With the state facing an estimated $750 million shortfall in next year’s budget, Republican Lt. Gov. Billy Nungesser rolled up his sleeves to work on finding a solution of his own.
The result: an ambitious, potentially transformative arrangement that on paper proposes reviving Louisiana’s once dominant shipbuilding industry, creating more than 30,000 new jobs and investing nearly $1 billion into charitable endeavors involving education, health care and housing initiatives.
Too good to be true? That’s Gov. John Bel Edwards’ take.
Despite initiating a global correspondence and telling his letter’s recipients — who included U.S. Secretary of State John Kerry and the Iraqi prime minister — that he was working at Edwards’ behest, Nungesser actually kept the newly elected Democratic governor in the dark, both men say.
Instead, Nungesser worked in conjunction with state GOP Chairman Roger Villere on the arrangement. It involves a Lake Charles refinery, a Delaware corporation called Alexandros Inc. and the government of Iraq, according to emails and documents The Advocate obtained in a public records request.
To be sure, it’s unclear what — if anything — the state stands to lose if the arrangement never materializes. Both Nungesser and Villere said they still believe it to be a “real deal” and one that could be of tremendous benefit to Louisiana’s sinking economy. That’s been disputed by the leader of Iraq’s oil export agency, who told a Baghdad-based reporter from The Washington Post that the arrangement was “100 percent not real.”
Edwards’ office has completely distanced itself from the deal and reiterated that the Louisiana Economic Development agency — not the lieutenant governor — is responsible for recruiting new business to the state.
“The Governor’s Office and Louisiana Economic Development have absolutely no knowledge of or involvement in this agreement with Alexandros Inc.,” said Richard Carbo, a spokesman for Edwards, in an email. “While Gov. Edwards will work in a collaborative nature with the lieutenant governor, he has given no such directive for the lieutenant governor to engage in these negotiations.”
In an interview Thursday, Nungesser said he has apologized to the governor for keeping him out of the loop, but he added his biggest mistake was having signed letters that he had not read.
Rather, Nungesser said he believed he was simply signaling his support for new business expanding in Louisiana at the request of Villere, a longtime friend and political ally.
“It’s something that is embarrassing, but it happened and we’ll move forward,” Nungesser said. “Hopefully nothing will come of it. But I apologized to the governor, and that’s all I can do.”
Nungesser’s office issued a news release in March, which was sent solely to The Washington Post, announcing that Louisiana was on the cusp of landing its biggest industrial project in generations.
The purported deal involved Alexandros signing a 25-year arrangement to become the exclusive shipping company for Iraq’s oil export agency, the State Oil Marketing Organization , putting it in charge of transporting as much as 150 million barrels of Iraqi oil each month, the documents show.
To do so, Alexandros proposed reviving activity at the former Avondale Shipyard on the Mississippi River in suburban New Orleans — a 260-acre facility that its owner, Huntington Ingalls Industries, closed in late 2014.
For years, Huntington Ingalls and state economic officials have been unable to lure new business activity to the site — once Louisiana’s largest private employer — even after dangling more than $200 million in incentives to a potential successor.
Now, Alexandros is proposing to engineer, design and build more than 40 new vessels, including “super-tankers,” that would be capable of hauling 200 million barrels of oil per month.
Crude oil production in Iraq averaged 4 million barrels per day last year, making it the second-largest oil producer in OPEC, according to the federal Energy Information Administration.
According to Nungesser’s release, Iraq’s oil export agency had signed off on Alexandros’ request to partner with Pelican Refining Co. in Lake Charles to purchase light and heavy crude oil from the export agency.
Louisiana had not agreed to make any payments or incentive agreements as part of the deal, but records show that Nungesser signed off on documents and letters seeking assistance from Iraqi and U.S. State Department officials on behalf of the state. The correspondence sought help from dignitaries to set up meetings and assist Alexandros CEO Markos Fuson as he traveled to Baghdad to sign the deal.
In the letters and his subsequent news release, Nungesser identified himself as a top economic development recruiter for Louisiana.
“The honorable governor of Louisiana, John Bel Edwards, has given me a directive to expedite economic stimulus for the state of Louisiana,” said a letter from Nungesser to Iraqi Prime Minister Haider al-Abadi. “This request for Your Excellency’s advocacy is part of my office’s effort to fulfill that directive.”
Fiscal woes cited
In the letter, Nungesser requested that al-Abadi sign a joint news release announcing the deal. He also asked the Iraqi prime minister to provide security and logistical support for Fuson as he made his way through Iraq to finalize the contracts.
Records show that a similar letter was addressed to the U.S. ambassador to Iraq, Stuart Jones, as well as to Kerry, with Nungesser again asserting his role as the state’s economic development leader.
“It is with sincere gratitude that I, Billy Nungesser, as the lieutenant governor of the state of Louisiana, respectfully request the Department of State’s additional advocacy to the Republic of Iraq on behalf of the state of Louisiana,” he wrote.
The letter also spelled out Louisiana’s current fiscal woes.
