Aziz Rahman of business crime solicitors Rahman Ravelli outlines the dangers of bribery to a company.
Petrofac is faced with having to make a possible £400M pay-out to investors as a result of legal action prompted by the alleged bribery scandal at the company.
David Lufkin, the former global head of sales at the oil services firm, has pleaded guilty to offering corrupt payments in an attempt to secure contracts in Saudi Arabia worth £2.7 billion and deals in Iraq value at £566M.
Litigation specialist Innsworth – which helps fund lawsuits in return for a proportion of any damages awarded - and a law firm have stated that they are analysing potential claims from shareholders who believe they suffered losses as a result of the scandal. Shares in Petrofac collapsed in 2017 when the Serious Fraud Office (SFO) announced its investigation into allegations of bribery, corruption and money laundering in relation to the company's dealings with the oil consultancy firm Unaoil.
Petrofac stated after Mr Lufkin's guilty plea that no charges have been brought against any group company, current officers, employees or board members.
That is certainly the case. But while Petrofac is not facing any charges it has suffered damage to its reputation, a drop in its share value and now the threat of being sued by its own shareholders. All of this is the result of the bribery allegations.
The situation Petrofac finds itself can be taken as a warning of the importance of taking all possible steps to prevent bribery. Many industries and trading sectors have seen some of their major names face massive legal problems because of the use of bribery to secure big deals. Oil is on a list that also includes the likes of aerospace, mining and pharmaceuticals. When companies are looking to secure major contracts, they must have an awareness of the risk of corruption.
An investigation into how a company functions can identify how its working methods provide opportunities for business crime to be carried out and go undetected. Changes to routines, working practices and procedures as a result of such an investigation can all help reduce or even remove the potential for crime. Concerns raised by an employee, company representative or trading partner, questionable transactions and any inexplicable accounting activities must all be viewed as the possible basis for an investigation.
Bribery is the subject of particularly fierce legislation. Section 7 of the UK's Bribery Act 2010 introduced an offence of failure by a commercial organisation to prevent bribery being committed in connection with its business. A company can be guilty of this offence without even knowing that the bribery had been committed. This in itself should be seen as a warning to companies about the need to ensure that wrongdoing is not being committed in their name – and a reminder of the importance of the right legal advice at the slightest hint of a problem.
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