The Sonatrach corruption scandal
Senior staff under investigation for alleged corruption in contract awards
On 14 January, the Algerian press revealed that Sonatrach president and CEO, Mohamed Meziane, had been put under judicial supervision along with Chawki Rahal, vice-president for marketing, and four other senior members of the firm. Several executives were jailed, including two other vice-presidents – Belkacem Boumedienne, responsible for upstream, and Benamar Zenasni, head of the pipelines division – and Meziane’s two sons.
The actions followed investigations by the state security service, Departement du Renseignement et de la Securite (DRS), into alleged corruption in the award of contracts. Meziane was replaced by the one vice- president to escape charges, downstream head, Abdelhafid Feghouli. Investigations are ongoing.
The significance of the removal of almost all Sonatrach’s upper management cannot be overstated. Chakib Khelil, Algeria’s oil minister, has been at pains to point out the executives are innocent until proven guilty, and their replacement is purely an interim measure until investigations are complete.
But the fact that the investigation is taking place is of great political significance. Government ministers insist President Abdelaziz Bouteflika initiated the investigations, and they are part of a wider effort to tackle corruption. But observers in Algiers say the more likely explanation is the DRS, which helped bring Bouteflika to power in 1999, wishes to remind the president that his authority still rests on their backing.
The events undermine the authority of both Bouteflika and Khelil, whose position as minister has already been threatened on two occasions. He survived a similar scandal in 2007 when an associate was jailed for corruption in the direct award of contracts to Brown Root Condor, a consortium of the US’ Halliburton and the Algerian state. And he was also thought to be close to resignation when elements of the hydrocarbons law that he personally sponsored in 2005 were removed the following year, but continued in office with the backing of the president.
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