REFILE-Algeria probes state power boss over Alstom, GE deals

Wed Jun 19, 2013 3:52am EDT

By Lamine Chikhi

ALGIERS, June 19 (Reuters) - Algeria is investigating the head of its state power and gas utility, Sonelgaz, over contracts involving U.S. conglomerate General Electric Co and France's Alstom SA, sources told Reuters and Algerian local media reported.

"The case is about inflating costs in deals with U.S. firm General Electric and French firm Alstom," one of the sources said. The source gave no further details.

There was no evidence that Alstom and GE were under investigation. Alstom and General Electric declined to comment.

Nouredine Bouterfa, chief executive of Sonelgaz, and 15 other top managers at Sonelgaz have been banned from leaving the country and their passports have been confiscated, a judicial source and a source at Sonelgaz told Reuters.

Sonelgaz and Bouterfa were not immediately available to comment.

State-owned daily El Moudjahid said Energy Minister Youcef Yousfi confirmed that Bouterfa was being probed but he did not give details. "Algerian justice is sovereign. Each one should assume its responsibility," the newspaper quoted the minister as saying.

Yousfi and the energy ministry were not immediately available for comment.

The probe is the latest in a series of cases that have shaken Algeria's energy sector in the past year. Algerian and Italian authorities are investigating whether Italian oil services firm Saipem, which is partly owned by oil group ENI , paid bribes to Algerian officials to win contracts in Algeria, Saipem has said. Both Saipem and ENI deny any wrongdoing.

Saipem has said it could lose up to 500 million euros ($670 million) in payments due from Algeria because of the probe. The probe led to the departure of Saipem's long-standing chief executive, Pietro Franco Tali, who resigned at the end of last year.

Saipem said Milan prosecutors were investigating allegations that corruption took place up through 2009 involving certain orders Saipem had won in Algeria. Saipem said it had obeyed the law and would cooperate with prosecutors in their investigation.

PROBE WIDENS

This year, the probe has widened to involve the chief executive of Eni, Paolo Scaroni, as ENI said Milan prosecutors also put him under investigation in a probe into alleged bribes paid to win contracts in Algeria for Saipem.

Both Tali and Scaroni have denied any wrongdoing.

Alstom and General Electric have contracts to build electricity plants in Algeria worth a total $4.5 billion.

Local media said Alstom's contract dated back to 2007 for a 1,200-MW electricity plant in the western Terga region for $2.2 billion. General Electric has a $2.3 billion contract in eastern Algeria.

Shares in Saipem, which is 43 percent owned by Eni, have dropped by a third since the beginning of the year as it made two profit warnings, citing the ongoing investigation in Algeria.

On Monday, Saipem said it faced an "escalation of commercial difficulties in Algeria" as its relationship with the state oil firm Sonatrach deteriorated.

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