Former Afren Bosses to Face Fraud Charges – SFO

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The United Kingdom’s Serious Fraud Office has said it will charge two former executives of collapsed oil company, Afren Plc, with alleged fraud over payments they received through secret companies relating to over $400m business deals in Nigeria.

Afren, an oil and gas exploration and production company once valued at $2.6bn on the stock market, collapsed into administration in July 2015 after it was unable to service heavy debts.

The SFO, in a statement on its website on Tuesday, said the former Chief Executive Officer, Osman Shahenshah, and former Chief Operating Officer, Shahid Ullah, would appear today (Wednesday) at Westminster Magistrates Court charged with two counts of fraud by abuse of position and two counts of money laundering.

It said they “stand accused over payments they received via secret companies they controlled relating to over $400m of Nigeria business deals.”

“The alleged fraud is claimed to have led to the collapse of the $2.6bn oil giant by their administrators, who in related civil claims, are seeking damages in excess of $500m from the defendants and a Nigerian associate,” the SFO stated

The SFO opened its investigation into Afren in June 2015, according to the statement.

Afren sacked its chief executive, chief operating officer and two associate directors after an independent review into unauthorised payments in 2014 found evidence of “gross misconduct”.

In a counterclaim to the administrators’ legal action, Mr Shahenshah has alleged the Afren board knew about the payments from Oriental Resources. He claimed wrongful dismissal and said the scandal had damaged his reputation.

The company’s shares lost nearly all of their value after being hit by a slump in oil prices, the dismissal of the top executives and the absence of proven or probable reserves at an oilfield in the Iraqi Kurdistan Region. Afren went into administration in July 2015 after failing to secure support for a vital refinancing and restructuring plan. The SFO opened its investigation into Afren in June 2015.

The review began in July 2014 to determine if three legitimate transactions with Afren’s partners in Nigeria, Oriental Energy Resources Limited and AMNI International Petroleum Development Company Limited, in 2012 and 2013 should have been disclosed to the market.

The review found that Shahenshah and Ullah had agreed with Oriental to receive 15 per cent of the net cash flows that was due to Oriental from the Ebok oil field for five years from 2013 in exchange for $400m in funding by Afren.

Oriental paid $45m in 2013 into a special purpose vehicle owned and controlled by the two top executives, who used the funds to pay bonuses to themselves and selected employees of Afren, the review found.