The former CEO and chief operating officer (COO) of collapsed oil company Afren have been convicted of fraud and money laundering over a $300m (£232m) oil business deal, marking a significant legal victory for the Serious Fraud Office (SFO)
At Southwark Crown Court, former CEO Osman Shahenshah and ex-COO Shahid Ullah were found guilty of fraud and money laundering offences from which they personally received more than $17m and laundered $45m 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 court was told.
Shahenshah and Ullah created a side deal with one of Afren’s Nigerian oil field partners, Oriental Energy Resources Ltd, 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.
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 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 offences in September last year.
Lisa Osofsky, director of the SFO, 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.’
The two men were found not guilty on a separate charge relating to a management buyout of another of Afren’s business partners.
They are scheduled to be sentenced at Southwark Crown Court on 29 October.
Report by Pat Sweet
