Afen (LSE: AFR), the oil and gas exploration and production company, this morning announced the results of an independent review into unauthorised payments made to members of management and senior employees.
It also announced that, following the review, the company has decided to terminate the employment and directorships of CEO Osman Shahenshah and COO Shahid Ullah for gross misconduct, and that two associate directors — Iain Wright and Galib Virani — are also being dismissed with immediate effect.
Afren’s share price is currently up 3.6%.
The review, conducted by US-based law firm Willkie Farr & Gallagher, found that there were two instances of Afren failing to comply with its reporting obligations under the Listing Rules, but that a further transaction that was investigated was not required to be disclosed. Afren’s board has said that it believes that neither of the partners involved in these transactions were aware of any wrong-doing.
Following the review, Afren has notified the Financial Conduct Authority of its breach of its obligations under the Listing Rules. And, in addition to dismissing the CEO, COO and two associate directors, the company has instigated disciplinary actions against a further seven current and former employees who were involved in the receipt of unauthorised payments, and has instructed counsel to commence legal proceedings to recover sums in respect of unauthorised payments.
Afren says that its board has begun a search for new senior executives and that it will provide an update on this in due course. In the meantime, Toby Hayward will be interim CEO and Egbert Imomoh remains as executive chairman.
Commenting on the findings of the review, Egbert Imomoh said:
“The decisive and comprehensive actions we have set out today should leave no-one in any doubt about how seriously Afren takes the issues uncovered in July and our commitment to rebuild the confidence of shareholders, partners, staff and our other stakeholders. Our focus is now on delivering the significant opportunities we have before us with an open and transparent approach to our business based upon mutual respect, the highest standards of ethics, governance and business conduct.“
Afren’s share price plummeted by as much as 35% in the weeks following the revelations about unauthorized payments, but has since recovered a bit. However, at 101.2p, it’s still 29% down on this time last year, in which time the FTSE All-Share has only fallen 2.8%. And Afren trails its index over five years, too, with a share price rise of only 14%, compared with a 27% increase in the FTSE All-Share.
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Jon Wallis has no position in any shares mentioned. The Motley Fool UK has recommended Afren. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.