• Natural Gas News

    Saipem faces $218mn fine in Algerian criminal case


The case relates to an award worth €2.8bn that Saipem secured as part of a group in 2008.

by: Joseph Murphy

Posted in:

NGW News Alert, Natural Gas & LNG News, Africa, Top Stories, Corporate, Contracts and tenders, News By Country, Algeria, Italy

Saipem faces $218mn fine in Algerian criminal case

Italian contractor Saipem faces a fine equivalent to 192mn ($217mn), following an Algerian court ruling in a criminal case concerning a 2008 contract award in the north African country, the company reported on February 15.

The tribunal of Algiers has reached a first-degree decision in the case, which began in 2019 and relates to Algerian oil company Sonatrach's award of a €2.8bn turnkey contract to Saipem, Snamprogetti and Chiyoda for the construction of a 4.7mn metric ton/year train in Arzew.

Saipem and Snamprogetti have been charged under Algerian law with "having obtained a contract, with a price higher than the expected value, concluded with a commercial and industrial company, benefitting the influence of representatives of that company," as well as with "false custom declarations."

The pair have appealed against the ruling, suspending payment of the fine. But Saipem will still book an equivalent amount in its results for 2021. It noted that the Italian judiciary fully acquitted the company in the criminal case in December 2020.

The Algiers tribunal has also sentenced two former Saipem employees, including the head of the Arzew project and a former Algerian employee, to five and six years in prison respectively. It has also sentenced ex-energy minister Chakib Khelil in absentia to 20 years in prison, and former Sonatrach head Mohamed Meziane has been sentenced to five years. 

The court ruling further weighs down on Saipem's financial prospects, coming after the company warned on January 31 it expected to book a 2021 loss equal to more than one third of its equity.