The former chief executive and chief operating officer of Afren, the FTSE 250 oil company once chaired by the late Nigerian oil minister Rilwanu Lukman and which collapsed in 2015, will be charged with criminal offences relating to an alleged £45m fraud.
The charges follow a two-year investigation by the UK’s Serious Fraud Office into alleged payments to the two Afren executives from a Nigerian oil partner.
Tomorrow, Osman Shahenshah, 55, the former chief executive of Afren, faces four counts of fraud and the use and possession of criminal property.
Shahid Ullah, 58, the oil company’s Texas-based former chief operating officer, faces four similar counts, according to a court filing seen by the Financial Times.
Oriental, along with Mr Shahenshah and Mr Ullah, and Alhaji Indimi — Oriental’s founder and one of Nigeria’s richest men, whose son is married to the daughter of the country’s president, Muhammadu Buhari — have separately been hit with a civil claim from Afren and its administrators, AlixPartners. Mr Shahenshah and Mr Ullah have countersued, claiming damage to their reputation.
Both men have been summoned to face the charges formally at Westminster Magistrates’ Court on Wednesday, the filing shows. UK-listed Afren was hit by a payments scandal in 2014 after an independent review by Willkie Farr & Gallagher, the US-headquartered law firm, found irregularities around expense payments, leading the oil firm to report itself to the SFO.
The oil group said it had “taken steps to halt its previous practices in relation to such expenses payments”.
The Willkie Farr report alleged that Mr Shahenshah and Mr Ullah struck a secret financing deal in October 2013, whereby Oriental agreed to pay 15 per cent of cash flows from the Ebok Nigerian oilfield over four years to an offshore entity registered in the British Virgin Islands and controlled by Mr Shahenshah and Mr Ullah.
At the time, Willkie Farr said the two men used the funds to pay “extraordinary bonuses” to themselves. Afren’s board fired them in October 2014 for gross misconduct.
Afren, a former FTSE 250 company that had a peak stock market valuation of £1.6bn, then collapsed in 2015 after the oil price slump and the failure of exploration at its oilfield in Iraqi Kurdistan caused a cash crisis. Stephen Gentle, a lawyer for Mr Ullah at Simmons & Simmons, declined to comment, but Mr Ullah has previously denied wrongdoing.
David Grant, a solicitor for Mr Shahenshah at Locke Lord, told the FT: “My client is fully aware of the proposed charges, which are considered to be without foundation. Accordingly, they will be vigorously defended.”
The SFO declined to comment on the case. According to the charges, Mr Shahenshah and Mr Ullah are accused of accepting £45m from Oriental Energy Resources, “knowing or suspecting that it was criminal property, namely the proceeds of fraud”, through a Bermudan offshore vehicle.
Oriental Energy was a Nigerian-based company with which Afren struck a partnership to gain access to oilfields. The two men are also accused of paying $8.2m from the offshore vehicle to seven named former employees of Afren.
