After the loss-making year 2021, the subsidiary of the Italian hydrocarbon giant Eni must deal with a financial sanction imposed by the Algerian justice.
On February 14, the judges of the Sidi M’hamed court in Algiers sentenced Saipem in first instance to a fine of 192 million euros for “having obtained a contract at a price higher than the expected value, concluded with a commercial company and industrial property belonging to the State, benefiting from the influence of the representatives of this company”, according to a press release from the group.
The subsidiary of Italian Eni, which specializes in prospecting and oil drilling, announced that it would appeal the day after the verdict, while constituting, however, a provision in its books of accounts to cover this sum. The group made a point of specifying that the Italian justice “completely acquitted the company on December 14, 2020” in the file of this project planned in the city of Arzew.
Serial convictions
In awarding this contract for the construction of a single-train gas liquefaction plant, the Milanese Saipem allegedly corrupted Algerian officials by concluding an overpriced contract. Former Algerian Oil Minister Chakib Khelil – a close friend of the late former President Abdelaziz Bouteflika – in office at the time of the events, was sentenced to 20 years in prison for receiving bribes. The former CEO of Sonatrach, Mohamed Meziane was sentenced to five years in prison, and his former number 2, Abdelafidh Feghouli, to six years.
With 1.84 billion euros in losses for the year 2021 (for the 2020 financial year, they already reached 1.4 billion euros), this condemnation falls badly for the company led by Francesco Caio. Posting a turnover of 6.92 billion euros (against 7.34 billion the previous year), the Italian oil services group had revised its annual outlook on January 31, citing the “significant deterioration” margins on certain projects due to the pandemic and rising raw material and logistics costs.
New managers
At the beginning of February, Saipem gave in to the pressure by acquiring new leaders: Alessandro Puliti becomes the new head of management and Paolo Calcagnini takes over as head of the financial control and planning unit. Both will support CFO Antonio Paccioretti and work under the supervision of Francesco Caio.
On February 3, the group, whose stock market valuation reached nearly 1 billion euros, saw its financial ratings lowered by Moody’s, which placed it under surveillance due to a risk of payment default.
Francesco Caio and Alessandro Puliti are currently preparing a strategic recovery plan for the period 2022-2025 which must be presented to the Board of Directors on March 15. A date that is already crucial.
