SFO v Petrofac: A new approach from the SFO?

On 4 October 2021, Petrofac Limited (“Petrofac”) was sentenced at Southwark Crown Court following guilty pleas to seven counts of failing to prevent bribery contrary to s.7 Bribery Act 2010. This followed a four-year corruption and money laundering investigation conducted by the Serious Fraud Office (SFO) and the earlier guilty pleas of David Lufkin, former Global Head of Sales, who was sentenced on the same occasion. This followed pre-charge plea discussions between the parties with agreement being reached as to scope of the indictment and approach to sentencing.

Petrofac must pay a fine of £47m by February 2022, and a further £29.5m by way of costs and confiscation within the next three months. David Lufkin was sentenced to two years’ imprisonment, suspended for a period of 18 months, in recognition of his significant efforts to cooperate with the SFO’s investigations.

Case summary

Petrofac was convicted of failing to prevent former employees from offering and making payments to third party agents in relation to gas and oil infrastructure projects based in Iraq, Saudi Arabia and the UAE. Bribes totalling $81m were made to win contracts worth $7.5bn.

The corruption came to light following the commencement of an investigation by the SFO and the subsequent cooperation of David Lufkin, after his own guilty pleas to 14 counts of bribery contrary to s.1 Bribery Act 2010. The corruption had tainted the very highest echelons of Petrofac, with two former board members implicated.

While Petrofac had attempted their own internal investigation in 2016, the allegations failed to come to light – at least in that there was no self-report to the SFO. Petrofac’s culpability sprang from the failure of its internal compliance policies. All employees involved in the charges have since left the business and the company has indicated that it has overhauled its compliance programme, currently operating with much higher ethical standards.

During her sentencing remarks, Her Honour Judge Taylor noted that Petrofac’s efforts to remedy their compliance failings were a substantial factor when it came to the court’s decision regarding the appropriate fine. However, she accepted that there was little good in bankrupting a largely reformed company.

Through joint submissions, the parties submitted that Petrofac’s offending fell within the highest category in the sentencing guidelines, agreeing a figure for harm of £67,780,700. The parties suggested that the figure should be multiplied by 300 per cent to reflect Petrofac’s culpability, resulting in a final fine of £131,563,336, once it had been reduced by a third to reflect Petrofac’s early guilty plea. The court determined that the appropriate multiplier to reflect Petrofac’s culpability was 325 per cent, producing an initially larger figure than the parties had agreed. However, it was accepted that, due to obligations owed to HM Treasury and other creditors, the fine would be capped.

The prosecution placed David Lufkin’s culpability in category 1A on the sentencing guidelines, which has a starting point of 7 years’ custody, but accepted that this should be substantially reduced in accordance with the guidance in ) [2008] Cr App R (S) 5, concerning the operation of s.73 Serious Organised Crime and Police Act (SOCPA) 2005 agreements.