Oil executives guilty of scheme to replace lost salary, bonuses

LONDON (Bloomberg) -- The top two executives at collapsed oil and gas producer Afren Plc were found guilty of what prosecutors called an elaborate scheme to boost their annual compensation after shareholders forced them to slash their bonuses.

Ex-CEO Osman Shahenshah and former head of operations Shahid Ullah were found guilty of fraud and money laundering by a London jury Wednesday following a six-week trial. The two men were found not guilty on a separate charge relating to a management buyout of one of Afren’s business partners.

Afren, once a publicly traded company with a market cap of $2.6 billion, collapsed in 2015 after the fraud was discovered. The company appointed administrators after failing to restructure an outstanding $863 million of bonds.

Prosecutors at the UK Serious Fraud Office say the two men pocketed more than $17 million from a pair of side deals with Afren partners. They entered into the deals after a shareholder revolt in 2013 forced them to dramatically cut their multi-million compensation packages.

“Greed motivated this crime,” Lisa Osofsky, director of the SFO, said in a statement. “Instead of acting in their company’s best interests, they used Afren like a personal bank account to fund an illicit deal, with no regard for the consequences.”

Administrators for Afren claim the alleged fraud led to the company’s demise and are seeking damages of more than $500 million from the defendants and a Nigerian associate in a separate civil lawsuit.