On 1 October 2021, Petrofac, the London based energy company, pleaded guilty to ‘failing to prevent bribery’, the corporate criminal offence created by Section 7 of the Bribery Act 2010.
Announcing the news on its website, the Serious Fraud Office (SFO) confirmed that Petrofac pleaded guilty to failing to prevent former senior executives from using agents to bribe officials, to win oil contracts in Iraq, Saudi Arabia and the United Arab Emirates. The press release states that the conduct occurred between 2011 and 2017 and that Petrofac pleaded guilty on the basis that the executives paid a total of GBP 32 million in bribes to corrupt the awarding of contracts worth approximately GBP 2.6 billion (USD 3.5 billion).
Petrofac was ordered to pay a confiscation order – orders intended to deprive those convicted of certain crimes of the benefit of their criminal conduct - of GBP 22,836,985. They were also ordered to pay a financial penalty of over GBP 47 million and the SFO’s costs of GBP 7 million.
As well as the sentencing of the Company, the SFO also announced the sentencing of David Lufkin, Petrofac Group’s former Head of Sales. Having pleaded guilty to a total of 14 counts of bribery, Mr Lufkin received a two-year custodial sentence, which was suspended for 18 months.
The value of cooperation?
The SFO press release confirms that Mr Lufkin ‘co-operated with SFO investigators and assisted with the investigation’. In contrast, a statement issued by Petrofac during the investigation suggests that the same may not apply to the Company.
In May 2017, the Company announced, when reporting an update on the investigation, that it had suspended its Chief Operating Officer. The same press release states:‘
The SFO has also informed Petrofac that it does not consider the Company to have cooperated with it, as that term is used in relevant SFO and sentencing guidelines.’
As well as a factor the court may take into account as mitigation when sentencing a convicted person (by virtue of the sentencing guidelines for bribery offences), the SFO’s Guidance on Corporate Co-operation also states that ‘Co-operating will be a relevant consideration in the SFO’s charging decisions’. Its separate guidance on Deferred Prosecution Agreements (DPA) goes further, confirming that companies are ‘only invited to enter DPA negotiations if there was full cooperation with [its] investigations’.
Broadly, DPAs require companies to admit the relevant offending and to comply with certain specified conditions, including the payment of financial penalties and potentially a period of compliance ‘monitoring’ by an external party. In exchange, the relevant prosecuting authority agrees not to prosecute the company for the relevant offending – something which Petrofac has, in this case, been unable to avoid.
Petrofac’s guilty plea represents only the third successful prosecution for failure to prevent bribery under Section 7 of the Bribery Act 2010. The previous two cases involve Sweett Group - which pleaded guilty in December 2015 - and Skansen Interiors, which was convicted after trial in 2018.
