Eni Rethinks Structure of Saipem Relationship

NEW YORK--Eni SpA (E, ENI.MI) is rethinking the structure of its relationship with oil-services provider Saipem SpA (SPM.MI) in light of a criminal inquiry into the company for alleged bribes of Algerian officials, Eni Chief Executive Paolo Scaroni said Monday.

"What has happened leads us to think again and look again at the situation," said Mr. Scaroni in response to a question about Eni's stake in Saipem. "There is nothing worse than having no control and full responsibility."

Last week Milan prosecutors placed Mr. Scaroni under investigation as part of the Saipem inquiry. Prosecutors are investigating whether Saipem, which is 43% owned by Eni, paid bribes to secure billions of dollars in natural-gas contracts over a period of years leading up to 2009, according to people familiar with the investigation.

Mr. Scaroni and representatives from Eni said that they believe he is being investigated due to a series of meetings he had with Algeria's oil minister Chekib Kheli. On three or four occasions, Mr. Scaroni said, Mr. Kheli was accompanied by Farid Bedjaoui, who was introduced to Mr. Scaroni as a "personal assistant."

On Friday, Reuters first reported that the investigation into Mr. Scaroni was based on meetings with Mr. Bedjaoui, who allegedly distributed bribes to win gas contracts in Algeria.

In a statement Thursday, Eni said "Eni and its CEO declare themselves totally unrelated to the object of the investigation."

Mr. Scaroni said Monday that he and the company are fully cooperating with authorities but Eni will not conduct its own internal probe.

"We have nothing to investigate," he said. He also said that he never discusses Saipem's business during meetings with customers or other business contacts.

"Saipem has always been managed hands off completely," he said.

Mr. Scaroni said he learned in November that Saipem had a brokerage agreement in place since 2007, which could allow intermediaries to be paid to help arrange contracts.

Eni, he said, "does not have any intermediation contracts, they are forbidden." He said that when he learned of Saipem's arrangements, he "acted immediately" by contacting the chairman of Saipem.

Write to Jerry A. DiColo at [e-mail]

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