The former boss and chief operating officer of Afren, a London-listed oil and gas explorer, have agreed to pay $20m (£13m) to the company after being threatened by legal action over a series of unauthorised payments.

Osman Shahenshah, the ex-chief executive, and Shahid Ullah, the past chief operating officer, were sacked last autumn amid a scandal over cash transferred without the board’s consent.

The company confirmed on Friday it had received a $17m backpayment from the executives, plus a further $3m to cover the cost of a review.

“Afren has entered in to settlement agreements with Mr Shahenshah and Mr Ullah which release them of claims relating to the unauthorised payments,” it said.

“As a result of such settlement, the company has agreed not to pursue legal proceedings against Mr Shahenshah and Mr Ullah in connection with the claims relating to the unauthorised payments,” it added.

The decision to pursue the former executives in the courts came after an independent review in October by the law firm Willkie Farr & Gallagher and accounting firm KPMG. The review centred on Afren’s balance sheet and three transactions between the oil and gas explorer and some of its partners in 2012 and 2013.

In a document outlining the details of the review, Afren said there were two instances of it failing to comply with its reporting obligations under London Stock Exchange listing rules.

The Financial Times reported a statement from the lawyers of Shahenshah and Ullah saying they continued to “disagree with the company’s assessment of the issue” but were “pleased” that the matter was behind them.

Last summer, the FTSE 250 company reported that revenues in the first half of the year were down 30% to £565m partly due to a lower share of production at its key oilfield in Nigeria.

The Nigeria-focused oil producer has appointed a qualified chartered accountant, Toby Hayward, as interim chief executive. Hayward was a former head of oil and gas equity capital markets at Canadian banking group, Canaccord Adams.