This week, in a landmark decision by UK’s Supreme Court, the ex-wife of a Nigerian oil tycoon won a potentially game-changing divorce settlement. It was argued that Michael Prest tried to conceal assets from his wife by hiding property in an offshore company.
The decision to uphold an appeal by Prest’s wife was unanimous – with seven justices ruling in favor of Yasmin Prest, who sought a share of seven properties held in trust by Petrodel Resources Ltd., a company under Prest’s control.
At a previous hearing, Yasmin was awarded a lump sum of £17.5m (around $27 million dollars). Prest claimed that he could not pay this amount because he was £48m in debt. Yet, Petrodel Resources and multiple related endeavors were found to be registered in the Isle of Man. This case brought up issues of piercing the “corporate veil” which treats companies and their shareholders as separate entities. Prest argued that because of this, his properties shouldn’t be considered as part of a divorce settlement. Yet, because Prest knowingly hid their existence, controversy surrounded his actions and motives.
This groundbreaking decision shatters the potential loophole offered by those trying to protect their assets from a partner through businesses. It was ruled that, because Prest intentionally tried to conceal the existence of companies from the court, it appeared that he was purposely trying to protect his own assets from a divorce settlement.
The ruling is a game changer for divorce proceedings among the wealthy because assets cannot be protected through corporate structures. If this decision had gone in favor of the husband, there would have existed an looming threat of assets being hidden away to avoid the repercussions of a lawful divorce settlement.