“The oil contracts and joint venture shipping agreement that Mr. Markos Joseph Fuson will be signing in the Republic of Iraq with SOMO provide a significant opportunity for Louisiana to address our projected 2017 budgetary shortfall,” Nungesser wrote in the letter, which states that it was copied to Edwards.
However, Edwards never received a copy, his spokesman said.
In an interview last week, Nungesser denied writing or even reading the letters. Rather, he said, Villere, the state GOP chairman, had told him a business considering expanding in Louisiana wanted a letter expressing the state’s mutual interest.
Nungesser also blamed his staff, whom he relies upon to vet his documents. In this case, the letters never should have reached his desk, he said.
“I would have never used the governor’s name without his permission,” Nungesser said. “We’re changing the way some things flow in my office to make sure this doesn’t happen again.”
Nungesser said he has never met Fuson or any of the others involved in the deal.
But despite Edwards’ skepticism, Nungesser hasn’t lost hope.
“Roger assures me that this, to his belief, is the real deal and a good opportunity that is happening,” he said.
The Governor’s Office cast doubt on whether the deal Nungesser was working on is grounded in reality. “Efforts by our office to obtain additional information regarding the request have gone unanswered,” spokesman Carbo said.
Fuson, the Alexandros CEO, could not be reached for an interview.
In an email, Fuson said he was overseas on a business trip to carry out the work described in the state’s news release. But he offered to set up a joint interview “with myself and His Excellency, Prime Minister Haider al-Abadi, in the next week or so.”
The Advocate wasn’t alone in trying to reach Fuson last week. Carbo said the Governor’s Office also reached out to Fuson after learning of the deal but that Fuson backed out of a scheduled call.
Based in Delaware, Alexandros describes itself as a “healing” company with a background in medical technology. Its website identifies the deal with Pelican Refining, but it does not list any other tangible projects besides a proposal to create a cancer treatment center that uses proton laser therapy.
According to Alexandros’ proposal, Fuson had committed to investing 100 percent of his profits from the joint venture into Louisiana’s motion picture industry. He then pledged to invest his share of the film profits into a “to-be-established” charitable foundation that would offer education, health care and housing assistance to “minorities in Louisiana.”
All told, the proposal suggested the project would generate about $1 billion over two decades.
Pelican Refining, located in Lake Charles off the Calcasieu River, produces asphalt and road oil; it hasn’t processed sweet and heavier crudes in at least a decade, according to the state Department of Natural Resources.
Asked by The Advocate whether Pelican had entered into any agreements with Alexandros, a Pelican official declined comment. “That’s obviously private commercial business,” said Don Nelson, Pelican’s general manager.
The Washington Post was notified about the deal via a single news release. According to letters Nungesser sent, the “internationally esteemed media outlet” was given the exclusive scoop on the announcement.
The Post did not report the story, but Baghdad reporter Mustafa Salim interviewed Falah Alamri, the director general of Iraq’s oil export agency, about the news release.
Alamri said the contracts mentioned in the release were “a hundred percent not real,” adding, “We don’t have any such deal.”
Some industry experts cast a skeptical eye toward the deal’s premise, based on the amount of oil that was said to be available to be transported to Louisiana. “I would find it hard to believe, because I don’t think any country would put all of its eggs in one basket,” said Eric Smith, associate director of the Tulane Energy Institute.
But at least one person affiliated with the deal insisted that it’s authentic.
“I know they’re real — 100 percent,” said Jeff DeRosia, an operations manager for Grand Isle Shipyard in Galliano, who is listed in the Alexandros documents as the company’s executive vice president of domestic sales.
DeRosia said he’s not surprised by the Iraqi denial.
“Until they get everything signed off on, he’s not going to reveal any information,” said DeRosia. “This is the bottom line: Everything we’re doing is for the good of Louisiana.”
GOP head involved
The spokesman for the newly elected Democratic governor also questioned why Nungesser, a Republican, was working with the GOP chairman, who has no authority to speak on behalf of the state.
“It is clear that the chairman of the Louisiana Republican Party is very involved in this matter,” Carbo said. “However, Mr. Villere has no role within state government, and we are unclear as to whether he stands to benefit from negotiating this questionable agreement. Nonetheless, he does not speak for or on behalf of the state of Louisiana or Gov. Edwards’ administration.”
Villere, according to emails, was the one who first notified Nungesser about the Alexandros deal after being briefed by DeRosia. He was copied on every email between Nungesser and Alexandros and every letter Nungesser sent to state dignitaries.
Villere even wrote his own letter in February to both the prime minister of Iraq and the country’s minister of oil, Adil Abd al-Mahdi, outlining the “urgent next steps that the state of Louisiana and the United States insist upon,” which included granting legal authority from Iraq’s oil export agency and issuing contracts to Pelican Refining.
Villere minimized his role in the arrangement, saying he only connected Nungesser to the business contacts at the request of DeRosia, whom he knew to be a reputable businessman in the state.
He also said he does not stand to personally gain from Alexandros’ deal.
“I’m always promoting Louisiana to do business. That’s all I was doing,” Villere said. “Was it worded perfectly? I don’t know. I’m not any kind of officer of the state, and I didn’t mean to represent myself as anything more.”
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