Good News About Petrofac
28 September 2021
Petrofac (6% of our fund) announced on Friday that it has reached a settlement with the Serious Fraud Office (SFO) acknowledging their guilt of having " failed to prevent " acts of corruption by some of its employees. This agreement ends a four-year investigation.
This " failed to prevent " is important, as it is a much less serious misconduct than, for example, the one for which Rolls Royce was convicted in 2017 (" corrupt conspiracy " and " fraudulent accounting ").
On Petrofac's side, some employees, including the sales manager, made payments to political officials in order to obtain business contracts between 2011 and 2017. A " deeply regrettable time in Petrofac's history " according to the current Chairman. " We are determined to ensure that this never happens again ».
Since the announcement, the share price has risen by 50%, pending the judge's decision. That said, the stock is still valued 80% lower than its pre-SFO price 4 years ago.
The British oil sector engineering specialist will be heard by the judge on October 1st to determine the amount of the fine, and to close the investigation. An investigation that has scared off many investors since 2017.
But investors should have more visibility on the group's future in the coming weeks. The company is currently suspended from bidding in Abu Dhabi, Iraq and Saudi Arabia due to the ongoing investigation. These suspensions could be lifted after the trial.
For several months, we have been waiting for a post-SFO Petrofac. Here we are.
Have a great week,
Pierre
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