US contractor hits back in Colombia refinery scandal

Source: ICIS News

2017/04/28

MEDELLIN, Colombia (ICIS)--US-based contractor Chicago Bridge & Iron (CB&I) on Friday defended itself after Colombian authorities accused two of its executives of being engaged in illicit activity during the renovation of the Reficar refinery.

Colombia’s attorney general’s office said on Thursday it intended to charge eight individuals for crimes linked to the disappearance of more than Colombian pesos (Ps) 610bn ($207.3m) during the expansion and modernisation project led by CB&I.

Reficar, close to the Caribbean port of Cartagena and one of two major refineries owned by state oil company Ecopetrol, reopened in late 2015 after an overhaul that took almost a decade to complete.

Philip Kent Asherman and Masoud Deidehban, along with current and former executives for Reficar and Ecopetrol, will be formally charged in the first week of June, the attorney general said during a recorded press conference. 

Asherman is CB&I’s CEO. 

A spokesman for CB&I, yet to be officially notified of the charges, described the accusations as “erroneous” and “completely unwarranted”.

“It is regrettable that they have chosen to take this unjustified course of action,” Gentry Brann said in an e-mail. “We will vigorously defend the company and our employees against any unjust accusations.”

A spokeswoman for Reficar was unable to provide immediate comment.

Authorities in Colombia first suspected something amiss at Reficar in early 2016 after the comptroller general’s office claimed spending on the overhaul had doubled to $8.02bn from a 2009 budget of $3.99bn.

Allegations emerged of embezzlement, money laundering and inappropriate payments.

Ecopetrol denied that corruption played any part in the cost overruns.

Instead, the state-owned company accused CB&I of bad management, low productivity and purchasing errors, and has since filed a suit before the International Chamber of Commerce seeking $2bn in damages.

Last month, the comptroller general’s office announced it was investigating dozens of Colombian officials, including Ecopetrol CEO Juan Carlos Echeverry and the current finance and defence ministers, for their alleged mismanagement during the project.

The comptroller general is seeking to reclaim $6bn, significantly more than the Ps610bn listed in the attorney general’s charges on Thursday.

The overhaul itself, which was first mooted over 20 years ago, called for the installation of 34 new units to boost fuel and petrochemical output.

Crude processing resumed in December 2015. 

The refinery is now running at its full capacity of 150,000 bbl/day, while operations are likely to be stabilised in the second half of this year, a Reficar spokeswoman said.

($1 = Ps2,943)