Petrofac must pay $95m in penalties for failing to prevent bribery after the UK oilfield services group pleaded guilty at Southwark Crown Court to seven offenses in a plea deal with the Serious Fraud Office.
The company was handed a $64m fine and a $31m confiscation order over the offenses, which relate to the payment of $44m in bribes to secure contracts in the Middle East worth $3.66bn.
Judge Deborah Taylor said the corruption had been “systemic, serious and grave” but took into account Petrofac’s cooperation and its precarious financial situation having required state-backed support during the pandemic.
The penalty was significantly lower than feared and does not bar the company from bidding for public contracts.
Petrofac’s shares rose more than 10 percent in morning trading. Its biggest shareholder is Ayman Asfari, a Conservative party donor who stepped down as the company’s chief executive last year.
The former head of sales David Lufkin avoided prison with a two-year sentence suspended for 18 months. Judge Taylor told him he had been “central to the use of corrupt agents” but that “Petrofac would not have pleaded guilty . . . had you not provided the detailed co-operation that you did.”
Petrofac pleaded guilty to seven offenses of failing to prevent bribery after admitting overseas agents had been bribed between 2011 and 2017 to win the contracts in Iraq, Saudi Arabia, and the United Arab Emirates.
Lufkin admitted to three bribery offenses relating to contracts worth about $3.3bn in the UAE and had pleaded guilty to 11 bribery offenses in 2019 relating to contracts worth more than $4.2bn.
Jonathan Kinnear QC, acting for the SFO, told the court that seven of the 14 counts admitted by Lufkin had overlapped with conduct to which Petrofac had admitted.
Lufkin made corrupt payments to agents in Iraq to help the company secure a lucrative contract from Russian oil and gas group Gazprom, the court heard, along with payments that helped secure two other contracts.
The payments included cash handed to an agent as well as false invoices for non-existent vehicles. One agent in Iraq told Lufkin: “You won’t be successful without my help.” In the UAE, the SFO obtained evidence including phone records and messages detailing how payments were routed.
The SFO opened its investigation into Petrofac in 2017 and Lufkin’s extensive cooperation meant the agency had been able to enter into plea discussions with Petrofac, Kinnear said.
Petrofac has until February to pay its fine and must pay an extra £7m to cover the SFO’s costs. Clare Montgomery QC, representing Petrofac, told the court the company needed to refinance a credit facility and repay a Covid-related corporate finance facility to the Treasury before paying any fine imposed by the court.
In handing down the fine Judge Taylor said she did not consider it necessary “for the company to be put out of business”.
Thomas Allen QC, representing Lufkin, submitted that his client had cooperated extensively with the SFO, providing 300 pages of witness statements, and had his life “opened up like a can and inspected for four years” by the agency.
He said Lufkin had “shown backbone when it came to facing up to the reality of the situation”, as he argued that his client should avoid prison.
Judge Taylor said that Lufkin had shown “moral courage” by submitting to an agreement with the SFO to give detailed statements and evidence, and had a realistic chance of rehabilitation.
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)
