Petrofac Ltd updates
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Petrofac has entered into a plea agreement with the UK Serious Fraud Office and indicated it will plead guilty to seven bribery offences over payments for contracts in the Middle East.
The SFO charged the oilfield services company on Friday with seven separate offences of failing to prevent bribery between 2011 and 2017 following a four-year probe. The company indicated it would plead guilty, triggering a 26 per cent jump in its shares.
Petrofac will enter formal pleas at a hearing on Monday at Southwark Crown Court. In a statement, chair René Médori said the charges concerned a “deeply regrettable period of Petrofac’s history”, adding: “Petrofac has been living under the shadow of the past, but today it is a profoundly different business.”
According to Petrofac, the charges relate to bribes or offers made to agents between 2011 and 2017 and contracts the company was awarded in Iraq, Saudi Arabia and the United Arab Emirates between 2012 and 2015.
The update comes after Petrofac’s former head of sales David Lufkin pleaded guilty to 14 counts of bribery relating to some $7.5bn worth of contracts. In January, Lufkin pleaded guilty to three counts of bribery relating to contracts in the UAE worth about $3.3bn. Those followed a hearing in 2019 in which he pleaded guilty to 11 counts relating to contracts worth more than $4.2bn. Lufkin will also be sentenced on Monday.
The SFO probe has had a stark impact on Petrofac over the years, affecting its ability to win work in key territories including Saudi Arabia, Iraq and Abu Dhabi. Its shares have lost around four-fifths of their value since the investigation was launched in May 2017. Analysts at Jefferies said they were assuming a fine in the region of $300m.
The SFO’s Petrofac probe stemmed from its blockbuster investigation into Monaco-based oil and gas consultancy Unaoil, which resulted in four convictions. One former executive at Unaoil admitted to paying $17m in bribes to secure contracts worth $1.7bn for the company and its clients.
The SFO’s decision to charge Petrofac comes after the anti-graft agency secured £28.1m from Airbus unit GPT in April, after charging it with corruption in relation to a UK government contract to provide services to the Saudi military. The prosecutions highlight moves from the SFO to secure criminal convictions of companies. In recent years, it has more commonly agreed settlement deals.
Petrofac said any financial penalty would be decided by the court, taking into account its ability to pay and efforts to overhaul its compliance processes and personnel.
Additional reporting by Nathalie Thomas
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