Oman corruption investigations could delay major projects

30 January 2014

More than 20 individuals involved in trials following conviction of Galfar managing director

Major oil and gas projects in Oman could be delayed by ongoing corruption investigations, following the conviction of the head of the sultanate’s largest construction group Galfar Engineering & Contracting earlier this year, according to industry sources.

Galfar managing director Mohammed Ali, who has since stepped down, was charged in January along with Juma al-Hinai, former head of state oil company Petroleum Development Oman’s (PDO) tender board, for involvement in bribes associated with PDO projects.

Several more corruption hearings in Oman’s oil and gas sector are expected to be resolved in early 2014 involving more than 20 government officials and private-sector executives, according to reports.

These include individuals from clients PDO, Oman Oil Company (OOC) and Oman Gas Company (OGC).

OOC and its subsidiary OGC are behind some of Oman’s biggest energy and infrastructure projects in the sultanate over the coming years, including the OOC-backed Duqm Refinery and Ras Markaz crude storage terminal.

“OOC is doing several reviews, especially on projects already in the process of contract awards. All of that is being investigated, which means delays,” said a contractor active in Oman’s oil and gas sector.

“Internal audits could definitely cause delays on some of the big projects going on there,” the source added. “Oman is always talking about transparency and in-country value, and all this has turned things a bit upside down.”

OOC was not available for comment on internal investigations.

The first case was concluded when, earlier this month, Oman’s Court of First Instance sentenced Al-Hinai to three years in jail with a fine of RO600,000 ($1.56m) and banned him from holding public office for 20 years.

Ali was sentenced to three years in jail and also fined RO600,000, while Galfar manager Abdullmajeed Naushad was given a two-year sentence with a fine of RO200,000.

The case started in November 2014 when Al-Hinai was charged with accepting RO200,000 from Ali to extend a Galfar contract awarded by PDO. Naushad was charged with complicity in providing the bribes.

Ali and Naushaf, both Indian citizens, will be deported after they have completed their prison sentences, the court heard.

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