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Saturday 14 September 2019

Tortoise case file • White-collar crime

Greasing the wheels

The case against Unaoil exposes how the fight against corruption can descend into turf war

By Paul Caruana Galizia

When Saman Ahsani was stopped at passport control in Rome’s Fiumicino Airport, it seemed the moment of reckoning had finally come. Along with his father Ata and older brother Cyrus, Saman Ahsani was suspected of running a global bribery business that greased the wheels for multinational corporations working in the world’s most corrupt countries and has made them hundreds of millions of dollars over 20 years.

For two years, the pursuit of Unaoil, the Ahsani family business, had drawn in the world’s leading prosecutors of white collar crime: the FBI, the Australian federal police and the UK’s Serious Fraud Office (SFO) were all investigating the Ahsanis’ role in securing billions of dollars of contracts for many of the world’s blue-chip industrial companies. Those companies turned to Unaoil, based in the tax haven of Monaco, to open the doors to lucrative engineering deals in countries from Iraq to Kazakhstan, Libya to Angola, Azerbaijan and Iran. Some have already settled allegations of using Unaoil to bribe foreign officials, like Rolls-Royce and FMC Technologies, while others remain under investigation, like Honeywell and ABB.

In the elaborate, shadowy world of oil and gas deals, the Ahsanis were like the Pink Panther. They lived a glamorous life in the French Riviera, apparently impervious to the authorities’ stumbling efforts to investigate and charge them.

Ata Ahsani, who founded Unaoil in 1991 in the UK after fleeing the Iranian Revolution, had ducked out of Monégasque high society and, as far as the international prosecutors knew, had disappeared to Iran. Cyrus Ahsani, the CEO generally considered the operating mind of Unaoil, had acquired Lebanese citizenship and, they’d heard, resurfaced in Beirut.

A sign outside the Serious Fraud Office in Westminster

But now, Saman Ahsani, the middle brother who was educated in an English public school, had been arrested in Rome’s Fiumicino airport under the terms of a European arrest warrant. A red flag flashed across the SFO’s computers at its headquarters just off Trafalgar Square in London. The game of cat and mouse, it seemed, was over.

In fact, it had only just begun. This is the story of how global industry really works and how those fighting corruption so often end up fighting each other. It’s how state prosecutors are outgunned by professional litigators, how the UK law favours defendants and stays the hand of the prosecutor, how the process of investigation persecutes individuals without securing their convictions and how, as a result, justice is neither done, nor seen to be done.

Nearly 18 months after his arrest in Rome, Saman Ahsani, along with his father and elder brother Cyrus, are understood to be back living at home in Monaco. They are free men, currently facing no prospect of extradition or prosecution.

“The annual cost of bribery,” according to IMF Managing Director Christine Lagarde, “is estimated to be between $1.5 to $2tn – roughly two per cent of global GDP.” And bribery is just one part of a larger problem.

Embezzlement, money laundering, tax evasion, cronyism, along with bribery, always come at someone’s expense. Societies are robbed of schools, hospitals and other public services; foreign investment is driven away; and countries are stripped of their natural resources. Corruption weakens their institutions, undermines their rule of law, and makes them unsafe.

IMF Managing Director Christine Lagarde

But the social concern surrounding corruption is low. It’s seen as victimless. Industrial espionage is competition. Insider trading doesn’t harm the company. Bribery opens doors. Of least concern is corruption overseas, where laws are unenforced, and which generates sales and jobs at home.

In theory, governments care about this. Prime Minister David Cameron said, at his 2016 Anti-Corruption Summit in London, that “the evil of corruption reaches into every corner of the world”. Along with his fellow leaders, Cameron signed a declaration against corruption: “The corrupt should be pursued and punished and those who have suffered from corruption fully supported.” Not everyone agrees.

Many defend international kickbacks: that’s the way, they say, business is done abroad. The Daily Telegraph was against the UK’s Bribery Act when it was introduced in 2011, arguing “the measure could cause British firms to lose overseas contracts”. Echoing the view still heard among business leaders up and down the country, the editorial continued: “In many countries business is done in a manner that may upset the more fastidious, but that is the way of the world.”

