UK court fines Petrofac (PFC.L) £70 million for bribery offences

Petrofac was fined £77m on seven separate charges related to failing to prevent bribery from the Middle East. The London-listed oil service provider pleaded guilty to the charges last month.

For failing to stop Petrofac employees from offering or making payments to agents in relation to projects that were awarded between 2012-2015, the penalty includes a £22.8m forfeiture, another £47.2m Fine, and the Serious Fraud Office (SFO) costs totalling £7m.

All of the employees involved have left the company, and Petrofac’s corporate restructuring influenced the amount of the penalty, Southwark Crown Court heard today.

Following the announcement, shares rose 7.3% to 186.7p per unit.

Chairman Rene Medori stated that this was a closure to a difficult period in our history. As the Court and the SFO acknowledged, we have taken responsibility and have learned from our past mistakes.

“The SFO’s past behaviour would not be revealed today. We look forward to the future as a more focused and focused company that is well-positioned to capitalize on the opportunities before us.”

In an effort to close the long-running inquiry, the oil services company reached a plea agreement with the fraud watchdog.

SFO director Lisa Osofsky stated: “Petrofac Limited has pleaded guilty to the fact that senior executives of the Petrofac Group committed a deliberate and unconcerned act in pursuit of their greed. This conduct led to a distortion of competitive market conditions that tainted oil and gas industries.

“Today’s results should be a warning. The SFO will use every power at its disposal to root and prosecute individuals and companies whose criminal activity negatively affects the reputation or integrity of the United Kingdom.

“The SFO welcomes Petrofac Limited to take responsibility for its conduct.”

Sami Iskander, chief executive, stated that “We are now able to put this behind. This is not the Petrofac history of today. I am proud to be its new CEO and operate on the core principle that ethical business conduct must be supported by a comprehensive governance system.

“We emerge out of this cloud because the world requires more energy. This includes both traditional energies that are the most efficient and renewable energies that allow for a low carbon world. Petrofac has the ability to support both.

Petrofac has until February 3, 2022, February 14, 2022, and February 14, 2022, to pay the fines totalling £77m.

Now that the SFO investigation is over, Petrofac will be able to return to the Middle Eastern market for new contracts, according to Laura Hoy, an equity analyst at Hargreaves-Lansdown.

“The monetary loss will provide relief since much higher numbers were being bandied about at the beginning of the investigation and Petrofac has more than enough to cover the fine. It could be detrimental, as the group seeks to improve its balance sheet and restore net cash.

The bigger story is that the investigation will end and unlock lucrative markets in Saudi Arabia, UAE, and other countries. Petrofac has been unable to compete for new contracts due to the ongoing investigation, which has created uncertainty about its order book. She said that future prospects will look brighter now that the shackles are gone.


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