Saipem is set to challenge the latest court ruling that upheld an earlier verdict that sentenced two former employees to imprisonment and imposed fines and damages on the Italian contracting giant relating to alleged graft for an historic tender for the GNL3 Arzew liquefied natural gas project in Algeria.

The Court of Appeal of Algiers on Tuesday ruled in the criminal proceeding ongoing since 2019 in the North African nation, connected, inter alia, to the 2008 tender for the GNL3 Arzew project.

Saipem 14 years ago won the contract to build a 4.7 million tonnes per annum liquefaction train for the GNL3 Arzew project, and construction was completed in 2012.

The Algerian criminal proceeding saw Saipem, Saipem Contracting Algerie and Snamprogetti Algeria Branch charged, in accordance with Algerian law, of allegedly “having obtained a contract, with a price higher than the correct value, concluded with a state-owned commercial and industrial company, benefitting of the influence of representatives of that company”; and of “false custom declarations”.

The Court of Appeal of Algiers upheld, on both charges, the judgement of the first-degree ruling issued by the Court of Algiers on 14 February.

This ruling had imposed total fines and damages of approximately €199 million (US$209.5 million) on the three companies – comprising some €60 million in fines and around €139 million in favour of civil parties.

Following the first-degree ruling, Saipem had set aside an equivalent amount in its financial statement as of 31 December 2021, even though the payment had been suspended following its appeal against this decision.

The Tribunal of Algiers had also sentenced two former employees of Saipem Group — the then head of the GNL3 Arzew project and a former Algerian employee — to five years and six years of imprisonment, respectively. Another employee of Saipem Group was acquitted of all charges.

Saipem said it would “promptly challenge before the Algerian Supreme Court” the appeal court’s decision.

Under Algerian law, opposing the appeal court’s decision suspends the effects of such ruling with regard to the fines however the ruling in favour of the civil parties is enforceable despite the pending challenge.

The company added the reasons for its ruling have not yet been made available by the appeal court.

Fully acquitted in Italy

Saipem notes that the Italian judiciary authority — further to criminal proceedings in which the process of its 2008 GNL3 Arzew contract award was analysed — fully acquitted the company in December 2020.

The Algerian court judgement does not affect the validity of the financing package and achievement of the objectives in the company’s 2022-2025 strategic plan, added Saipem.