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February 7, 2019

Former Petrofac executive convicted in bribery case

A former executive of Petrofac has been convicted of 11 counts of bribery as part of an ongoing investigation into Petrofac and its subsidiaries.

By Umar Ali

A former executive of British oil firm Petrofac has been convicted of 11 counts of bribery as part of an ongoing investigation into Petrofac and its subsidiaries.

The UK Serious Fraud Office (SFO) reported that British national David Lufkin, 51, pleaded guilty at Westminster Magistrates’ Court on Wednesday.

The offences relate to corrupt offers made to influence the award of contracts to Petrofac worth up to $730m in Iraq, and up to $3.5bn in Saudi Arabia.

Bribery in Iraq

Payments of approximately $2.2m were made by Petrofac to secure a $329.3m engineering, procurement and construction (EPC) contract on the Badra oilfield in Iraq, which was awarded to Petrofac in February 2012.

Petrofac also offered payments to influence the award of contract variations to the Badra EPC contract and for the extension of the Badra operations and maintenance (O&M) contract, but the company was ultimately unsuccessful in obtaining these contracts.

Further payments of approximately $4m were made by Petrofac for an O&M contract on the Fao Terminal project in Iraq, which was awarded to the company in August 2012. This contract was worth approximately $400m, and Petrofac was awarded additional yearly extensions in 2012, 2013 and 2014.

Bribery in Saudi Arabia

In Saudi Arabia, Petrofac made payments of approximately $45m to secure contracts between July 2012 and November 2015.

Approximately $5.8m was paid for EPC contracts for the Petro Rabigh Petrochemical Expansion Project worth approximately $463m in July 2012. Petrofac also made payments of approximately $21.4m to secure EPC contracts for the Jazan Refinery and Terminal Project worth £1.7bn in December 2012.

Additionally, the company made payments of approximately $19.5m and was awarded an EPC contract for a sulphur recovery plant as part of the Fadhili Gas Plant Project in November 2015, worth approximately $1.56bn.

Corrupt offers of payment were also made for the award of other contracts during this time, but Petrofac was unsuccessful in obtaining those contracts.

Comments from Petrofac

In a statement on Thursday, Petrofac confirmed that no charges had been brought against any Petrofac Group companies of employees, and that no current board member of Petrofac is alleged to have been involved.

Petrofac chairman René Médori said: “The SFO has chosen to bring charges against a former employee of a subsidiary company. 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 SFO’s investigation into Petrofac’s use of agents in these bribery cases is ongoing.

David Lufkin will be sentenced at a later date.

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