* Former manager Varone arrested on July 28
* Arrest warrant issued for Algerian go-between
* Prosecutors criticise audit, controls at Eni, Saipem
* Eni spokesman says internal controls very strict
MILAN, Aug 6 A former manager of Italian oil
service group Saipem, who is at the centre of a
bribery probe relating to Algerian gas contracts, has been
arrested, his lawyer said on Tuesday.
Pietro Varone, the former head of Saipem's engineering
division, was arrested on July 28, lawyer Alessandro Pistochini
said on Tuesday, confirming a report in newspaper Corriere della
Saipem is 43-percent owned by state-controlled Eni,
Italy's largest listed company and the leading foreign energy
operator in Algeria.
Varone was one of several Saipem and Eni senior managers to
resign last December as a result of an investigation by Italian
prosecutors into allegations that Saipem paid bribes to win a
series of contracts from 2007 to 2010 worth around 8 billion
euros ($10.6 billion).
Pistochini said on Tuesday Varone "gave a contribution to
the investigation and admitted his role in certain operations."
Eni Chief executive Paolo Scaroni is also being investigated
as part of the probe.
Eni, Scaroni and Saipem, Europe's biggest oil services group,
have all denied wrongdoing.
Both Eni and Saipem have important contracts in Algeria,
which supplies Italy with about 30 percent of its natural gas.
Pistochini and two people with direct knowledge of the
investigation, who have all read Varone's arrest warrant, said
the order also called for the arrest of Algeria-born Farid
Prosecutors accuse Bedjaoui of channeling nearly 198 million
euros in bribes for Saipem to officials in Algeria via a company
called Pearl Partners Limited.
In the arrest warrant, according to Pistochini and the
sources, prosecutors said they had identified a large part of
the bribes and had asked that "more than $100 million" in
accounts based in Singapore and traceable to Bedjaoui be
Reuters was unable to contact Bedjaoui.
Varone was one of Eni and Saipem's main interlocutors with
Bedjaoui, according to a search warrant issued by prosecutors on
Feb. 6 and seen by Reuters.
The Algerian contracts at the centre of the probe had not
been picked up by the audit committees and internal control
systems of either Eni or Saipem, the prosecutors said in the
arrest warrant, according to Pistochini and the two sources.
Prosecutors referred to "the silence maintained by the
management at Saipem and Eni with regard to their own internal
control bodies," it added, according to the lawyer.
"For certain the intermediation contracts between Saipem and
Pearl Partners were simply a documentary cover to allow the
siphoning off of money from Saipem," Pistochini and the two
sources cited from the warrant.
An Eni spokesman said the company had very strict internal
control systems based on best international practice.
"With regard to Saipem, which as a listed company has its
own control systems, Eni became aware of the alleged
irregularities only at the end of November 2012 and immediately
took action in its role as significant shareholder," the
A spokeswoman for Saipem declined to comment.
Some analysts are concerned the Algeria probe could lead to
a fine for Saipem. The oil service group recently acknowledged
the U.S. Department of Justice was also looking into the
($1 = 0.7553 euros)
(Reporting by Emilio Parodi; Writing by Stephen Jewkes; Editing
by Erica Billingham)