Petrofac shares surge after $95 million UK bribery penalty

By Ellen Milligan on 10/4/2021

(Bloomberg) --UK oilfield service provider Petrofac Ltd. must pay a $95 million penalty by a London judge for failing to prevent bribery between 2011 and 2017.

The penalty includes a $64 million fine and a $31 million confiscation order. The levy comes after the company pleaded guilty to seven bribery offenses, in a deal with the UK’s Serious Fraud Office.

Shares jumped as much as 17% in London trading to their highest since June 2020. The charges relate to former employees offering or making payments to agents in relation to projects in Iraq, Kingdom of Saudi Arabia and the United Arab Emirates.

The company admitted last week to failing to prevent $44 million in bribes being paid to secure $3.6 billion worth of contracts. Petrofac was also ordered to pay 7 million pounds ($9.5 million) in legal costs.

“The corruption in this case is systemic, serious and grave,” said Judge Deborah Taylor. She said that the company has substantial short term debt, and that payment cannot be met without refinancing.

“Despite the very serious offending, I do not consider it necessary to put the company out of business,” Taylor said. She made reductions based on the company’s change of leadership, compliance practices and their “serious attempt” to “change the culture and approach to compliance and address its past offending.”

The fine fell short of what the SFO sought, who’d asked the judge to order a 154 million pound penalty.

“This draws a line under a regrettable period of our history,” Petrofac chair, Rene Medori, said.

By pleading guilty, Petrofac has accepted that its employees “acted deliberately and without conscience in the pursuit of greed,” Lisa Osofsky, SFO director, said.

A former senior executive at Petrofac, David Lufkin, was handed a two year suspended sentence at Southwark Crown Court on Monday, avoiding jail time.

Taylor said Petrofac would have been unlikely to enter a plea deal if it hadn’t been for Lufkin’s own guilty plea and cooperation with prosecutors.

The judge recognized that, since the investigation began four years ago, he “has done all that he could to redress the mistakes that he has made in the past,” Lufkin’s lawyers said in an email.

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