Ex-Afren executives guilty of fraud and money laundering

 Osman Shahenshah and Shahid Ullah, former executives of now-defunct oil company Afren were found guilty of fraud and money laundering offenses from which they personally received more than $17 million and laundered $45 million by deceiving the Afren Board into agreeing a $300m business deal.

Following a shareholder revolt which objected to their £6.6m and £3.8m salary packages and faced with the possibility of lower remuneration in future, the two hatched a fraudulent scheme to secretly increase their pay, the UK’s Serious Fraud Office said on Wednesday.

Shahenshah who served as CEO and Ullah who served as COO created a side deal with one of Afren’s Nigerian oil partners that would allow them to benefit from payments Afren would make.

The men recommended a transaction to the Afren Board, who then approved payments of hundreds of millions of dollars without knowing that Shahenshah and Ullah stood to personally benefit.

The transaction was claimed to be necessary to maintain the business partnership, but the fact that Shahenshah and Ullah stood to benefit personally remained hidden, the SFO said.

Lisa Osofsky, Director of the Serious Fraud Office said:

“Greed motivated this crime. Osman Shahenshah and Shahid Ullah failed in their duties as company directors, abused their positions and lied to their board.

“Instead of acting in their company’s best interests, they used Afren like a personal bank account to fund an illicit deal, with no regard for the consequences.

Shahenshah and Ullah had struck a side deal with Oriental which led to 15% of the $300m was then paid out to a Caribbean shell company controlled by the defendants..

“Fraud corrodes confidence, undermines trust and damages the reputation of the UK at home and abroad. It is our mission to bring those committing this crime to justice.”

The criminal investigation into the former CEO and COO of the collapsed oil and gas exploration company began in June 2015 following a self-report by the company, with the defendants charged with four offenses in September last year.

Shahenshah and Ullah recommended that the Afren Board agree to a $300m payment to Oriental Energy Resources Ltd, the company’s oil field partner in Nigeria. Unknown to the Afren board, Shahenshah and Ullah had struck a side deal with Oriental which led to 15% of the $300m was then paid out to a Caribbean shell company controlled by the defendants.

The men then used the $45m to purchase luxury properties in Mustique and the British Virgin Islands. A smaller portion of the $45m laundered was split between Oriental employees and a close network of Afren staff dubbed ‘The A Team’, the Serious Fraud Office said.

The two men were found not guilty on a separate charge relating to a management buyout of another of Afren’s business partners.

Per SFO, sentencing has been scheduled at Southwark Crown Court for Monday October 29, at 10.00am.

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Posted on October 25, 2018 with tags .