Unaoil’s business was, in that sense, not fastidious at all. It enabled some blue-chip firms, many of them British, to operate in that real world. The company was suspected of bribing officials in oil-rich and very corrupt countries: its home turf.

Take Iraq. Amidst the bombing and killing, Iraqis elected their first government in January 2005, after the US invasion two years earlier had toppled Saddam Hussein. It was meant to be a break with a past of corruption, instability and human rights abuses.

For Unaoil’s man on the ground, Basil Al Jarah, a 70-year old British citizen, it was also a business opportunity. He knew Kifah Numan, then a senior official at the South Oil Company, the Iraqi state-owned energy business based in Basra. If FMC Technologies, a US company that employed over 17,000 people and made equipment for the oil and gas industry, wanted to land contracts from the South Oil Company for a new control room, new gas meters and loading arms for the Al Başrah Oil Terminal, contracts worth up to $30m, then they were going to need Numan’s help.

David Cameron hosted an anti-corruption summit in 2016. The then US Secretary of State, John Kerry, appeared quite tired

“I have to lean really heavy on Kifah to swing this if at all possible,” Al Jarah wrote to his bosses. “I will start softening Kifah from tonight.” The softening would be worth it. The percentages on the deal, according to Al Jarah, would be split like this: one per cent to the person who introduced Al Jarah to a key official besides Numan who they call the “big cheese”; seven per cent for the “big cheese” himself; and two per cent for Unaoil to be “split internally”.

Al Jarah spent a good deal of time and money courting Numan. In March 2008, for example, he filed an expenses form to Unaoil’s finance manager for $2,684 for gifts for “Mr Kifah” during a London visit, which included perfume, various CDs, mobile top-up and a leather jacket. Al Jarah justified the expenses, explaining that Numan “is our key contact to obtaining the current contract valued at $17m (Job number 730) and I am pursuing him hard for the next set of turbines valued in excess of $23m”. Job number 730 was a plan for UK engineering company Rolls-Royce to supply the South Oil Company with gas turbines.

A few days later, Al Jarah sent another email, explaining that Numan had made his South Oil Company colleagues alter a public tender in Rolls-Royce’s favour. “The value of Kifah’s jacket starts to show now,” Al Jarah wrote in an e-mail. (According to company documents, Unaoil was also paying Numan a retainer of $15,000 a month, doubling the typical salary paid to an executive in his position in Basra, where the average monthly wage is $3,600.)

When Numan was promoted to director general of the South Oil Company in May 2008, Al Jarah wrote to Cyrus Ahsani: “This is really the best news I had in a long, long time…Don’t know about you,” he added, “I am having few beers today to celebrate.”

Cyrus Ahsani replied with this email: “Fantastic news!! THis as you say is the best news we have got so far and will i think definitely change the dynamics in Iraq.” “Excellent,” Cyrus went on, “and lets see how we can quickly do certain things to make sure we are the only ones with access.”

Basil al-Jarah, Iraq partner of Monaco-based firm Unaoil, arrives for a first appearance at Westminster Magistrates Court, December 2017

The world over, this was alleged to be Unaoil’s real business: as a fixer. Employees like those at Rolls-Royce or FMC made “commission payments” to Unaoil, which would then use a portion of that money to bribe foreign officials and employees of state-owned firms, like those at South Oil Company, to secure public contracts. The remaining portion would go to Unaoil, which a former senior employee, who worked under Saman Ahsani – “Sammy” – describes as a “very well-run, very well-managed organisation”.

Employees of Unaoil’s clients, prosecutors now claim, knew or ought to have known that the money they paid Unaoil would be used for bribery. And so Unaoil’s work, such as it was, undermined both the integrity of the countries where they operated and the clients that they served.

This report is based on more than 20 interviews, including with key insiders, together with a review of court records, emails, and other documents. The Ahsanis and Basil Al Jarah did not respond to multiple requests for comment. The US Department of Justice declined to comment and the SFO declined to comment on active investigations.

Of Unaoil’s former clients, KBR and ABB say they are cooperating with investigating authorities, Petrofac and TechnipFMC declined to comment, Honeywell, Amec Foster Wheeler, and Baker Hughes did not respond to a request for comment. Rolls-Royce, which paid UK and US authorities £671m to settle foreign bribery cases that included Unaoil, says that the company now conducts itself in a “fundamentally different way”.

