Renaissance, the Omani oil services company that this week revealed fraud in one of its units, has embarked on a damage-control campaign to try to halt a sell-off.
Shares on the Muscat exchange rallied 7.8 per cent to close at .565 Omani rials yesterday after the company's top officials sought to reassure investors the ethical lapses were limited to an overseas division of Topaz Energy and Marine, a unit based in Dubai.
"The investigation into those matters centred on a total of US$2.9 million (Dh10.6m) cash over a six-and-a-half year period. That is the limit of it," said Stephen Thomas, the chief executive of Renaissance. "There is no black hole … For us inside the business, these matters are history."
The efforts revived shares of Renaissance, which had slumped by nearly a quarter in three days of straight losses after Monday's unveiling of what it called "the story of one of the most troubled periods in our company's history".
In a filing that day to the Muscat exchange, Renaissance said it had found fraud and other ethical misconduct inside an overseas Topaz subsidiary that it declined to name. It also said it had accepted the resignation of three top Topaz executives including Fazel Fazelbhoy, the former chief executive, after finding signs of a "command and control" leadership style.
"That's an organisation where hierarchy and systems and process drive, rather than support, the business," said Mr Thomas, who took over as chief executive at Topaz after Mr Fazelbhoy left in May. "There was a difference in agreement on the management style and shape to go forward, and there was a difference in the view of the priorities of the business and the CEO role. From those differences, we reached a point in which we agreed for the CEO to step down."
Until this week Renaissance planned to complete a $1.3 billion expansion over the next two years and hoped to list Topaz in a $500m IPO in London.
Renaissance acknowledged it could see slower growth than originally projected but insisted it was sticking to the original scope of the investment plan.
"Our long-term cap-ex plan is still intact," said Vishal Goenka, the chief financial officer. "We are still looking at 1.3bn cap-ex. The timing might expand."
He cited regional unrest, the US economic slowdown and the tsunami in Japan as causes for the delay in unrolling investments into new offshore vessels and other equipment for the oil industry.
Renaissance said the financial problem at Topaz began before it bought the Dubai company in 2005.
"That specific issue is something that was started in the business before we owned it," said Mr Thomas. "Clearly we didn't pick it up at the time we bought it, when there was a due diligence process."