Yahoo Finance Petrofac co-founder accused posthumously of paying bribes
The co-founder of the oil company Petrofac has been posthumously accused of taking part in a scheme to pay multi-million-dollar bribes to secure contracts. The Serious Fraud Office’s allegations against Maroun Semaan, who died two years ago, have been revealed in charges laid before a court.
The multinational’s other co-founder is Ayman Asfari, a major financial backer of the Conservatives. Together with his wife, Asfari has donated almost £800,000 to the party since 2009. Currently the firm’s owner and chief executive, he was arrested and interviewed under caution in May 2017 by the SFO and released without charge.
What is the SFO investigating?
The Serious Fraud Office announced in May 2017 that it was “investigating the activities of Petrofac PLC, its subsidiaries and their officers, employees and agents for suspected bribery, corruption and money laundering”. The SFO added that the investigation was related to its inquiries into alleged corruption by the oil and gas company Unaoil, which had started in 2016.
How big is the investigation?
The SFO is investigating Petrofac’s use of agents in a number of countries, including Iraq and Saudi Arabia.
How far has the investigation progressed?
David Lufkin, formerly Petrofac’s global head of sales, pleaded guilty this month to offering corrupt payments to influence the awarding of contracts to the company worth more than $3.5bn (£2.7bn) in Saudi Arabia and more than $730m in Iraq. He has yet to be sentenced.
What has Petrofac said?
Petrofac said no charges had been brought against the company or its employees, adding that none of the current board was alleged to have been involved. In May 2017, Petrofac said Ayman Asfari, its chief executive, and Marwan Chedid, the company’s chief operating officer, were arrested by the SFO and questioned under caution. Both were subsequently released without charge. Chedid has since left his position.
What other legal troubles does Petrofac face?
Lawyers for Petrofac shareholders have said they are preparing to sue the company, claiming that they have made substantial losses from its alleged involvement in criminal activity. They argue that Petrofac issued false and misleading statements as a result of the alleged fraud.
Petrofac designs and builds facilities for the oil and gas industry. It has offices in 24 countries and employs more than 12,000 people, with revenue of more than $6bn (£4.7bn) in 2017, according to the company. Petrofac described Semaan as having played a leading role in establishing it as a leading oil and gas services company over 22 years.
Last year Petrofac donated $5m to a Lebanese university to honour the legacy of Semaan. Asfari said the donation – to the engineering department – was a “fitting legacy that honours the valuable contribution [Semaan] made, not only to Petrofac, but also to the American University of Beirut”.
The university’s engineering and architecture faculty had been previously named after Semaan “in honour of his vision and support”, according to Petrofac.
A spokesperson for the Semaan family said the allegations against him were “emphatically denied”. “Mr Semaan had no role, knowledge or oversight in relation to these matters which are currently being investigated by the UK authorities. The Semaan family will take all steps necessary to protect his respected reputation and legacy.”
The SFO started its investigation in 2017 into allegations that Petrofac had paid bribes and laundered money. Following the inquiry, the company’s share price fell from £9 to £3.47. Earlier this year the price recovered, but has since fallen back to £4.
In the first prosecution resulting from the investigation, David Lufkin, Petrofac’s former global head of sales, pleaded guilty to 11 counts of bribery at Westminster magistrates’ court in London on 6 February. The 51-year-old Briton admitted offering to make corrupt payments to try to secure contracts in Saudi Arabia worth $3.5bn (£2.7bn) and contracts in Iraq worth $730m (£566m). Petrofac shares fell by more than a quarter after his plea was announced.
The SFO alleges that Semaan was complicit in six counts of the alleged bribery. According to prosecutors, Semaan acted with Lufkin and others to offer financial inducements to be paid to Iraqi and Saudi officials between October 2011 and February 2013.
Semaan retired from the firm in July 2013 when he held the title of president. At the time of his retirement, Asfari said:“Since we co-founded Petrofac International in 1991, the business has enjoyed tremendous growth, building our capabilities and expanding our geographic reach so that Petrofac now has one of the world’s leading names in oilfield services.
“Much of that growth is directly attributable to Maroun, who, with his team, has continued to uphold the ethos of operational excellence, innovation and commitment to the values of the group.”
Lebanese-born Semaan reportedly had a fortune worth more than £130m in 2006.
In 2014, David Cameron appointed Asfari to be a “business ambassador”, one of a group of executives who were tasked with “promoting the UK’s excellence internationally” and securing investment in Britain. The scheme was closed last month.
The SFO did not comment. It is continuing to investigate Petrofac and has yet to decide whether other individuals or companies will be charged.
Petrofac said no charges had been brought against the company or its employees. It also said a number of Petrofac individuals and entities were alleged to have acted together with Lufkin. It added that no current member of its board was alleged to have been involved.