The trail to Unaoil didn’t start in Iraq or even in Monaco. It began in Melbourne.

In 2011, lawyers for Leighton, an Australian engineering firm, found files showing the company agreed to pay Unaoil “not less than $25 million in marketing fees” to help the firm secure Iraq government projects, even though the projects required no marketing. Leighton sent the files to the police, refused to pay Unaoil for fear that it would be on the hook for bribery, and so Unaoil sued Leighton in London in 2013.

The US Department of Justice

The case went unnoticed in the UK, but not in Melbourne where Nick McKenzie, a sharp-eyed, award-winning investigative journalist at The Age, began reporting on Unaoil, given its corrupt links to a major Australian firm. Some months later, McKenzie was contacted by a whistleblower who was impressed by his reporting on the case.

The whistleblower told McKenzie he hadn’t gone deep enough into Unaoil and promised a cache of internal documents. To get them, McKenzie had to first place an advertisement in the real estate section of the French newspaper Le Figaro in July 2015 that included the code word “Monte Christo”. McKenzie followed the plan and eventually met the whistleblower who introduced him to other sources. Soon, McKenzie found himself in possession of tens of thousands of Unaoil’s internal emails, many addressed to its blue chip clients between 2002 and 2012.

It was not law enforcement or any of the participating companies, who by reporting evidence on bribery to the police get leniency in an eventual prosecution, that initiated the investigation. The prosecutors responded to a tip from the newspapers: McKenzie notified Australian, UK and US law enforcement agencies a week before publication of his Unaoil report on 30 March 2016. And so began a turf war.

The SFO needed a break.

Established in 1987, after judge Lord Roskill recommended a specialist prosecutor for fraud, the SFO had over the years seen its budget cut and a mixed success rate. Its prosecution of traders charged with Libor manipulation was successful, but it lost a number of other high profile cases.

In 2006, the Attorney General, who has direct responsibility for the agency, pressured the SFO into dropping its bribery investigation of BAE’s arms sales to Saudi Arabia after the Kingdom suggested that the SFO was putting the UK’s security at risk. The SFO director dropped the case and the media began calling the agency the Serious Farce Office. The Attorney General, Lord Goldsmith QC, organised an external review of the SFO and ministers drew up plans to incorporate it into other agencies. Morale dropped and people left, but the agency survived.

Gas flares at the Basrah Gas Company’s (BGC) facilities in Basra

The revolving door spun Goldsmith into private practice. He defended property barons Robert and Vincent Tchenguiz against the SFO in relation to the collapse of the Icelandic bank Kaupthing. The case was so badly handled that the SFO’s director Sir David Green QC issued a public apology and agreed to pay millions in damages to the brothers in 2014. Theresa May, then home secretary, called for the agency to be disbanded. Goldsmith said the case questioned the SFO’s “fitness for purpose”.

Green, appointed in 2012, after the Tchenguiz investigation, was determined to show that the SFO had teeth.

He put Tom Martin in charge of Unaoil. Not towering but tank-like, former SFO colleagues describe Martin as Green’s “rottweiler”, a dog with teeth. They had worked together at the Revenue and Customs Prosecution Office. And although Martin was not much liked in the office – he enjoyed leaning back in his chair and hectoring his colleagues, who describe him as “overly aggressive” and “divisive” – he had proven to be a forceful lawyer who could cut through the civil service culture and get results.

At the SFO, he proved that he could secure convictions. Martin and his team secured a guilty plea from the Sweett Group, a property company that between 2012 and 2015 bribed an official in the UAE to secure a contract for the construction of a hotel in Dubai, to a charge of failing to prevent an act of bribery. The company was ordered to pay £2.3m in penalties and costs on 19 February 2016.

Vincent Tchenguiz and his sister Lisa. After a badly handled case, the SFO had to pay millions in damages to Vincent and his brother

When the Unaoil tip-off came in the following month, it made sense that the file would be handed to Martin. The material, in the hands of a driven investigative lawyer, promised a quick conclusion. Martin went after it with characteristic aggression. On 22 March 2016, a day after it was notified, the SFO opened its investigation into Unaoil.

