Petrofac fined £77m for string of Middle Eastern bribery charges
Petrofac has been fined £77m for seven separate charges of failing to prevent bribery in the Middle East, to which the London-listed oil services provider plead guilty last month.
The penalty, for failing to prevent former Petrofac employees from offering or making payments to agents in relation to projects awarded between 2012 and 2015, is comprised of a £22.8m confiscation, another £47.2m fine and the Serious Fraud Office’s (SFO) costs of £7m.
As all involved employees have now exited the business, Petrofac’s corporate reform influenced the penalty’s figure, Southwark Crown Court heard today.
Shares jumped 7.3 per cent to 186.7p per share following the announcement.
Chairman René Médori said: “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.
“The past behaviour uncovered by the SFO would not be possible today, and we look to the future a better and more focused company, well positioned to capitalise on the opportunities we see before us.”
The sentencing, which had been previously postponed until today, followed the oil services group cutting a plea deal with the fraud watchdog in a bid to bring a close to the long-standing inquiry.
SFO director Lisa Osofsky said: “By pleading guilty, Petrofac Limited has accepted that senior executives within the Petrofac Group acted deliberately and without conscience in the pursuit of greed. The company’s failure to prevent this conduct distorted competitive market conditions and tainted the oil and gas industry.
“Today’s result 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.
“The SFO welcomes Petrofac Limited taking responsibility for its conduct.”
Returning to the Middle East
Chief executive Sami Iskander said: “We are now in a position to put this behind us. 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.
“We emerge from this cloud as the world needs more energy – both traditional energies that can be produced in the most efficient manner, and renewable energies on which a lower carbon world can be built. Petrofac is well positioned to support both.”
Petrofac will have until 3 January 2022; 14 February 2022; and 14 February 2022 respectively, to pay the three fines that make up the total £77m penalty.
And with the SFO’s investigation now over, Petrofac can return to Middle Eastern markets for fresh contracts, equity analyst at Hargreaves Lansdown, Laura Hoy explained.
“The monetary loss will be a relief, since far higher numbers were bandied around at the start of the investigation, and Petrofac is more than capable of covering the fine. Though it could prove unhelpful as the group aims to shore up its balance sheet and return to a net cash position.
“The bigger story is that the end of the investigation will unlock the lucrative Saudi Arabia and UAE markets. Petrofac’s been unable to compete for new contracts with the investigation underway, and that’s created a lot of uncertainty about the group’s order book. With the shackles off, future prospects should start looking rosier,” she said.