23rd Mar 2015 08:08
LONDON (Alliance News) - Afren PLC Monday said it has reported concerns raised about an "individual" it hired in 2012 to its bondholder committee and to the UK's Serious Fraud Office.
The struggling company, which Monday dropped out of the FTSE 250 after its shares collapsed in the wake of issues with management payments and operational problems, had appointed Willkie Farr & Gallagher (UK) LLP to review its business in the wake of the management issues.
It said Monday it has reported "preliminary concerns" arising from the review regarding the "hire of an individual within its operations in 2012 and the payment of certain travel and accommodation expenses connected to Afren's activities".
"As part of the company's implementation of improved internal compliance procedures and as a result of whistle-blower reports received by the company's management, the company engaged WFG to assist it with its review of its compliance with such procedures. WFG has undertaken a substantial review of such matters, which is still ongoing but which is almost complete save for some follow-up work in relation to these two issues," it said in a statement.
In January, Afren reached a settlement with its former chief executive and chief operating officer in relation to payments made to the pair which were not authorised by the company and which led to the sacking of both executives. Afren was set to receive a total of USD17.1 million in cash from former CEO Osman Shahenshah and former COO Shahid Ullah. The FTSE 250-listed company said it would get a further USD3 million in respect to the costs to the company related to independent reviews carried out by Wilkie, Farr & Gallagher and KPMG, as well as some legal costs.
The FTSE 250 oil producer and explorer fired the pair in October for gross misconduct based on evidence from an independent review which unearthed irregular payments. Associate Directors Iain Wright and Galib Virani also were fired with immediate effect for the same reasons, and the company started disciplinary action against seven more employees who it said also received payments.
Afren didn't say whether the new concerns raised by Wilkie, Farr & Gallagher related to any of those former executives or to someone else. It said further announcements will be made in due course as appropriate.
The news comes just days after Afren reached an agreement in principle to address its short- and longer-term funding needs and recapitalise its capital structure, but also warned it will be making significant impairments in 2014 followed by significant budget cuts in 2015.
The oil company said it has entered into an agreement with some holders of its 2016, 2019 and 2020 notes, and with the majority of its lenders under the company's existing USD300 million Ebok credit facility, to secure interim funding and recapitalise the business. The deal needs to be approved by shareholders, and the company has warned them that they'll be unlikely to get any return on their investment if they don't approve the deal.
It has now had to notify those holders about the concerns raised in the review.
"The company takes its compliance with all laws extremely seriously and we are committed to ensuring that our business is not undermined by breaches of our internal policies or applicable legislation," Afren Chairman Egbert Imomoh said.
"The company has taken steps to halt its previous practices in relation to such expenses payments," Afren said.
By Steve McGrath; [email protected]; @stevemcgrath1
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