Ex-Petrofac executive pleads guilty to 11 counts of bribery, UK Serious Fraud Office says
David Lufkin plead guilty to 11 counts of bribery relating to making corrupt offers to influence contract awards worth billions, according to the SFO
David Lufkin, former global head of sales at Petrofac International Limited, plead guilty to 11 counts of bribery on 6 February, according to a news release by the Serious Fraud Office (SFO), which has been investigating the British company on allegations of corruption. The SFO noted that Lufkin would be sentenced at a later date.
The charges against Lufkin "relate to the making of corrupt offers to influence the award of contracts to Petrofac worth in excess of $730 mn in Iraq and in excess of $3.5 bn in Saudi Arabia," the SFO wrote in a news release.
The charges by the SFO include payments of $2.2 mn "by Petrofac to two agents in respect of a $329.7 mn EPC contract on the Badra oilfield in Iraq." The Badra Phase One EPC contract was awarded to Petrofac in February 2012. The SFO also noted further offers of payment to influence contract variations and the extension of a related operations and maintenance (O&M) contract; Petrofac did not obtain either of the contracts and payments were not made.
Payments regarding the Fao Terminal project in Iraq were also included among the SFO's charges, which noted that $4 mn in payment were made by Petrofac with regards to an O&M contract, which was awarded to the company in August 2012 and extended in 2013, 2014 and 2015. SFO estimates that this was worth around $400 mn to Petrofac.
In Saudi Arabia, charges involve three downstream projects. The SFO lists the EPC contract for Petro Rabigh Phase II Petrochemical Expansion Project, worth approximately $463 mn, for which the SFO says "payments of approximately $5.8 mn were ultimately made by Petrofac to its agent."
Regarding the Jazan Refinery and Terminal Project EPC contracts, worth an estimated $1.7 bn, which were awarded to Petrofac in December 2012, Petrofac made payments of approximately $21.4 mn to its agent.
Petrofac also paid approximately $19.5 mn to its agent in respect to the EPC contract for a sulphur recovery plant as part of the Fadhili Gas Plant Project, which was awarded in November 2015 and is worth an estimated $1.56 bn.
SFO noted that "corrupt offers of payments were also made to its agent for the award of other contracts at the time," but Petrofac did not obtain those contracts and made no payments to its agent.
Petrofac released a statement responding to the SFO announcement, noting that no current board member of Petrofac Limited is alleged to have been involved.
"The SFO has chosen to bring charges against a former employee of a subsidiary company," René Médori, chairman of Petrofac, said. "It has deliberately not chosen to charge any Group company or any other officer or employee. In the absence of any charge or credible evidence, Petrofac intends as a matter of policy to stand by its employees."
“Petrofac has policies and procedures in place designed to ensure that we operate at the highest levels of compliance and ethics,” the statement continued.
After the announcement of Lufkin's guilty plea by SFO, Petrofac dropped 25.81% (as of writing) on the London Stock Exchange. In May 2017, the SFO questioned Petrofac COO Marwan Chedid, who was then suspended and resigned from the board, while CEO Ayman Asfari, who was also questioned by the SFO, stayed on as CEO, according a report by Reuters.
The charges were part of the Serious Fraud Office's wider investigation into Unaoil, a Monaco-based oil and gas consultancy.
Petrofac did not immediately respond to an emailed request for comment.