Petrofac on Monday was ordered to pay £77 million (U.S. $105 million) to conclude a long-running investigation into allegations company executives paid to win lucrative oil contracts in Iraq, Saudi Arabia, and the United Arab Emirates (UAE).
The oilfield services company pleaded guilty at Southwark Crown Court on Friday to seven counts of failing to prevent bribery perpetrated by former senior executives. The U.K. Serious Fraud Office (SFO) had alleged the misconduct took place from 2011-17.
“A key feature of the case was the complex and deliberately opaque methods used by these senior executives to pay agents across borders, disguising payments through sub-contractors, creating fake contracts for fictitious services and, in some cases, passing bribes through more than one agent and one country, to disguise their actions,” the SFO stated.
In total, according to Petrofac’s admissions, the senior executives paid £32 million (U.S. $44 million) in bribes in exchange for the awarding of contracts worth approximately £2.6 billion (U.S. $3.5 billion) in violation of Section 7 of the U.K. Bribery Act.
The penalty is comprised of a confiscation order of £22.8 million, a fine of £47.2 million, and the SFO’s costs of £7 million. On Friday, Petrofac acknowledged “a potential penalty of U.S. $240 million” prior to the application of any adjustment to the level of the fine.
In determining the final penalty, the court and the SFO acknowledged Petrofac has since transformed its leadership, personnel, compliance, and assurance processes, the company stated Monday. All employees involved in the charges are no longer with the business.
“Petrofac has a well-developed, comprehensive compliance and governance regime,” it stated. “This is supported by a dedicated compliance and investigations team, new systems and technologies, mandatory training and a company culture based on ethical business conduct and transparency. Its compliance regime is championed, supported, and overseen at local, divisional and Board level, and supplemented by regular independent audit.”
Petrofac Chairman René Médori added, “This draws a line under a regrettable period of our history. We have taken responsibility, reformed and learned from these past mistakes, as acknowledged by the SFO and the Court.
“Most importantly, the extensive work that we have done since the SFO investigation began means that the Petrofac of today has a comprehensive compliance and governance regime that meets or exceeds international best practice. The past behavior uncovered by the SFO would not be possible today, and we look to the future a better and more focused company, well positioned to capitalize on the opportunities we see before us.”
Group Chief Executive Sami Iskander shared similar sentiments, noting Petrofac now “operates upon the core principle of ethical business conduct, supported by a comprehensive governance regime.”
The agreement marks the third set of convictions secured by the SFO in its four-year investigation of Petrofac. The company’s former head of global sales, British national David Lufkin, was also sentenced Monday for 14 counts of bribery after previously pleading guilty. He received a two-year custodial sentence, which was suspended for 18 months.
SFO Director Lisa Osofsky said the settlement “should serve as a warning” the SFO “will use all the powers at its disposal to root out and prosecute companies and individuals, whose criminal activity detrimentally affects the reputation and integrity of the United Kingdom.” She added the SFO “welcomes Petrofac Limited taking responsibility for its conduct.”