British oil services company Petrofac (PFC.L) was fined 77 million pounds ($105 million) on Monday and a former executive received a two-year suspended sentence after both pleaded guilty to bribery in Iraq, Saudi Arabia and the United Arab Emirates.
The penalty from Southwark Crown Court in London is less than the $240 million the company had said it might face for failing to prevent bribery between 2011 and 2017. read more
Its shares jumped by as much as 17% after the announcement to their highest since June 2020.
Petrofac’s former head of sales David Lufkin, who pleaded guilty to 14 counts of bribing agents with more than $80 million to influence around $7.5 billion of contracts, was given a two-year suspended sentence.
Lufkin’s lawyer was not immediately available for comment.
Petrofac had admitted that senior executives paid 32 million pounds in bribes related to the awarding of contracts worth around 2.6 billion pounds, the Serious Fraud Office (SFO) said.
“Senior executives within the Petrofac Group engaged in elaborate schemes to corrupt the awarding of contracts, using agents to systematically bribe officials to win lucrative contracts by unfair and dishonest means,” the SFO said.
“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.”
Judge Deborah Taylor said that corruption was systemic, serious and grave and that Petrofac’s controls were wholly inadequate, but she said she did not consider it necessary to put the company out of business.
Petrofac intends to proceed with a refinancing flagged ahead of the sentence, which could include raising debt or equity.
With the four-year investigation by Britain’s SFO hanging over its past contracts, Petrofac has struggled to secure contracts in the Middle East and has seen its shares battered.
“All employees involved in the charges have left the business. This concludes the Serious Fraud Office’s investigation into the company. In determining the penalty, the Court and the Serious Fraud Office acknowledged Petrofac’s corporate reform,” the company said.
The case marked the second corporate guilty plea secured by the SFO in about five months.
Former Airbus (AIR.PA) subsidiary GPT Special Project Management pleaded guilty to corruption over military contracts for Saudi Arabia in April.
($1 = 0.7363 pounds)