A former executive of Petrofac pleaded guilty this week to bribery offenses in connection with an ongoing investigation by the U.K. Serious Fraud Office into the oilfield services company and its subsidiaries.

On 6 February 2019, David Lufkin, a British national and former global head of sales for Petrofac International, pleaded guilty at Westminster Magistrates’ Court to eleven counts of bribery, contrary to Sections 1(1) and 1(2) of the Bribery Act. These offences relate to the making of corrupt offers to influence the award of contracts to Petrofac worth more than U.S. $730 million in Iraq, and more than U.S. $3.5 billion in Saudi Arabia. Lufkin will be sentenced at a later date.

Among the charges: Payments of approximately U.S. $2.2 million were made by Petrofac to two agents for a U.S. $329.7 million engineering, procurement and construction contract on the Badra oilfield in Iraq (the “Badra Phase One EPC contract”), awarded to Petrofac in February 2012.

Corrupt offers of payments were also made to an agent to influence the award of contract variations to the Badra Phase One EPC contract and for the extension of the Badra Operations and Maintenance (O&M) contract. Petrofac was unsuccessful in obtaining these contracts and no payments were made to the agent.

Additionally, payments of approximately U.S. $4 million were made by Petrofac to an agent for an O&M contract on the Fao Terminal project in Iraq. The Fao Terminal O&M contract, awarded to Petrofac in August 2012, together with yearly extensions awarded in 2013, 2014, and 2015, was worth approximately U.S. $400 million to Petrofac.

In Saudi Arabia, payments of approximately U.S. $45 million were made by Petrofac to its agent for the following contracts awarded to Petrofac in Saudi Arabia between July 2012 and November 2015:

  • Payments of approximately U.S. $5.8 million for of EPC contracts for the Petro Rabigh Phase II Petrochemical Expansion Project awarded in July 2012, worth approximately U.S. $463 million;
  • Payments of approximately U.S. $21.4 million for EPC contracts for Jazan Refinery and Terminal Project awarded in December 2012, worth approximately U.S. $1.7 billion; and
  • Payments of approximately U.S. $19.5 million for an EPC contract for a sulphur recovery plant as part of the Fadhili Gas Plant Project awarded in November 2015, worth approximately U.S. $1.56 billion.

“Corrupt offers of payments were also made to its agent for the award of other contracts at the time,” the SFO said. “Petrofac was unsuccessful in obtaining these contracts, and no payments were made to its agent.”

The SFO’s investigation into Petrofac’s use of agents in multiple jurisdictions, including Iraq and Saudi Arabia, is ongoing.

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