That same day Basil Al Jarah, normally resident in Hull, a deprived city in northern England, was arrested at Manchester airport. He was due to board a flight to Dubai and was found carrying two cheques from “A. Ahsani” made payable to Armada Investments LLC, believed to be controlled by Ahmed Al Jibouri, a Jordanian middleman, in the sums of £950,000 and £925,000.

A day later the SFO requested that authorities in Monaco simultaneously raid Unaoil’s office and the Ahsanis’ homes. Martin was there with them.

“What’s this about?”, Saman Ahsani asked officers at the raid on his home six days later.

“Bribery and corruption,” one replied.

The Ahsanis were taken separately from their grand apartments that day to the principality’s prison: four cell blocks, a chapel, and prison yard, half a mile from the Prince’s palace and, like their apartments, overlooking the glittering Ligurian Sea.

They were kept in separate cells, spending the night talking through thick concrete walls, and were interviewed the following day. By the end of March, the SFO had interviewed the Ahsanis and collected evidence from their homes and Unaoil’s Monaco office.

Monte Carlo in Monaco, where Unaoil is based

When it comes to international investigations, the US Department of Justice ( DoJ) likes to say “no sweat, no equity”. Moving fast with the raids earned the SFO “equity”. The DoJ agreed to back off, but tailgated, looking for a way into the evidence. The turf war began to simmer.

In May 2016, it spilled over. After meeting at the US embassy, then on Grosvenor Square, FBI and SFO officials went to the embassy bar and then a nearby pub in Mayfair. The informal drinks were meant to smooth over relations. It didn’t work. Martin allegedly called one FBI agent a “cunt”, “spy”, and a “quisling”. He kept moving.

In November 2016, the SFO received “blockbuster funding” from HM Treasury for its Unaoil investigation. As time passed, the investigation grew to target specific companies – some British, some American – and intensified its focus on the Ahsanis.

This is where the argument between London and Washington, the SFO and the Department of Justice, began. American prosecutors say the game is to continuously go after the bigger fish: Unaoil’s multinational clients – not the Ahsanis, who are mere middlemen, or their company, which is miniscule compared to their clients. They are better placed to do this, they argue, given that their laws allow them to strike plea deals directly with cooperating witnesses. In the Ahsanis, the US saw cooperating witnesses and a route to billions of dollars in corporate settlements that would impose compliance reforms on the companies and change their behaviour.

“The SFO wants to prosecute the parties that are most culpable,” Laura Dunseath, a former senior SFO prosecutor, says. “Going for corporates is usually a secondary consideration for the SFO – they’d want to go for the principal.”

The SFO can only recommend that a judge treat the Ahsanis with leniency in exchange for cooperation. The judge retains discretion. In the UK, a prosecutor can’t guarantee leniency like the DoJ. In the Ahsanis, the SFO thought they saw the opportunity for convictions.

For the Ahsanis, the path was clear. Their lawyers – one in Monaco, one in Sydney, and seven barristers, including three Queen’s Counsel, and several solicitors at Mishcon de Reya, Kingsley Napley, and Clifford Chance in London – each in their own way fended off the SFO and guided the family step by step to the right prosecutor: the DoJ.

The FMC Corporation Chemical manufacturing company logo seen displayed on a smartphone

For the SFO, the turf war escalated. Martin powered ahead. On 16 November 2017, the SFO charged Al Jarah with conspiracy to make corrupt payments to secure the award of contracts in Iraq (Al Jarah would eventually plead guilty in England on 15 July 2019). It put in an extradition request for Saman Ahsani who was in Monaco. Two weeks after charging Al Jarah, the SFO charged two company executives from a Unaoil client, SBM Offshore, a Dutch service provider to offshore oil and gas rigs. The DoJ reached a $238m settlement with SBM Offshore at the same time.

The Ahsanis had filed a legal complaint on 1 December 2016 about the way the SFO raided its Monaco properties. But a judge dismissed the complaint on 29 March 2017, largely on the expert evidence given by Martin. That week, Green said that he wanted to see “the big investigations” that he had started reach “a charging decision” before his term ended in April 2018.

