Former director of lead power station partner gets 16 years for laundering $45m out of $300m Nigeria deal
A former director of Gasol, once the lead partner of the Delimara power station project and which bowed out of the project under what can be described strange circumstances, has been sentenced to 16 years concurrent prison time in the UK for his leading role for making away with and laundering $ 45 million out of $ 300 million deal.
Osman Shahenshah, former co-founder and Chief Executive Officer of Afren and a former director of Gasol, has been sentenced to six years jail for one count of fraud; six years concurrent for one count
of money laundering; and four years concurrent for one count of money laundering.
He and an associate, Shahid Ullah, were sentenced to a total of 30 years for fraud and money laundering offences they had committed while they were respectively CEO and Chief Operating Officer of Afren Plc.
The men were found guilty at a trial in late October for a scheme they created to profit from business deals Afren made with its Nigerian oil partners, without the knowledge of Afren’s Board of Directors.
Shahenshah and Ullah laundered more than $45 million from a $300 million deal they recommended to Afren, using their illicit proceeds to purchase luxury properties in the Caribbean, according to the Serious Fraud Office.
Sentencing Shahenshah, His Honour Judge Gledhill QC said: “You believed that you were above the law, you believed that you were so clever that no one would ever discover your offending.”
Lisa Osofsky, Director of the UK’s Serious Fraud Office (SFO) said: “The significant sentences reflect the seriousness of this fraud. Shahenshah and Ullah violated their duties and their employees, the Board of Directors and shareholders paid the price.
“They abused their positions to line their own pockets and it is satisfying that they have been brought to justice. I would like to thank our international partners in the US Department of Justice, who greatly assisted with our investigation.”
The SFO said that Shahenshah and Ullah hatched their scheme to secretly increase their income when faced with the possibility of lower remuneration in the future after shareholders rejected their £6.6 million and £3.8 million salary packages in 2013.
Shahenshah and Ullah rec- ommended that the Afren Board agree to a $300 million payment to Oriental Energy Resources Ltd, the company’s oil field partner in Nigeria. Unknown to the Afren board, Shahenshah and Ullah had struck a side deal with Oriental which led to 15 per cent of the $300 million being paid out to a Caribbean shell company controlled by the defendants.
The men then used the $45 million to purchase luxury properties in Mustique and the British Virgin Islands. A smaller portion of the $45 million laundered was split between Oriental employees and a close network of Afren staff dubbed ‘The A Team’.
In March 2018, following an investigation by the UK’s Insolvency Service, both Shahenshah and Ullah were banned by the courts from being company directors for 14 years for failing to declare to the Afren board their vested interests in a number of high-value transactions they had recommended.
The SFO’s criminal investigation into the actions of the former CEO and COO of the collapsed oil and gas exploration company began in June 2015 following a self-report by the company’s administrators, with the defendants charged with four offences in September last year.
The SFO’s investigation began in June 2015, with charges announced against the two men on 27 September, 2017. It focused on oil business deals, with Shahenshah and Ullah both accused of hiding financial transactions relating to those deals from the Afren Board of Directors.
Shahenshah and Ullah created shell companies and agreed a side deal, with Afren’s oil field partner in Nigeria, from which they anticipated personal gain, without the knowledge of the Afren board of directors.
Shahenshah and Ullah recommended that the Afren Board agree to a $300 million payment to Oriental Energy Resources Ltd, the company’s oil field partner in Nigeria. Unknown to the Afren board, Shahenshah and Ullah had struck a side deal with Oriental which led to 15 per cent of the $300 million being paid out to a Caribbean shell company controlled by the defendants.
Gasol’s exit from Electrogas shrouded in controversy and mystery
The story bears a number of similarities to Gasol’s Malta project, and how it panned out.
It is a well-known fact that the Labour Party’s power plan was crucial in propelling Labour to power, and Schembri had been chairman of a Labour Party energy working group when Muscat was Leader of the Opposition.
That plan was undoubtedly under formation in 2012 when Shahenshah stepped out of Gasol.
On 20 March 2016, this newspaper had revealed that Gasol had sold its Electrogas shares on the very same day that Konrad Mizzi’s Panama company was transferred to his New Zealand trust.
Earlier in February 2016, Mizzi had shown paperwork to this newspaper revealing that the shares in his Panamanian company Hearnville Inc had been held by ATC Administrators Inc, a company with the same address of Mossack Fonseca in Panama, for the benefit of Mizzi between 2 June and up to 21 July 2015. Mizzi had explained that on 22 July 2015, the shares in Hearnville were transferred to Mizzi’s Rotorua Trust based in New Zealand.
The Gasol share sale transaction was formally captured in a document, known as a ‘Notice of transfer or transmission of shares,’ filed by Electrogas with the Malta Financial Services Authority on 28 July 2015.
The document showed that the share transfer was registered with Electrogas on the same day, 22 July 2015. Mizzi had vehemently denied any connection between the two events, and Prime Minister Joseph Muscat had described it as “hogwash” when questioned by the media on the day of publication.
The next day, 23 July 2015, an FIAU report leaked to this newspaper confirmed that money was transferred to the Dubai company 17 Black, whose function was allegedly to transfer money to the Panama companies belonging to Mizzi and another Panamanian company owned by Schembri.
The leaked FIAU document reported a transfer of money from a company connected to Armada Floating Gas Services Malta, owners of the LNG tanker berthed in Marsaxlokk, to a Dubai-based company, 17 Black, created for the purpose of transferring kickbacks to then Minister for Energy Konrad Mizzi and the Prime Minister’s Chief of Staff Keith Schembri. The FIAU report categorically states that “a transaction was carried out successfully on 23rd July 2015”.
According to The Times of Malta, reporting through the Daphne Project, another $200,000 (€161,000) payment was sent to 17 Black by Orion Engineering, a company owned by the local agent for the FSU unit feeding LNG to the new power station. The FIAU also found the $200,000 payment in July 2015 by Orion Engineering to be suspicious, due to owner Mario Pullicino's links to the power station project.
The newspaper has also reported that the FIAU had traced two payments totalling $1.4 million (€1.1 million) to 17 Black, from a company in the Seychelles called Mayor Trans, which is reportedly owned by an Azerbaijani national. The funds were sent to 17 Black in November 2015, via ABLV, a Latvian bank recently closed down due to money laundering violations.