Saipem CEO resigns after Algeria corruption probe

Source: Thomson Reuters Foundation - Wed, 5 Dec 2012 21:30 GMT
Author: Reuters
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   * Eni CFO also resigns after news of probe

   * Saipem says probe will not affect results

   * Umberto Vergine appointed new Saipem CEO

(Releads after statements, analyst comment)

   By Stephen Jewkes

   MILAN, Dec 5 (Reuters) - The longstanding head of Italy's Saipem <SPMI.MI> resigned on Wednesday after news that the oil services group was being investigated for corruption regarding contracts in Algeria. 

   Saipem, Europe's biggest oil service group, said in a statement that Pietro Franco Tali had resigned as chief executive and deputy chairman, confirming what sources had told Reuters.

   The company said Milan prosecutors are investigating allegations that corruption took place up through 2009 involving certain orders Saipem had won in Algeria. Saipem did not give further details, but said it had obeyed the law and would cooperate with prosecutors in their investigation.

   Milan prosecutors have not issued any statements on the matter. Typically, prosecutors in Italy do not comment on investigations.

   Saipem, which is controlled by oil and gas major Eni <ENI.MI>, has in the past worked on several contracts in Algeria with state energy firm Sonatrach.

   The two companies are involved in the GALSI gas pipeline project which will transport Algerian gas into Italy via the island of Sardinia.

   In November Sonatrach named its fourth chief executive in two years in the wake of a corruption probe.

   It was not clear if the probe might affect Saipem's ability to operate in Algeria.

   "The board of directors, on the basis of information currently available to it, does not believe the investigation will have a material adverse effect on the company's economic results," Saipem said.

   According to one analyst about 4 percent of Saipem's order backlog is in Algeria.

   

   WELL RESPECTED

   Tali, who first started working at Saipem in 1993, has been at the helm of the company since 2000 and is one of the most highly respected CEOs in the oil services industry.  

   In a research note UBS said that given Tali's age (63-years-old) investors should have been prepared for a transition in the near future.

   But it added "a resignation stemming from a corruption investigation would be a lacklustre way of ending an otherwise successful career."

   In its statement Saipem said Tali had not been targeted by the probe but had resigned to allow the group to better respond to investigations. He will be succeeded by Umberto Vergine.

   Two other executives at the group were suspended.

   In a separate statement, state-controlled Eni said its Chief Financial Officer Alessandro Bernini had also decided to resign after news of the probe.

   "While Alessandro Bernini considers that his actions were right and proper it is his view that Eni's interests are better served by his resignation," Eni said.

   Bernini had been CFO at Saipem until 2008. 

   Shares in Saipem were suspended from trading in the early afternoon when they were down more than 4 percent.

(Additional reporting by Gianluca Semeraro and Alberto Sisto; Editing by Greg Mahlich)