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City Diary: Kazakhstan oil company's directors drink deep from the remuneration well

October 24 2014, 10:22

No wonder there's an investor revolt at loss-making Tethys Petroleum, following multimillion-dollar expenses and payments to directors' consultancy companies.

Diary understands why shareholder revolt is welling up at Tethys Petroleum, after major investor Pope Asset Management this weekcalled for the removal of “the majority of directors” from the Kazakhstan-focused oil company's nine-strong board.

Last year, for example, the energy company’s “administration” costs of $18.7m (£11.7m) were even bigger than its losses of $17.6m, thanks to spending that included $8.7m on staff expenses, $3.1m on travel, and a mysterious $2.1m on “other”.

But that didn’t seem to concern the Tethys compensation committee, overseen by non-executive directors Peter Lilley MP and Piers Johnson. According to the 2013 annual report, the company’s “key management personnel” were paid a combined $6.17m in salary and shares over the year to December 31 last year.

Digging deeper still into the finances of Cayman islands-domiciled Tethys, Diary learns that Oilfield Production Consultants, where Mr Johnson is a founding director, was paid fees of $111,284 from Tethys in 2013.

Meanwhile, Vazon Energy, a offshore company wholly owned by Tethys chairman Dr David Robson, charged the company $1.3m for its services, and Khalilzad Associates, an international consultancy run by Tethys director Ambassador Zalmay Khalilzad, presented a bill for $96,440 for “business development”.

Could it perhaps be time for Dr Robson, who employs a “close family member” at the company, to take his medicine, as irate investors demand?

It's the “dog ate my homework” excuse for City executives who really should know better. According to Travelodge, one business customer recently asked the budget hotel chain to call his boss and say the company's cleaners had lost his presentation.

Other bizarre requests over the last year, says Travelodge, include: “Can my boss be dropped by helicopter in the hotel car-park?” and “Please could you make sure these numbers add up in my company report?"

This last one concerns Diary, since it was made by a financier in the chain's City of London hotel in Bank, near the Bank of England.

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