Sonatrach Algeria Corruption

There has been a recent crackdown on corruption in Algeria. The government owned business Sonatrach is at the centre of the crackdown. Read our guide for more facts and information…

In January of 2010, the CEO of Sonatrach, Mohamed Meziane, along with two of his sons and fifteen other company officials were accused of misappropriation of funds in connection with the awarding of contracts to two research and consulting firms which are owned by relatives of senior Sonatrach officials.

Allegations

Allegations revolve around the awarding of public contracts to the two research and consulting firms. Also included is a contract to a security equipment installation company. According to the allegations, the two companies were awarded government contracts in return for bribes. It is also alleged that Meziane’s sons acted as intermediaries for the payment of the bribes.
After a twenty hour hearing, the judge in charge of the proceedings placed Meziane and seven other Sonatrach officials under judicial supervision. One of the seven officials is the vice president of marketing, Chawki Rahal.

Meziane’s two sons along with the rest of the defendants were placed under committal orders. There is an international arrest warrant for another unnamed suspect who has fled Algeria.

Judges Orders

Meziane was told he could not leave the country. He had been removed from his duty at Sonatrach on January 12, 2010. He must report to court officials on a weekly basis while the other executives have been arrested.

The executives were snared in an investigation ordered by Algeria’s President Abdelaziz Bouteflika. The probe was conducted by Algerian military intelligence officers who were looking into corruption charges relating to contract awards.

The arrests left Sonatrach without senior management organization. A source revealed that Abdelhafid Feghouli, Sonatrach’s vice president for downstream operation would head the company until further notice. The firm will continue normal operations, but major development decisions will be put on hold.

Later Developments

In May of 2011, an Algerian court sentenced Meziane to a two year sentence, with one of the years suspended and ordered him to pay a fine equivalent to $7,000 US. Four other defendants, including Meziane’s short term replacement Abdelhafid Feghouli, were sentenced to up to a year in jail.

The Sonatrach scandal forced the departure of most of the company’s top management. Chakiv Kheli, Algeria’s energy minister, who was not involved in the probe, also lost his job.
The ruling came after January riots led the government of Abdelaziz Bouteflika to speed up employment programs. He has also announced plans for constitutional revision to help combat further corruption in the government.

With Algeria supplying a large amount of world oil and natural gas and with Libya’s production already lagging, the world can ill afford to have a big cut in Algeria’ production.  Everyone will watch this drama closely.

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