Saipem (Italy)

Updated: January 09, 2017
Status: Ongoing Case
Labaton Sucharow represents clients as liaison counsel in a proposed action against Saipem S.p.A. (Saipem), an Italian oil and gas industry contractor. The case stems from Saipem's failure to timely and adequately inform investors of the true nature of its finances, which caused its stock dropped considerably. On April 28, 2015, Deminor filed a lawsuit on behalf of a group of 64 institutional investors against Saipem in the Court of Milan (Tribunale di Milano) to seek compensation for losses suffered on purchases of the company's shares. 

In 2012, Saipem company officials were accused of bribing officials from Sonatrach, Algeria's government-owned oil and gas company, in exchange for ensuring local development deals. Despite these bribery allegations, throughout 2012, Saipem's previous CEO, Pietro Franco Tali, touted stable margins and 2013 earnings were expected to be similar to 2012. On December 5, 2012, Tali suddenly resigned to allow the company "to better respond to the Milan Prosecutor's inquiry" into bribery payments in Algeria. The company then installed a new management team that promised to provide greater transparency to the public. 

The new management uncovered misreporting from 2012. The company issued a profit warning on January 29, 2013, announcing a 50 percent drop in EBIT from €1.5 billion to €750 million. Another profit warning was issued in June, in which the expected 2013 EBIT was further reduced to zero. The stock price fell by 34 percent and 29 percent respectively on these two disclosure dates. The new management's operational review revealed weaknesses and "serious deficiencies" in the company's internal organization, risk management and reporting mechanisms. CEO Umberto Vergine admitted the company faced "major legacy issues, which have proved to be of greater magnitude than we envisaged."

In August 2013, Italian regulatory authorities brought charges against Saipem regarding the timing of the profit warning and the 2012 accounts, and in September of that year, Italian investigators began investigating allegations of insider trading and market manipulation.

This case is still in the early stages with the judge evaluating whether powers of attorneys presented by the plaintiffs are acceptable. That issue should be resolved at a hearing in April 2017.