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Bacon's Bahamas row reaches court in New York - Neighbour accuses billionaire of waging a smear campaign

Published:Wednesday | August 20, 2014 | 12:00 AM

 By Kara Scannell in New York

A battle over Clifton Bay, a postcard-perfect patch of turquoise waters off the western coast of the Bahamas, has raged for years between its billionaire hedge fund owner and a Canadian clothing mogul. It has now spilled into a New York courtroom in which one side hopes the score will finally be settled.

Louis Bacon, the billionaire founder of hedge fund Moore Capital Management, last week asked a US court to try to gain access to videotaped footage that he believes will help him prove that Peter Nygard, founder of clothing manufacturer Nygard International and his Bahamian neighbour, has engaged in a smear campaign against him.

The backdrop is a long-running legal feud involving several lawsuits over whether Mr Nygard is, as Mr Bacon alleges, harming the environment around Clifton Bay, a beach made famous by James Bond movies, where both men have compounds.

Mr Nygard's lawyer said he planned to file a counter lawsuit, adding that "this lawsuit is a continuation of Louis Bacon's malicious campaign against Peter Nygard with the objective of obtaining Mr Nygard's Bahamian property (Nygard Cay), through illegal means, and to wrongfully continue to damage Mr Nygard's businesses and reputation".

The setting for the feud is the exclusive Lyford Cay community on Clifton Bay. In 1993 Mr Bacon bought a 150,000 sq ft estate in a gated community. His neighbour is Mr Nygard, who also owns a large estate and has been a resident of the Bahamas since 1986.

Mr Nygard has built a "Robinson Crusoe playground" with volcanic, smoking Mayan temples, a disco club and 20 themed cabanas where he has hosted celebrities, according to his website.

Their battle was seared following a 2009 fire at Mr Nygard's property. Mr Nygard sought permission to redevelop it but this was rejected by the Bahamian government, according to court filings. Mr Bacon's court filing in the New York case asserts that Mr Nygard believed Mr Bacon was behind the rejection and a critical CBC broadcast. Mr Nygard has filed a libel lawsuit against the CBC.

The founder of the fashion line has previously said, according to a statement published by the Canadian Broadcasting Corporation, that he supports the environment and that reports about his effort to rebuild have not been presented "accurately".

In March last year Mr Bacon, a self-described environmentalist, co-founded Save the Bays, a non-profit coalition made up of neighbours including Robert Kennedy Jr and Nicholas Brady, a former US Treasury secretary, with a focus on Clifton Bay.

Two months later Save the Bays asked a Bahamian court to stop sand dredging and other work to expand the property. A second lawsuit complained of a lack of transparency over Mr Nygard's plans. A Bahamas court issued an injunction ceasing work and enjoined the government from considering future applications for Nygard Cay.

Mr Bacon alleges in the New York case that Mr Nygard has retaliated over the rejection of redevelopment permits by engaging in a smear campaign, including paying journalists to write stories and posting of manipulated news clips on YouTube suggesting Mr Bacon had engaged in insider trading.

Mr Nygard responded to the Save the Bays lawsuits by saying: "The required environmental assessments have been completed and are in the hands of the government, including the most recent assessment completed in February 2014. These assessments confirm that there has never been any adverse environmental impact." He called legal actions by Save the Bay "a complete farce and an improper manipulation of the public process to acquire Nygard Cay".

Mr Bacon is trying to use US courts to obtain evidence relating to five defamation lawsuits pending in Bahamian courts, in which he is suing several defendants but not Mr Nygard, and the two lawsuits by Save the Bay.

His application to the New York court claims "smoking gun" evidence has emerged from a 28-year-old videographer hired by Nygard International to chronicle the magnate. Mr Bacon's lawyers are asking the US judge to order the videos be turned over.

(c) 2014 The Financial Times Limited