According to one of their lawyers, the Ahsanis are “lovely” and “delightful”. A former senior Unaoil employee says they are “very, very decent”. They own companies from Malta to the British Virgin Islands. They founded a Monaco-based charity, UnaKids, that hosts galas attended by Richard Branson, Prince Albert II, and Emirati sheikhs.

Cyrus was the treasurer of Monaco’s Ambassador’s Club, whose honorary president is Prince Albert II. The youngest brother, Sassan, not involved in Unaoil but arrested on suspicion of money laundering in 2017 and released without charge, lives in a flat on Sloane Square. He runs a real estate investment fund and hobnobs at business events with Prince Andrew.

Known to friends as Sammy, Saman Ahsani was a Queen’s Scholar at Westminster School, where contemporaries remember him as having the “confidence that comes from growing up with economic security and from the innocence of never having suffered hardship.” He acted in school plays; his performance as Octavius in Julius Caesar was described as “feline” and “sardonic” while, as Rusty Charlie in Guys and Dolls, he “could have been more corroded by sin, but he sang with a lusty voice”.

Princess Charlene of Monaco and Prince Albert II of Monaco attend the 69th Monaco Red Cross Ball Gala at Sporting Monte-Carlo

At Oxford, where he studied classics, Ahsani is remembered as a “fantastic” and “enthusiastic” captain of his college boating club at St Benet’s Hall. For his home in Monaco, where he plays the piano and reads Somerset Maugham, his mother Lida stitched handmade towels for his bathroom to comfort him after his recent divorce from his wife Melorie.

Artsy and sensitive Sammy Ahsani isn’t like his shrewd chief executive brother and chairman father. When they fled to Lebanon and Iran, he stayed in his home environment of Monaco. From there he tried to make his case in the press, complaining to the New York Times in September 2017 that with some neighbours “you can see written on their face, while you are talking, at best a presumption of guilt”.

The SFO’s extradition request for Sammy Ahsani, issued a few days after his interview, was finally rejected in February 2018. At the time of the alleged offences, the Monégasque appeals court found that bribery of foreign officials only warranted prosecution in the context of combating organised crime. Martin was not present at the hearing.

Monaco is not part of the European Union. It can make its own decisions on extradition. As a principality, the decision ultimately lies in the hands of His Serene Highness, Prince Albert II. But behind the scenes a bigger argument was playing out over the fate of the Ahsanis. The US was positioning to cut a deal.

After the failed extradition request, Sammy Ahsani left Monaco for the closest American embassy – Rome – where he met FBI agents working on the Unaoil case. He surfaced in April 2018 when he tried boarding a flight to Buenos Aires from Fiumicino airport.

He assured the FBI agents at the embassy that, after flying to Buenos Aires, he would meet them in Washington. As American soil in Italy, the embassy allowed American officials to do without a formal request for legal assistance from the Italian authorities, which would have been slow and alerted them to Sammy Ahsani’s location. The embassy was a stop-gap. While legal, one lawyer connected to the case says it’s not the done thing and the Italian authorities were furious at the discovery of this operation.

Sammy Ahsani was discovered at Fiumicino’s passport control. Unlike his father Ata and brother Cyrus, who hold multiple passports, Sammy Ahsani only holds a British passport. And Britain, unbeknownst to the Americans, had put out a European arrest warrant on that passport, setting off flashing red flags at the SFO in London and Fiumicino airport.

The Italian state police kept Sammy Ahsani from leaving while Rome’s appeal court decided on whether to extradite him to Britain. It decided to extradite in September, but it was by then too late. Through what the Italian state police described as “diplomatic channels”, American authorities presented the Italians with their own extradition request. A district court in Texas, home of the Ahsanis’ former oil and gas clients, had an arrest warrant out for him. There was then what one former US attorney described as “a change in thinking at the SFO”, and a change in leadership, and so Sammy Ahsani was released to the US.

The US then got to work on dislodging Martin from the case for once and for all. In June 2018, the DoJ filed a formal complaint to the SFO against Martin. And then, almost in concert, the Ahsanis did the same.

