- London court hands Petrofac $104m penalty, including costs
- Group admits to failing to prevent bribery and corruption in between 2011 and 2017
The Serious Fraud Office (SFO) has said Petrofac (PFC) has admitted to paying tens of millions of pounds in bribes between 2011 and 2017, and will now hand the anti-corruption body £77m in penalties and costs. The exact charges related to the oil services' group's "failure to prevent bribery". The penalty was far less than the $240m (£176m) Petrofac said it expected in a statement to the market on 1 October.
"By pleading guilty, Petrofac Limited has accepted that senior executives within the Petrofac Group acted deliberately and without conscience in the pursuit of greed," said SFO director Lisa Osofsky. The SFO said the company disguised payments through sub-contractors, created fake contracts for "fictitious services" and passed payments through several agents and countries. The anti-graft body came across £32m in corrupt payments and bribes in its investigation, linked to contracts worth £2.6bn in Iraq, Saudi Arabia and the United Arab Emirates.
Petrofac made the admission of guilt as a company, and only one former employee has faced court for the years of bribery. David Lufkin, the company's former head of sales, was given a suspended jail sentence of two years on Monday.
"This part of our history does not represent the Petrofac of today - a company that as its new CEO I am proud to lead, and which operates upon the core principle of ethical business conduct, supported by a comprehensive governance regime," said Petrofac chief executive Sami Iskander.
The leadership from the period is still around, however. Former chief executive Ayman Asfari handed over the top role in January but has kept his seat on the board. New CFO Afonso Reis e Sousa, who joined the board last month, has been at the company in various finance roles since 2012. Former CFO Alastair Cochran left last month.
Petrofac said the sentencing and fine meant the conclusion of the SFO's investigation into the company specifically. The anti-corruption body said it "continues to investigate this case".
The company's shares have almost doubled in the past fortnight as a penalty looked imminent, including a 6 per cent rise on this announcement. The stock's recent performance has been in-line with the rest of the oil and gas services industry, which struggled last year as clients cut spending but is now looking healthier. This payment does still mean a dent in this year's earnings - the pretax profit consensus estimate is $67m for 2021 - and for us, a conviction for not preventing bribery is enough to keep away from Petrofac regardless of new governance standards. Sell at 187p.
Last IC View: Sell, 177p, 12 Aug 2020
