The Malta Independent 7 August 2020, Friday

Former director of lead power station partner gets 16 years for laundering $45m

David Lindsay Sunday, 11 November 2018, 11:00 Last update: about 3 years ago

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.

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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 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.

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.

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