Saipem Fined $218MM In Alleged Corruption Case, Plans Appeal

Saipem has received a hefty fine under a first-degree decision by the Tribunal of Algiers over alleged corruption in the 2008 tender for the GNL3 Arzew deal.

Saipem said that it plans to appeal against the decision but has booked a $218 million amount for the fiscal year 2021. Payment has been suspended, pending appeal.

The ruling piles pressure on the company that expects to report a 2021 loss of over one-third of the company’s equity. This was followed by discussions with shareholders and creditors to devise a funding package.

It has also undergone some personnel restructuring as Allessandro Puliti joined Saipem from Eni as general manager, while Paolo Calcagnini from CDP was named the lead of a new unit set to strengthen the financial planning and control. The oil and gas company Eni and the state lender CDP are major shareholders in the company.

As for the new ruling by the Tribunal of Algiers, Saipem said on Tuesday it has been charged of allegedly “having obtained a contract, with a price higher than the expected value, concluded with a state-owned commercial and industrial company, benefitting of the influence of representatives of that company.”

The company added that it was also accused of “false custom declarations”. In 2020, the Italian judiciary authority had fully acquitted the company.

In addition to the fine, the Tribunal of Algiers also sentenced two former employees of Saipem Group – the head of the project GNL3 Arzew and an Algerian former employee – to five and six years of imprisonment, respectively. Another employee of the Saipem Group has been acquitted of all charges.

The company is yet to find the reasoning for the ruling as the tribunal has not made it available.

The contract in question is the one awarded to a Saipem/Snamprogetti, in a joint venture with Chiyoda, by Sonatrach in 2008 for the engineering, procurement, and construction (EPC) of a single-train gas liquefaction facility with a capacity of 4.7 million tons of LNG per annum. At the time, the deal had been valued at $3.18 billion.