Former direc­tor of lead power sta­tion part­ner gets 16 years for laun­der­ing $45m out of $300m Nige­ria deal

The Malta Independent on Sunday - - FRONT PAGE - David Lind­say

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.

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