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‘Benefits Outweigh Risks’, Medserv Says About Deal With Oilfield Company With Angolan Connections

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A publicly-listed Maltese company is about to enter into a major deal with a Mauritius-based business whose links with Angola could raise eyebrows.

But the Maltese operators believe “the benefits outweigh the risks”.

The “transaction”, as it is being described, brings together two publicly-listed oilfield companies: Malta-based Medserv and Mauritius-based Regis, which will help Medserv restructure its debt thanks to a significant amount of money it will be injecting.

But questions are being asked about who owns Regis and where its money comes from.

According to Medserv, the ultimate beneficiary owners are Dave O’Connor and Olivier Bernard, who also have an executive role in Regis plc and will continue to have a significant role in MedservRegis on completion of transaction.

Files online show that the company is actually owned by two trusts in the Seychelles, linked to O’Connor, and one in Mauritius, linked to Bernard.

“It seems odd that the interest of O’Connor in Regis shares should be through two trusts rather than just one and that there is no address given for the legal owner of the shares. In fact, for a listed company why are 100% of the shares still being held through three trusts? It’s the opposite of transparent,” a source in Mauritius told Lovin Malta.

The source said that to get a deeper understanding of Regis and its owners, you need to understand the Angolan background of Bernard, who had a 16-year career in the controversial oil industry of the African nation.

Bernard started in the oil industry in 2010 with the Orlean Group led by the colourful Italian billionaire Gabriele Volpi. Orlean is a leading logistics and service provider for the oil and gas industry with big operations that have included Angola, Nigeria and Mozambique.

His ties to this company were very personal. Bernard listed the Orlean company address in London as a forwarding address for his own property in southern France and used the same address to register Sonils.com.

Sonils is the name of an oil service centre in the port of Luanda (Angola) which Orlean set up in partnership with the Angolan state oil company Sonangol. In fact, the full name of Sonils is ‘Sonangol Integrated Logistics Services”. And it made a lot of money.

What started as a 50:50 partnership mysteriously shifted to 70:30 in favour of Orlean before finally becoming 100% owned by the Angolan state company in 2012 after millions of US dollars were paid out in dividends and share sales.

Sonils fattened ghost shareholders pockets with over invoiced prices,” read one headline in the Angolan press.

By 2010, Bernard was the deputy general manager of Sonils, having built a large network of high profile Angolans, many of whom have since been investigated for wrongdoing.

In 2019, Regis, appeared on the Mauritius stock exchange after 27 years in operation, describing itself as having been a key partner and equipment and service provider to Sonils through a “rolling multi-year contractual agreement” based on purchase orders.

Regis also claims that in 2011 – shortly after Bernard took up his senior executive role at Sonils – through its subsidiary Regis Management Services Limited, it signed a yearly agreement covering the provision of services and staff with Sonils. This agreement has, according to Regis, been consistently renewed since then.

It is apparent from Regis’ March 2019 prospectus that its relationship with Sonils was key to its financial strength since the first of the five subsections making up the “Growth Strategy” section is entirely dedicated to Angola and Sonils.

The timing of the move to Mauritius stock exchange listing is significant because in 2017, the newly-elected President of Angola Joao Laurenco sacked Isabel Dos Santos – the daughter of the former President – as head of Sonangol. That’s when Bernard decided to move to Mauritius and join Regis, which now seems to have set its sights on Malta, itself having just missed greylisting by Moneyval.

Fears in Mauritius are that the nation’s stock exchange was effectively being used to move questionably-obtained money and these are just the sort of actions that keeps Mauritius blacklisted.

Unlike most publicly-listed companies, Regis never sold shares to the public despite saying it would do so.

Asked about this, Medserv says the listing was fairly recent and the two shareholders were working on a strategic plan to sell shares to the public or a strategic partner “but the COVID19 impact in year 2020 disrupted their plans”.

Another issue raised is that Regis never published their full audited accounts.

Medserv says Regis always published its results on a quarterly basis as well as the audited financial statements but these are no longer available because a condition to the transaction was delisting Regis from the stock exchange of Mauritius.

In reality, only a condensed consolidated financial report had been published, only for the year in which Regis was listed.

