Saipem’s Algerian subsidiary fined €34,000 for inflating contract prices

Saipem Contracting Algérie, part of Italy’s Saipem group, has been fined €34,000 by the Court of Algiers for inflating prices on a gas pipeline contract and “taking advantage of the authority or influence of [its] representatives”.

The fine relates the bid procedure for a $580m deal struck in 2009, in which Algerian state oil company Sonatrach awarded the EPC contract for the GK3 onshore gas pipeline in Algeria to the engineering company.

The deal later came under scrutiny as part of the so-called ‘Sonatrach 1’ trial, which in March 2015 saw a group of 19 top former Sonatrach officials, including its ex-CEO, tried for granting privileges to third parties, hiking contract prices with a state company, embezzlement, money laundering and corruption.

In a separate investigation, Italian prosecutors accused oil major Eni and its subsidiary Saipem of paying bribes to win contracts in Algeria, according to Reuters reports.

The Algerian court also ordered two bank accounts belonging to Saipem Contracting Algérie to be unfrozen. The accounts hold around €82m in Algerian currency and have been blocked since 2010 in connection with the ‘Sonatrach 1’ trial.

“Saipem Contracting Algérie will assess the reasons given by the Court and will appeal to the Court of Cassation against the first instance verdict, as it firmly believes no price inflation above market rates occurred. Pursuant to Algerian law, presentation of the appeal fully suspends payment of the fine,” Saipem said in a release on Tuesday.

“The Court of Algiers rejected the request by the Algerian State Treasury to claim for damages. Sonatrach, the client on the GK3 contract, has reserved the right to claim payment of the damages allegedly suffered in a separate civil proceeding. At present, no such claim has been presented to the civil courts and no amount has been specified in relation to the damages allegedly suffered.”


Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.
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