Afren, the oil and gas company, has dismissed its chief executive, chief operating officer and two associate directors in the wake of its discovery of unauthorised payments.
The company said:
Willkie Farr & Gallagher has completed its independent review into the receipt of unauthorised payments by members of management and senior employees. In connection with the conclusion of this review, the company has decided to terminate the employment and directorships of Osman Shahenshah and Shahid Ullah with immediate effect.
The decision to terminate the employment and directorships of Mr Shahenshah and Mr Ullah for gross misconduct was based on evidence identified by WFG of breaches by Mr Shahenshah and Mr Ullah of their obligations to Afren as employees and directors, in particular the receipt of unauthorised payments from third parties. The board has instructed counsel to commence legal proceedings against Mr Shahenshah and Mr Ullah, if necessary, to recover sums in respect of such unauthorised payments.
In connection with the review, the board has also decided to terminate the employment of the associate directors, Iain Wright and Galib Virani with immediate effect. Each of Mr Wright and Mr Virani received payments in breach of the company’s approved remuneration policy and the company will seek to recover of such sums.
A further seven employees also received payments, it said, and it is beginning disciplinary action against them. The company is also sending a full report to the Financial Conduct Authority after finding there were two instances of failing to comply with listing regulations. But it believed there was no material loss to the company as a result of the transactions.
Analysts at Liberum said:
It appears to us that the damage to Afren is limited. The economic loss looks relatively small, the only illegitimate contracts were entered into by the chief executive and chief operating officer for their own benefit and partner relationships should be intact.
Oriel added:
We see the announcement on the positive side. Although failing to comply with some of the Listing rules could result in further fines from FCA, we believe the market has already punished the company for it. Furthermore, it appears that the company has not had any material impact form the transactions in question, and if anything it seems it has been able to get back some of the loans extended to its partners. It may even be able to also recover the $45m unauthorised payments. New management could be a good new start for the company, especially that we believe that the assets could attract a decent management. We also not that that based on the press release it does not appear that its partners (Oriental and AMNI) were involved in any wrongdoing.
The market appears to agree, marking Afren’s shares up 4% or 3.95p to 101.4p.
Afren dismisses two executives after discovering unauthorised payments
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