review corporate documents."
But the dispute that really catches the eye is over trusts related to GKP.
A question of trusts
Mrs Kozel's legal team claims her husband has been squirrelling away assets in trusts as "divorce planning", so that she will not be able to get hold of some of his fortune. They describe these trusts as Mr Kozel's "alter egos".
Gulf Keystone Petroleum LLC (GKP LLC) owns 5.25 per cent of GKP's stock. The named shareholders of LLC are Mr Kozel and Ali Al-Qabandi, the business development director at GKP.
Mrs Kozel alleges that her husband owns between 40 and 50 per cent of GKP LLC, worth up to $60m depending on how the shares are performing. However, Mr Kozel says that although he is named as owning 40 per cent, the majority of that stake is held on behalf of his father and brothers.
The Gokana Trust is GKP's eighth-biggest shareholder, with just shy of 4 per cent of the stock. Mrs Kozel's legal team allege in one motion that this is "a trust with $90m of marital assets in it".
Jersey-based Gokana was once called Emerald. Gokana's trustee is called Emeralp. This seems to have confused all parties with Emerald and Emeralp often used interchangeably.
Mrs Kozel's team argues that Mr Kozel used Gokana to place the $90m "beyond the jurisdiction of this court". The husband put the money there, the lawyers allege, because Jersey is "a notorious asset protection jurisdiction" where Mrs Kozel would struggle to get any of the money that a judge might eventually decide she is owed.
In April 2009, Mr Kozel transferred 20 million shares to what was then Emerald in a move described as "by way of gift" and "as part of advised estate planning". It has emerged that the controlling shareholder of Emeralp, the trustee, is Markus Hugelshofer, Mr Kozel's Swiss lawyer.
A second tranche of shares, transferred in August 2009, has caused quite a stir. Mr Kozel lent Mr Hugelshofer nearly £1m to buy 10.35m shares on behalf of Gokana as part of a fundraising, the proceeds of which were to be used to explore and drill in Kurdistan.
An unfortunate phrasing in Mr Kozel's deposition, though, means that Mrs Kozel's team argues that the transfer was of "questionable legality", and that the loan was made during a time when they say that he was not allowed to trade shares:
Fisher: How did you lend money to the Gokana Trust?
Kozel: When we did the fund-raising in July of '09, we approached all of our top shareholders. And it would be just not me, it would be the Board of Directors, finance director, chief operating officer. Legal, maybe not so much. Approached all of them trying – you know, "do you want to protect your dilution?" ... The other directors approached Gokana to see if they wanted to participate. Gokana did. Markus made the decision, asked me if I would loan money for them to participate. He believed in me. I loaned him money. That's where the loans are coming back from. That was a board approach, and Todd Kozel [referring to himself in the third person] excluded himself.
In the file, Mr Fisher has highlighted the "Legal, maybe not so much" phrase. However, this was not some sort of admission of guilt. It is understood that Mr Kozel was in fact saying that GKP's in-house legal team did not approach shareholders over the fundraising.
At least that exchange between Mr Fisher and Mr Kozel, which took place in December, was civil. It appears that there was great hostility between the two, their showdown dripping with bitter sarcasm. At one point, Mr Fisher was asking about a number of credit card bills, including $4,434 spent on food and drinks at the five-star Hotel de Paris in Monaco.
Fisher: Well, we don't have time to go through all of these charges, but we will another day.
Kozel: I'm looking forward to it.
Fisher: I am too. I am too. We'll find time and make – you know what? If we could – if we could maybe do it at some of these nice restaurants, it will make it less – less painful.
Kozel: That's not possible. I'm too busy trying to make money.
Fisher: Well, after spending all this money, you'd better work hard.
Kozel: Well, you're arguing over a whole bunch of Gulf Keystone that's responsible for this, my friend.
Mr Kozel's deposition also revealed that he regularly entertains customers and company members at a number of strip clubs, which are put through GKP's expenses. These include the Windmill International in London and the Bourse Restaurant in Zurich.
Questioned about one strip-club bill that came to more than $5,100, Mr Kozel replied: "When we do it, we take a lot of people and do it properly."
The deposition also teases out some detail on the Etamic Trust. In 2009, this group was granted a 50 per cent stake in GKP's main operational vehicle, and little information was given about the identities of those behind Etamic, except that it was a Beirut investment fund. There was press speculation that Gulf Keystone directors could even be involved, though this was denied.
Last year, GKP bought Etamic out of the joint-venture for $12m, after the Middle Eastern group missed some of its payments. When questioned, Mr Kozel makes clear that he was in no way related to Etamic, as some had speculated, and said that the trustees were "two bankers in Beirut". He also told the court that his lawyer, Mr Hugelshofer, had helped the bankers establish Etamic.
Mr Kozel currently has an asset injunction placed against him. This means that he is unable to trade any of his GKP shares, which account for 0.49 per cent of the company. His lawyers have argued that he would not sell up anyway as that would give the wrong signals to the market, that he was not confident that the stock price would continue to rise. GKP has not announced this restriction, and there is no need to, under AIM rules.
However, together with the stock of GKP LLC and Gokana, nearly 10 per cent of the company's shares have been affected by this divorce. And there is a feeling that the divorce will not be finalised this year, which is not what GKP needs, when it is already involved in another ugly legal case.
In New York and London, a US company called Excalibur Ventures is trying to claim up to 30 per cent of GKP's interests in Kurdistan. GKP has argued that this claim is "spurious" as it relates to an old deal Excalibur had with Kozel's family company, TKI, not GKP.
Again, then, there might be confusion over just how all these various companies are interrelated. Kozel vs Kozel should, eventually, establish just how the tough American has organised this otherwise most impressive of businesses.Reuse content