Transforming Corruption: South MunaiGas Case Study

• In Event: Teaching Cases I

Abstract

In 2007, Russian NothOilService (NOS) acquired 98 percent of shares of Kazakh drilling company South MunaiGas (SMG). This included the President/CEO, shares as well. Due to the fact that NOS did not have prior knowledge of drilling operations, it decided to retain SMG managers to reorganize SMG’s operating processes. Under the assumptions that the bankruptcy of SMG was not based on corporate corruption, initially, NOS was unable to prevent the management team of SMG of committing fraud, AGAIN. This case study focuses on the forensic accounting fraud allegedly perpetrated by the SMG management team and the anticorruption measures implemented by NOS. In order to detect fraud and corruption activities being presented in this case, a basic understanding forensic analysis and the importance of fraud accounting are needed.

Authors

• Willie Dion Reddic, DePaul University

• Georgi Shmagel, DePaul University