December 22, 2024

Italian Oil Giant Caught Up in Corruption Investigation

ROME — The Italian oil giant Eni said Thursday that Milan prosecutors had expanded their investigation of alleged corruption in Algeria involving Saipem, the company’s oil services subsidiary, to include ENI itself and its chief executive, Paolo Scaroni.

ENI denied that it or its directors had any involvement in any corruption in Algeria. “ENI and its C.E.O. declare themselves totally unrelated to the object of investigation,” the company said.

The widening investigation has slashed Saipem’s share price and is now casting a cloud over top management of ENI, which had been reveling in its recent success in finding new energy reserves, particularly giant natural gas discoveries in Mozambique over the past two years. ENI is also the largest foreign oil and gas producer in key North African countries including Libya, Algeria, and Egypt.

ENI’s shares were the second-best performers among major oil companies in 2012, trailing only Rosneft, the state-owned Russian company. The Italian company’s shares closed 4.6 percent lower in Milan on Thursday.

ENI said Thursday that after it learned details of the Milan prosecutors’ investigation in November, it urged Saipem to cooperate with the authorities and take appropriate steps, including conducting an internal audit.

Pietro Franco Tali resigned as Saipem’s chief executive in December. At the same time, ENI’s chief financial officer, Alessandro Bernini, who had held the same post at Saipem, resigned.

Mr. Tali was replaced by an ENI executive, Umberto Vergine. Saipem said last week that Mr.Tali was under investigation.

Prosecutors say they are investigating suspicious payments of about €200 million, or $268 million, on Algerian contracts won by Saipem. A person familiar with the matter said that in 2007, Saipem agreed to pay a Dubai company a percentage of the value of the contracts Saipem won in Algeria. Even if corruption were not a factor, such an arrangement would be in violation of Saipem’s internal controls, said the person, who requested anonymity because he was not authorized to comment. A spokesman for Saipem declined to comment.

Investigators searched Mr. Scaroni’s home in Milan on Thursday, along with his offices in Rome and Milan.

Mr. Scaroni has been streamlining ENI, selling off noncore businesses so the company can focus on finding and producing oil. But he said in an interview in November that he considered Saipem “a major asset.”

Last week Mr. Vergine, the new Saipem chief executive, shocked investors when he warned that the company’s net income for 2013 would be about €450 million — roughly half what Saipem has projected it will report for 2012. Mr. Vergine said he was taking a more conservative approach in forecasting profitability. Saipem’s shares tumbled, and over the next several days the company lost more than €4 billion in market value.

Officials from Consob, the Italian market regulator, met Monday with Mr. Vergine and Saipem’s chief financial officer, Stefano Goberti, to discuss the profit warning and the sale of a large block of Saipem shares just before the warning was issued.

A person with knowledge of Consob’s inquiry said the regulator suspected that the shares were sold through Merrill Lynch in London and had asked the British Financial Services Authority to investigate.

Both Merrill and the F.S.A. have declined to comment.

Stanley Reed reported from London.

Article source: http://www.nytimes.com/2013/02/08/business/global/italian-oil-giant-caught-up-in-corruption-investigation.html?partner=rss&emc=rss

Foxconn Begins Bribery Investigation

The company said last week that an internal investigation had uncovered possible wrongdoing in the supply chain and that those findings had been shared with the authorities in China.

The announcement is the latest setback for Foxconn, which produces a growing share of the world’s smartphones, laptop computers and other electronics.

“We can confirm that we are working with law enforcement officials whom we brought in to work with our own internal audit team as part of an investigation into allegations against a number of Foxconn employees related to illegal payments from supply chain partners,” Foxconn said in a statement e-mailed to the news media.

“Since the matter is under investigation, we are not able to comment further,” Foxconn said. “However, we can say that the integrity of our employees is something we take very seriously and any employees found guilty of any illegal actions or violations of our company’s Code of Conduct will be prosecuted to the fullest extent of the law. We are also carrying out a full review of our policies and practices to identify steps we can take to strengthen such measures to further mitigate against such actions.”

Foxconn, which is based in Taiwan but has production facilities throughout China, did not offer details about the nature of the investigation or how the problem was uncovered. But last week, the Taiwan edition of Next Magazine reported that a Foxconn executive in the coastal Chinese city of Shenzhen had been detained by the police on bribery allegations.

In its report, Next magazine said an executive at Foxconn’s operation in Shenzhen had been detained after being accused of asking for bribes from suppliers, and that two executives overseeing the company’s production of Apple products had left their positions in recent months.

Foxconn is considered one of the world’s most reliable suppliers of electronics. But the company’s image has been tarnished in recent years by labor strikes, accusations of poor working and safety conditions, and a spate of worker suicides at some of its Chinese factories.

Apple has strongly defended its partner against allegations of poor working conditions and Foxconn executives have responded in the past year by upgrading its management, work standards and production facilities.

Article source: http://www.nytimes.com/2013/01/14/business/global/foxconn-begins-bribery-investigation.html?partner=rss&emc=rss