Nigeria producer Afren fires CEO, COO

London-listed Afren has dismissed its chief executive officer and chief operating officer for "gross misconduct" after an internal audit found they had received unauthorized payments in relation to Afren's business dealings with its Nigerian upstream oil partners Oriental Energy Resources and AMNI International.

Unauthorised payments had been received by chief executive officer Osman Shahenshah, chief operating officier Shahid Ullah and also associate directors Iain Wright and Galib Virani, Afren said. Today. Wright and Virani had also been dismissed "with immediate effect," Afren said.

A further seven current and former Afren employees also received unauthorized payments, Afren said.

The firm has started disciplinary actions against these additional employees. The firm has also begun legal proceedings to recover sums in respect of the payments.

Afren's internal audit concluded that in 2013 Shahenshah and Ullah had entered into an agreement with Oriental by which Oriental agreed to pay 15pc of the agreed net cash flows that Oriental was due to receive from the Ebok oil field for the period 2013 to 2017 to a British Virgin Islands special purpose vehicle, Ntiti Limited, which was owned and/or controlled by Shahenshah and Ullah.

This was in exchange for facilitating $400mn in funding by Afren to Oriental.

"Mr Shahenshah and Mr Ullah, with assistance from Afren's former Nigeria business development manager, Mr Faiz Imam, used the funds in part to pay extraordinary bonuses to themselves," Afren said.

A total of $17.1mn was paid in bonuses to the two men and other "selected employees of Afren". In total, 11 current and former Afren employees, including Shahenshah and Ullah, benefited from these payments from Ntiti, the company said.

Afren had net production of 23,337 b/d in the first half of this year at the Ebok field where Oriental is its upstream partner.

The internal audit also found evidence of unauthorized payments linked to a transaction with AMNI.

"In exchange for assisting AMNI in raising the necessary funding for a December 2013 management buy-out of AMNI, including by persuading Afren to pay $100mn to AMNI as a tax equalization settlement in December 2013, Mr Shahenshah and Mr Ullah intended to obtain a personal benefit from the transaction, most likely by obtaining equity in the company which was incorporated to acquire AMNI as part of the management buy out," Afren said.

Afren had net production of 8,135 b/d in the first half of this year at the Okoro field where AMNI is its upstream partner.

The internal audit had also found that Afren had failed to publicly declare two separate loans to Oriental that accounted for more than 5pc of Afren's capitalisation. London-listed firms have to announce loans above 5pc of their market capitalisation.

"Our focus is now on delivering the significant opportunities we have before us with an open and transparent approach to our business based upon mutual respect, the highest standards of ethics, governance and business conduct," Afren said.

Afren is currently producing from its assets in Nigeria and holds further interests in the Kurdistan region of Iraq, Ghana, Ivory Coast, Congo (Brazzaville,) Kenya, Ethiopia, Madagascar, Seychelles, Tanzania and South Africa.

Afren partners Oriental at the Nigerian Ebok field and Amni at the Okoru field. Afren also has Nigerian interests at the Okwok field and blocks 26, 310, 113 and 115.

Afren group production was 33,488 b/d in the first half of this year.

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