Italy's Consob Asked Saipem to Review Part of 2012 Accounts

   By Manuela Mesco 
 

MILAN--Italy's market securities regulator Consob started procedures to sanction oil company Saipem SpA (SPM.MI) for irregularities in its 2012 accounts, it emerged on Tuesday.

Consob found a number of irregularities in the way Saipem gave notice of its two recent profit warnings and on the company's 2012 accounts. The irregularities found by Consob were described in Saipem's first-half report published on Tuesday.

Consob found irregularities in relation to eight contracts awarded to Saipem. Some of these resulted in a total of 130 million euros ($172.9 million) net loss that Saipem failed to account for, but which should be included in 2013 accounts, according to Consob.

The figure adds to a EUR500 million loss that the oil company accounted for when it issued one of its recent two profit warnings, impacting the company's 2013 guidance. According to the regulator, the EUR500 million should have been accounted for in 2012 accounts, instead.

Consob says that Saipem have been notified in the last weeks of such irregularities and the company has now a maximum of 360 days to explain its reasons. After the term, Consob will decide whether to sanction the oil company, but a spokesman could not detail the entity of the potential sanction.

A Saipem's spokesman said Tuesday that the company is working to demonstrate the criteria it used for its accounts have been rightly put in place.

Saipem issued two profit warnings in six months, the second of which came in June. It posted a second-quarter net loss of EUR685 million and an operating loss of EUR670 million as revenue slipped 36% to EUR2.10 billion.

Milan-based Saipem, which is controlled by oil company Eni SpA (E), has been in the spotlight in recent months after it announced in December that it was being investigated by Italian prosecutors over possible corruption involving some Algerian contracts. Saipem denied any wrongdoing.

Two weeks later, Saipem shocked investors by reducing 2012 earnings guidance and indicating a gloomy outlook for this year. The sudden change came after months of assurances that the company was optimistic over earnings.

Write to Manuela Mesco at [e-mail]

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