International Business

UK bans pair over payments via Bermuda

  • Lengthy ban: two former executives of oil company Afren have been banned from running a UK company for 14 years

Two former oil company executives have each been banned from running companies for 14 years after they received millions of dollars in secret payments through a Bermudian-based entity they controlled.

Osman Shahenshah and Shahid Ullah were the ex-chief executive and ex-chief operating officer of Afren, an oil and gas company that collapsed into administration in 2015.

The two were charged with fraud and money laundering in September 2017 following a two-year investigation by the Serious Fraud Office over payments they received through secret companies they controlled relating to over $400 million of Nigeria business deals, City A.M. in the UK reported

Britain’s Insolvency Service said the disqualifications focused on Mr Shahenshah and Mr Ullah’s failure to declare to the Afren board that they had a vested interest in a number of high-value transactions.

Both transactions took place after Afren’s shareholders had capped what they deemed as “excessive” benefits packages for senior executives, it said.

The payments totalled about $17 million. Afren sacked both executives for gross misconduct.

The payments were made via special purpose vehicles based in the British Virgin Islands and Bermuda, which had been funded by an Afren partner company called Oriental Energy.

“Afren PLC’s shareholders had expressed clear opposition for a number of years to benefits packages for senior executives in their company, which they viewed to be excessive,” said David Brooks, group leader at the Insolvency Service.

“Mr Shahenshah and Mr Ullah have clearly then reacted to that decision by negotiating secret benefits for themselves.”

He added: “Their decision to agree an undisclosed contract via a BVI [British Virgin Islands] company, while receiving the funds via a Bermudian company of exactly the same name, best illustrates the cloak-and-dagger nature of their actions referred to in Chief Registrar Briggs’s judgment.”

The disqualification “underlines the gravity of directors breaching their fiduciary duties to a company and its shareholders”, Mr Brooks said.

The disqualifications prevent the two from either directly or indirectly becoming involved, without the permission from the court, in the promotion, formation or management of a company for the duration of their bans.