Medserv also says that the audited consolidated financial statements of Regis Group for the financial years ended 31 December 2018, 31 December 2019 and 31 December 2020 were available for viewing at the registered office of Medserv plc.

A copy of the full 2020 accounts has been given to Lovin Malta.

Asked if Medserv was comfortable with and fully aware of the Angola links to Regis, Medserv confirmed that Regis provides manpower, equipment and parts to the energy market of Angola.

“Regis clients are the same customers as Medserv, being national and international oil companies, oilfield services contractors, drilling and Engineering, Procurement and Construction companies. It also supports the mining industry in Mozambique.”

“There is no hiding that operating in Africa has risks and can be a challenging environment. In fact in Medserv’s circular to the shareholders, the directors highlight that Regis Group operates in a number of emerging markets such as Mozambique, Angola, and Uganda. The exposure to such markets present certain risks. However, Medserv plc (to be renamed MedservRegis) operates with the international energy companies and their international contractors and these businesses instil a high work ethic.”

Medserv CEO Karl Bartolo said the three integral culture values for Medserve were “Safety, Respect for Each Other and Performance-Minded”.

“Medserv plc will continue to instil this culture and requires its employees to act in an exemplary manner especially in the following areas: health, safety, security, environment, integrity in all its forms (particularly, the prevention of corruption, fraud, and anti-competitive practices) and human rights. It is through strict adherence to these values and to this course of action that Medserv intends to build strong and sustainable growth for itself and for all its stakeholders.”

Asked if he was comfortable with the fact that despite registering losses, Regis paid out millions in dividends to its shareholders, Bartolo said that prior to declaring any dividends Regis has to carry out a solvency test as per Companies Act of Mauritius, and it is only then that such a dividend can be declared and paid.

“The dividends were declared from previous profits. Following the signing of the share for share exchange agreement both parties have agreed on a locked box approach thus permitted leakages, such as dividends or bonuses, need to be approved by the other party.”

“We have been working with Regis to conclude this transaction for over six months and through our daily business activities we feel that the working culture and values of Regis plc are compatible with those instilled in Medserv,” he added.

“I definitely do not see any negative impact on Malta. Our view is a significant positive one. Medserv is a Maltese homegrown household name which presently is considered by the international energy companies as one of the top three integrated energy companies globally. Medserv will continue with its growth trajectory putting up the Maltese flag.”

“The global reach of the new group will be in four continents, present in 12 countries and operating 12 bases. Additionally, as a service company providing logistics and other services to the energy market, it is natural that it must be present in all areas where the international energy companies are based or are expected to be based. This consolidation of two complementing groups operating in two different geographical markets will strengthen the Company’s market position and broaden its geographic footprint in strategic locations around the Mediterranean region, in the Middle East, Sub-Sahara Africa and Suriname.”

“In 2019 Medserv generated revenue of €68.7 million which a significant amount of these revenues are remitted to Malta and are being paid by international energy companies through international bankers so a high level diligence is completed on these transactions.”

“We acknowledge that we operate in significant challenging jurisdictions given the nature of our business but we operate for the international firms including American multinationals whose standards of operating in terms of compliance, ethics and human rights are extremely high.”

“During the transaction process Medserv management did evaluate these risks and is of the opinion that the benefits of the transaction outweigh the risks, most of which can be minimised through our Corporate Governance structures.”

“I would add Medserv’s objective is to continue to deliver value to its shareholders, stakeholders and importantly, customers. This current environment demands a new operating model of better collaboration across the people and materials supply chains. Medserv will continue to seek and work with strategic players within its supply chain to provide fully integrated solution to customers.”

Meanwhile, MFSA told Lovin Malta that while it cannot comment on specific cases in view of confidentiality obligations, the companies involved “are not licensed by the MFSA and the Authority’s oversight is limited to ensuring proper transparency on the market and market integrity from a market abuse perspective”.

Asked whether MFSA believed the disclosure by Medserv related to Regis satisfies the requirements for transparency, MFSA said: “We would like to reiterate that in view of confidentiality obligations, the MFSA cannot comment on specific cases.”

What do you make of this deal?

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Christian is an award-winning journalist and entrepreneur who founded Lovin Malta, a new media company dedicated to creating positive impact in society. He is passionate about justice, public finances and finding ways to build a better future.

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