Earlier this month, the U.K.’s Serious Fraud Office charged two former Unaoil executives with corruption for allegedly paying bribes to win lucrative contracts in Iraq on behalf of its client SBM Offshore, a company that produces floating containers for use in oil production. Another former director who is living in Monaco is subject to an extradition request.
Basil Al Jarah, Unaoil’s former partner in Iraq, has been charged with two offences of conspiracy to make corrupt payments, contrary to section (1) of the Criminal Law Act 1977 and contrary to section 1 of the Prevention of Corruption Act 1906.
Ziad Akle, Unaoil’s former territory manager for Iraq, has been charged with one count of the same offence.
The charges relate to alleged corrupt conduct within Unaoil between June 2005 and August 2011. Both directors will appear before Westminster Magistrates’ Court on Thursday, 7 December. The executives and the company deny the allegations, and have refused to comment further.
A third man, Saman Ahsani who was Unaoil’s commercial director, is subject to an extradition request to Monaco on related charges. Lawyers suggest that this will not be refused.
The SFO opened its investigation into the Monaco-based oil company—which provides operational and advisory services to the oil and gas industry—in March 2016, following a series of reports published by the Australian newspaper The Age. These revealed the use of consultants by a string of big international companies as a way of winning contracts in areas such as the Middle East, ostensibly through illicit payments.
The ongoing Unaoil probe has resulted in several other parties being investigated for possible collusion. Among those that have been named as part of the SFO investigation are subsidiaries of KBR, the engineering, procurement and construction group; Petrofac, a U.K.-listed oilfield services company; oil services company Amec Foster Wheeler; energy services company Wood Group; and the U.K. units of Swiss engineering company ABB (which self-reported the incidences of bribery to the agency).
If one wants to consider how seriously the SFO deems Unaoil’s activities, then think on this: The agency was given additional (though unspecified) “blockbuster” funding by the Treasury last year to pursue its investigation.
And the impact of the widening SFO probe has already been felt in those companies under the agency’s spotlight. Amec Foster Wheeler, for example, saw its share price dive by 10 percent, just as it was in the middle of a planned £2.2bn (U.S.$2.9bn) merger with Wood Group (which has also carried out its own internal probe into its past dealings with Unaoil). Petrofac, on the other hand—which is under SFO investigation over allegations that it paid Unaoil to secure consultancy contracts worth US$2bn for work in Kazakhstan between 2002 and 2009—saw half of its market value wiped out in a flash when the agency moved in on it back in May. The SFO announcement also resulted in the company’s chief operations officer, Marwan Chedid, being suspended and forced to resign from the board, and its chief executive, Ayman Asfari, excluded from all matters connected to the investigation.
If one wants to consider how seriously the SFO deems Unaoil’s activities, then think on this: the agency was given additional (though unspecified) “blockbuster” funding by the Treasury last year to pursue its investigation.
And as for Unaoil, its fortunes have dwindled since the SFO officially started poking around into its affairs early last year. On 10 October—more than a month before the SFO announced it was bringing the charges against the company’s former directors—the company issued a press statement which said that “the press articles and the investigations have had a devastating impact on the business of the Unaoil group, with a number of companies in the group having to go into liquidation as a result.” It added that the company is working hard to complete existing engineering and construction contracts, as well as pay its creditors.
Unaoil has tried to ward the agency off in the courts. Last year, it launched legal action against the SFO, alleging that it had unlawfully misused its powers. Its lawyers told the high court that investigators working for the SFO unlawfully raided its headquarters in Monaco and seized a large cache of its documents, phones, and computer equipment in a “cavalier” fashion. Unaoil alleged that the raid amounted to an “excessively wide fishing expedition rather than a proper exercise of” its legal powers. The judges, however, ruled against the company.
The SFO’s investigation into Unaoil—as well as those companies that engaged its services—highlights several issues that compliance professionals should note.
Statement from Unaoil
In March 2016, the Unaoil group and the Ahsani family were the subject of a number of press articles, which contained allegations that certain individuals had paid bribes to assist other companies to win business. These allegations have been vigorously denied.
As a result of the articles, the U.K. SFO commenced an investigation which is ongoing. At this time, it is not possible to provide further comment on the investigation.
While the press articles and the investigations have had a devastating impact on the business of the Unaoil group, with a number of companies in the group having to go into liquidation as a result, the remaining core team of employees is working hard in Iraq to ensure that Unaoil’s obligations to its customers are met in relation to existing engineering and construction contracts, and to ensure that monies owed to Unaoil are received in order to allow the company to make payments to its creditors.
Unaoil is grateful to those of its suppliers, customers, banks and advisors who continue to provide support during this period.
Source: Unaoil
First, the SFO is increasingly flexing its muscles—and getting results. The agency, which has never been blessed with a large budget (lawyers regularly joke that visitors aren’t offered coffee when they go there because of a lack of cups), is able to get additional funding if the investigation warrants more public money and if pursuing the case is in the public interest. In fact, according to Jeremy Wright, the U.K.’s Attorney-General, the SFO has applied for—and received—eight rounds of “blockbuster” funding since 2010, and all of these cases are still under active investigation.
Second, it’s not necessarily the SFO’s finances that companies need to worry about: It’s their own. A terse statement of less than 50 words saying that the agency is investigating your company is enough to worry investors, dent your reputation, and wipe away millions of dollars in market value overnight (as was the case with Petrofac). The fact that the SFO dictates the pace of any investigation (which can proceed very slowly) just adds to the burgeoning expenses that a company needs to contend with, as they fork out for lawyers and data retrieval experts to ensure that the organisation can co-operate, defend itself, and/or cut a deal.
The SFO was slated for the scrap heap in the run-up to the June general election. But that decision seems to be on hold, and the agency’s possible shaky future is not impacting its willingness to investigate cases that can take years. If anything, its uncertain fate is driving the agency harder than ever before.
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