ENI-Saipem Hit by Corruption Scandal on Algeria Business
The North Africa Journal | Italian oil and gas industry contractor Saipem is embroiled in a corruption scandal in its Algeria operation that forced the resignation of its veteran CEO Pietro Franco Tali. The company’s engineering and construction Chief, Pietro Varone was suspended pending the ongoing investigation. Energy giant ENI, which owns 40% of Saipem announced the resignation of its own CFO Alessandro Bernini.
The investigation led by a Milan court is currently focusing on alleged bribery, with Saipem said to have made illegal payments to executives and individuals linked to Algerian oil firm Sonatrach in exchange for a $580 million gas pipeline contract. In Algeria, where the story has been known for years, sources say the amount involved in paying for favors reached $200 million in 2007 paid to Sonatrach executives and other intermediaries, possibly reaching Minister Khelil and Bedjaoui (see associated article). Saipem wanted to insure that the it would get the construction of the gas pipeline called GK3. The pipeline project led by Saipem was part of a bigger gas transportation project involving other companies from the US and Germany. GK3 was a 350 kilometer pipeline that would allow Sonatrach to expand its transport capacity to accommodate 9 billion cubic feet of gas moving from Algeria’s gas fields to an Italian gas pipeline via the island of Sardinia.