Serious Fraud Office
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Osman Shahenshah & Shahid Ullah sentenced to 30 years for Afren fraud & money laundering

Osman Shahenshah and Shahid Ullah yesterday received a total of 30 years for fraud and money laundering offences they had committed whilst they were CEO and Chief Operating Officer of Afren Plc.

The men were found guilty at trial earlier this month for a scheme they created to profit from business deals Afren made with its Nigerian oil partners, without the knowledge of Afren’s board of directors.

Shahenshah and Ullah laundered more than $45m from a $300m deal they recommended to Afren, using their illicit proceeds to purchase luxury properties in the Caribbean.

Sentencing Shahenshah, His Honour Judge Gledhill QC said:

“You believed that you were above the law, you believed that you were so clever that no one would ever discover your offending.”

Lisa Osofsky, Director of the Serious Fraud Office said: 

“The significant sentences reflect the seriousness of this fraud. Shahenshah and Ullah violated their duties and their employees, the board of directors and shareholders paid the price.

“They abused their positions to line their own pockets and it is satisfying that they have been brought to justice.

“I would like to thank our international partners in the US Department of Justice, who greatly assisted with our investigation.”

Shahenshah and Ullah hatched their scheme to secretly increase their income when faced with the possibility of lower remuneration in the future after shareholders rejected their £6.6m and £3.8m salary packages in 2013.

Shahenshah and Ullah recommended that the Afren Board agree to a $300m payment to Oriental Energy Resources Ltd, the company’s oil field partner in Nigeria. Unknown to the Afren board, Shahenshah and Ullah had struck a side deal with Oriental which led to 15% of the $300m being paid out to a Caribbean shell company controlled by the defendants.

The men then used the $45m to purchase luxury properties in Mustique and the British Virgin Islands. A smaller portion of the $45m laundered was split between Oriental employees and a close network of Afren staff dubbed ‘The A Team’.

In March 2018, following an investigation by the Insolvency Service, both Shahenshah and Ullah were banned by the courts from being company directors for 14 years for failing to declare to the Afren board their vested interests in a number of high-value transactions they had recommended.

The SFO’s criminal investigation into the actions of the former CEO and COO of the collapsed oil and gas exploration company began in June 2015 following a self-report by the company’s administrators, with the defendants charged with four offences in September last year. 

Notes to Editors 

  1. Osman Shahenshah, former co-founder and Chief Executive Officer of Afren received 6 years jail for one count of fraud, contrary to section 1 of the Fraud Act 2006; 6 years concurrent for one count of money laundering, contrary to section 329 of the Proceeds of Crime Act 2002; and 4 years concurrent for one count of money laundering, contrary to section 328 of the Proceeds of Crime Act 2002.
  2. Shahid Ullah, former Chief Operating Officer of Afren received 5 years jail for one count of fraud, contrary to section 1 of the Fraud Act 2006; 5 years concurrent for one count of money laundering, contrary to section 329 of the Proceeds of Crime Act 2002; and 4 years concurrent for one count of money laundering, contrary to section 328 of the Proceeds of Crime Act 2002.
  3. Osman Shahenshah and Shahid Ullah were both convicted of the following offences, relating to misconduct between 1st May 2013 and 29th July 2014:
    a. One count of fraud by abuse of position, contrary to sections 1 and 4 of the Fraud Act 2006.
    b. One count of money laundering, contrary to section 328 of the Proceeds of Crime Act 2002.
    c. One count of money laundering, contrary to section 329 of the Proceeds of Crime Act 2002.
  4. Osman Shahenshah and Shahid Ullah were found not guilty of the following offence, relating to misconduct between 1st May 2013 and 29th July 2014:
    a. One count of fraud by abuse of position, contrary to sections 1 and 4 of the Fraud Act 2006.
  5. Afren Plc was an oil and gas exploration and production company, founded in 2004. The company is now in administration.
  6. Further information can be found on the Afren case page on our website.

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Channel website: https://www.sfo.gov.uk/

Original article link: https://www.sfo.gov.uk/2018/10/29/osman-shahenshah-shahid-ullah-sentenced-to-30-years-for-afren-fraud-money-laundering/

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