Content area
Full Text
EVENT:Energy Minister Chakib Khelil on February 8 accused the media of amplifying the significance of allegations against state-owned hydrocarbons company, Sonatrach.
SIGNIFICANCE:Sonatrach was dealt a major blow last month when it was announced that its most senior management was being investigated over corruption allegations. Aside from the company's reputation, these developments could affect important business decisions and Algeria's attractiveness as an investment destination.
ANALYSIS: Sonatrach accounts for 97% of the country's total exports (see ALGERIA: Oil price levels determine negotiating stance - June 4, 2009), and is an important supplier of energy to Europe (see ALGERIA/EU: Focus on energy would improve relations - November 30, 2009). On January 13, 15 of its senior officials senior officials, including Chief Executive Mohammed Meziane and three of the company's four vice-presidents (in charge of upstream, pipeline and marketing operations), were placed under 'judicial control' and in some cases remanded into custody by a court in Algiers. Downstream Vice-President Abdelhafid Feghouli has been appointed interim chief executive and other replacements have also been made.
Charges The prosecutor's main allegations relate to irregularities in the award of consulting and procurement contracts through non-competitive, directly negotiated tenders. Media reports suggest that the deals in question involve international companies in which two of Meziane's sons have a direct commercial interest, although this has not yet been proved. Although the earlier part of the 2000s saw Sonatrach abandon its traditional tendering procedures of closed negotiations between the licence-holder and contractor in favour of standard competitive bidding, its continued ability to award negotiated contracts in exceptional cases has invariably been seen as a systemic loophole open to abuse.
Timing This is the first time in 30 years that Sonatrach has faced a corruption scandal of this...