Eni Stands by Chief Scaroni as Algerian Corruption Probe Widens

Eni SpA stood by its Chief Executive Officer Paolo Scaroni as a probe into alleged bribery by Saipem SpA, where it’s the largest shareholder, widened to include him.

“Eni and its CEO declare themselves totally unrelated to the object of the investigation,” the Rome-based oil company said in a statement yesterday. Chairman Giuseppe Recchi told Italian newspaper Corriere della Sera today that he sees no reason for Scaroni to resign.

Several executives have already fallen amid an Italian probe into the award of oil-services contracts to Saipem in Algeria. In December Pietro Franco Tali quit as CEO of Saipem, which also suspended the chief operating officer of its engineering unit. Eni Chief Financial Officer Alessandro Bernini, Saipem’s CFO until 2008, stepped down the same month.

“It’s conventional wisdom that oil companies operating in certain areas of the world sometimes give bribes which, for a small amount, can give access to huge contracts,” said Nicolo Sartori, an energy analyst at Rome’s Institute for International Affairs. “That doesn’t make it less illegal. If it happened, people involved will be held accountable.”

Scaroni’s home and office have been searched as part of the probe, and Eni has said it will cooperate fully with the prosecutor’s office in Milan. Saipem said in December the investigation involves the award of contracts up until 2009.

No Interference

Scaroni, 66, was appointed Eni CEO in June 2005. He is serving his third term, which expires in 2014. Scaroni told Italian newspaper La Repubblica he doesn’t and can’t interfere with Saipem contracts because 90 percent of the company’s operations are with Eni competitors.

Eni rallied after two days of declines in Milan trading. The shares rose as much as 1.6 percent to 17.61 euros, and were at 17.53 euros as of 1:22 p.m. local time.

Saipem’s new CEO Umberto Vergine said yesterday that he wasn’t aware of any new developments in the investigation and the company has no plans to set aside financial provisions related to the probe.

Saipem, which is 43 percent-owned by Eni and is Europe’s biggest oil-services provider, has always denied any wrongdoing.

Before it's here, it's on the Bloomberg Terminal.