The DoJ complaint made seven allegations against Martin, including that it insulted one of its agents. It referred to the pub incident, when Martin is alleged to have called an FBI agent a “quisling”. The Ahsanis’ complaint contained 27 allegations about Martin’s conduct in London and Monaco, including that he leaked details of the investigation to the press.

Lisa Osofsky, director of the Serious Fraud Office

By this point, Green was gone. The interim SFO director Mark Thompson launched an internal investigation into the complaints, which dismissed all allegations but one: that Martin, Green’s “rottweiler,” had called the FBI agent, who had access to the SFO’s database, a “quisling”.

A few days later, Martin was suspended from the SFO. Lisa Osofksy, the SFO’s new director joined in August 2018. A dual British-American national, Osofsky started out life as a US federal prosecutor of white-collar crime and rose to Deputy General Counsel at the FBI.

Days after Osofsky joined the SFO, in July 2018, Martin was taken off the Unaoil case. His friends claim that Osofsky bowed to pressure from the DoJ and, having recently joined, she wasn’t aware of the details surrounding the case or of the SFO’s strained relationship with the FBI. Osofsky is directing the SFO towards more cooperation, with the DoJ and with witnesses.

On 28 November 2018 at a conference on the Foreign Corrupt Practices Act, America’s bribery act, Osofsky gave the keynote speech: “We in the UK have heard loud and clear from our colleagues in the United States how valuable cooperators can be in cracking white collar cases.”

Martin was finally dismissed from the SFO a few days later for “gross misconduct” relating to the pub incident. He’s now suing the agency for unfair dismissal. In his Employment Tribunal claim, Martin claims that his conduct at the pub “was not such as would justify the termination of his employment”. The strong language, Martin claims, “was commonly used by criminal lawyers and partner agencies and that members of the DoJ themselves used very robust language: in essence it was part of the culture”. A former American prosecutor agrees: the language is “very common,” he says. As does a former senior SFO lawyer: “The Americans called me all sorts of things.” The fight rumbles on for Martin and Unaoil’s former clients.

The DoJ, on the back of Unaoil evidence, has open investigations into KBR (formerly Kellogg Brown & Root), Honeywell International, Amec Foster Wheeler, and Baker Hughes, a General Electric company. The SFO is investigating Petrofac and UK subsidiaries of ABB and KBR, but nothing on the Ahsanis or Unaoil itself.

On 25 June 2019, the day when the SFO quietly dropped its investigation into the Ahsanis and Unaoil, the DoJ announced a deferred prosecution agreement with TechnipFMC, which by then had acquired FMC Technologies.

The company agreed to pay a criminal fine of more than $296m to resolve foreign bribery charges related to the company’s misconduct in Brazil and Iraq. The fine is 14-times greater than the company’s latest quarterly profit. Technip is now separating Technip and FMC, just three years after the merger.

A legal filing shows that at the centre of FMC’s bribery schemes “was a Monaco-based oil and gas services intermediary that provided sales and marketing services to FMC Technologies in Iraq”. Among the foreign officials it targeted were those in the South Oil Company.

The same filing mentions three individuals “whose identity is known to the United States” and whose citizenship details are an unusual mix of British, Iranian, and renounced American. They are placed at the centre of the Iraq bribery scheme as executives of the Monaco intermediary, but not named and not charged.

They are the Ahsanis – Ata, Cyrus, and Saman – who are back where they have always been: in Monaco, striking deals.


Cover and portrait of Saman Ashani by Rebecca Marshall

Further reading

Nick McKenzie at The Age in Melbourne broke the Unaoil story in March 2016. His series of reports is called ‘The Bribe Factory’.

Christine Lagarde, as IMF Managing Director, gave an eloquent speech on the costs of corruption, ‘Addressing Corruption with Clarity’, at the Brookings Institution, Washington DC, 18 September 2017.

Sally Yates, as US Deputy Attorney General, wrote a memo on ‘Individual Accountability for Corporate Wrongdoing’, on 9 September 2015, which is now known as the Yates Memo.

Global Witness, an anti-corruption NGO, wrote a blog-post on why corruption in the energy sector is a transnational problem that needs transnational enforcement on 20 December 2016.