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Petrofac had been under investigation by the UK Serious Fraud Office (SFO) for several years in relation to allegations of bribery in the Middle East over a six-year period, for payments contrary to the UK Bribery Act. In October 2021, the British oil services provider was ordered to pay a total of £77m (£22.8m confiscation, £47.2m fine and SFO legal costs of £7m) in relation to the corrupt awarding of contracts worth £2.6bn.
Seasoned Advice with Innovative Technical Arguments
FRA was engaged by Petrofac and its external counsel to support the company’s plea discussions with the SFO. The calculation of harm from the contracts in question relied on profit calculations, which required the identification, validation and justification of all costs that Petrofac incurred to deliver the contracts. To calculate those profits, FRA performed financial analysis and conducted numerous interviews with finance and operational staff to assess the company’s benefits and challenges from the contracts in the SFO’s scope. FRA was called to explain and justify to the SFO how losses, unforeseen expenses, and additional costs arose on the relevant contracts.
Time was of the essence for the company and FRA needed to tailor a new approach to suit Petrofac’s financial situation. While FRA has a proven method for ability-to-pay studies, our expert team designed an innovative approach more suited to Petrofac’s needs but crucially still robust enough to stand up to scrutiny from authorities.
Presenting to the Authorities
Our team’s new approach was ultimately accepted by the court and the penalty was reduced. We presented profit calculations, ability-to-pay analyses and supporting information to the SFO, and assisted external counsel in presenting calculations to the SFO and responding to queries.
The Court agreed the profit calculations presented as “reasonable” and significantly reduced the fine imposed on our client based on its ability-to-pay; the Court “accept[ed] that what [was] available [was] in the region of $110 million” and arrived at the fine amount of £47.2m from that starting position.