7 February, 2019 SFO (The Serious Fraud Office: UK's specialist prosecuting authority tackling the top level of serious or complex fraud, bribery and corruption)
Former senior executive convicted in Petrofac investigation
In connection with the SFO’s ongoing investigation into Petrofac Limited（国際的な石油・ガス産業の大手サービスプロバイダー ）and its subsidiaries, on 6 February 2019 David Lufkin, 51, a British national, and previously Global Head of Sales for Petrofac International Limited, pleaded guilty at Westminster Magistrates’ Court to eleven counts of bribery, contrary to sections 1(1) and 1(2) of the Bribery Act 2010. These offences relate to the making of corrupt offers to influence the award of contracts to Petrofac worth in excess of USD $730 million in Iraq and in excess of USD $3.5 billion in Saudi Arabia.
The charges included the following:
|Iraq||Badra oilfield||USD $329.7 million||Engineering, Procurement and Construction||February 2012||2.2|
|Fao Terminal project||USD $400 million||O&M contract||August 2012||4.0|
|Saudi Arabia||Petro Rabigh Phase II||USD $463 million||EPC contracts||July 2012||5.8|
|Jazan Refinery and Terminal Project||USD $1.7 billion||EPC contracts||December 2012||21.4|
|sulphur recovery plant of the Fadhili Gas Plant Project||USD $1.56 billion||EPC contract f||November 2015||19.5|
The Badra oil filed stakeholders are Gazprom, the operator with 30% share, then KOGAS with 22%, Petronas with 15%,トルコ TPAO with 7.5%
Iraq Crude Oil Export Expansion Project (ICOEEP) is a 247km-long pipeline master planned by the Iraqi Ministry of Oil (MoO). The new pipeline will increase the country’s Basra crude oil export capacity. It will be located in the Persian Gulf of Iraq.
Payments of approximately USD $2.2 million were ultimately made by Petrofac to two agents in respect of a USD $329.7 million Engineering, Procurement and Construction (“EPC”) contract on the Badra oilfield in Iraq (the “Badra Phase One EPC contract”) awarded to Petrofac in February 2012.
Corrupt offers of payments were also made to an agent to influence the award of contract variations to the Badra Phase One EPC contract, and for the extension of the Badra Operations and Maintenance (“O&M”) contract. Petrofac was unsuccessful in obtaining these contracts and no payments were made to the agent.
Fao Terminal, Iraq
Payments of approximately USD $4 million were ultimately made by Petrofac to an agent in respect of an O&M contract on the Fao Terminal project in Iraq (the “Fao Terminal O&M contract”). The Fao Terminal O&M contract, awarded to Petrofac in August 2012, together with yearly extensions awarded in 2013, 2014 and 2015, was worth approximately USD $400 million to Petrofac.
Payments of approximately USD $45 million were made by Petrofac to its agent in respect of the following contracts awarded to Petrofac in Saudi Arabia, between July 2012 and November 2015:
Corrupt offers of payments were also made to its agent for the award of other contracts at the time. Petrofac was unsuccessful in obtaining these contracts and no payments were made to its agent.
David Lufkin will be sentenced at a later date.
The SFO’s investigation into Petrofac’s use of agents in multiple jurisdictions, including Iraq and Saudi Arabia, is ongoing.
Individuals with information potentially relevant to this investigation are encouraged to contact the SFO through our secure and confidential reporting channel. When providing information please quote ‘Petrofac Investigation’. Please note that it would be of particular assistance if you could provide your contact details for any further queries or questions that we may have.
Notes to Editors:
ーーーNeither Aramco, Petro Rabigh nor Gazprom Neft are accused of any wrongdoing.
Aramco declined to comment. Petro Rabigh, Iraq’s state oil marketer Somo, the Iraqi Oil Ministry and Gazprom Neft made no immediate comment.
Petrofac is a leading international service provider to the oil and gas production and processing industry.
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.