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Petrofac exec admits bribes paid to win $4.2bn contracts in Saudi, Iraq

Former global sales boss pleads guilty to making "corrupt offers" for work on schemes such as Petro Rabigh and Fao Terminal

Petrofac is a major EPC contractor in the region [representational image].
© Pixabay / Chris_LeBoutillier
Petrofac is a major EPC contractor in the region [representational image].

A UK Government body is investigating a former senior executive of engineering, procurement, and construction (EPC) contracting giant Petrofac for making “corrupt offers to influence the award of contracts” in the Middle East. These contract awards are valued in excess of $4.2bn, of which $3.5bn came in Saudi Arabia and $730m in Iraq.

British national David Lufkin, aged 51, was global head of sales at Petrofac International Limited, a subsidiary of the oil and gas specialist group. He has pleaded guilty at Westminster Magistrates’ Court to 11 counts of bribery, related to sections 1(1) and 1(2) of Bribery Act 2010, the UK’s Serious Fraud Office (SFO) said.

Petrofac said in a separate statement that no charges have been brought against the wider group or any of its officers or employees, adding that no current board member “is alleged to have been involved”.

Among the “corrupt offers” made by Lufkin include payments of $45m to the Petrofac subsidiary’s agents for contracts that were eventually awarded to the firm between July 2012 and November 2015.

Saudi Arabia payment details

This includes a $5.8m payment for EPC contracts related to the Petro Rabigh Phase 2 expansion, which were awarded in July 2012 and are “worth approximately” $463m, SFO revealed. 

Additionally, payments of $21.4m were made for Jazan Refinery and Terminal Project’s EPC contracts, which are worth $1.7bn and were awarded in December 2012. Finally, around $19.5m were paid to a Petrofac agent for EPC works related to a sulphur recovery plant within the Fadhili Gas Plant scheme. SFO said this project was awarded in November 2015 for $1.56bn.

In Iraq, meanwhile, Petrofac’s former executive is said to have paid $2.2m to two agents for the $329.7m Badra Phase 1 oilfield contact in February 2012. 

Iraq payment details

“Corrupt offers of payments were also made to an agent to influence the award of contract variations to the Badra Phase 1 EPC contract, and for the extension of the Badra operations and maintenance (O&M) contract,” SFO continued.

“Petrofac was unsuccessful in obtaining these contracts and no payments were made to the agent.”

Another round of payments was made for an O&M contract related to the Fao Terminal in Iraq. The deal was awarded to Petrofac in August 2012, and extensions granted in 2013, 2014, and 2015, with its overall value at $400m. 

SFO said that “corrupt offers of payments” were also made to Petrofac agents for other contracts at the time, but the contractor was “unsuccessful in obtaining these contracts and no payments were made” to agents. 

Lufkin will be sentenced at a later date, and SFO is investigating Petrofac’s “use of agents in multiple jurisdictions, including Iraq and Saudi Arabia”.

Petrofac chairman speaks out

Petrofac said that a number of its individuals and entities are “alleged to have acted together with”, but they have not been charged with any offences.

Commenting on SFO’s investigation, René Médori, Chairman of Petrofac, 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.”

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