Corporate Bribery: a significant conviction 

United Kingdom


The “Failure to Prevent Bribery” offence, under Section 7 of the Bribery Act 2010 (the “BA”) makes corporates automatically liable for bribery committed by agents or employees, whether or not the company knew about it. Enforcement has tended to be by way of deferred prosecution agreement (“DPA”) (i.e. negotiated outcomes approved by a court to avoid a prosecution and potential conviction), rather than actual prosecutions of companies. As such, charges against companies are relatively unusual. However, on 1 October 2021, Petrofac Limited (the “Company”) pleaded guilty to seven counts of failure to prevent bribery under s. 7 BA. On 4 October 2021, the court imposed a penalty of $95.3 million (including fines, confiscation and costs). At the same time, an executive of the Company, David Lufkin, was sentenced to two years imprisonment, with the sentence being suspended for 18 months. So as long as he behaves during that period, he will not go to prison. 

This is an important case as regards the law of bribery and there is a good deal to un-pack. First, a summary of the facts: 


The Company provided oil-field services in various countries around the world, including in Iraq, Saudi Arabia and the UAE, through various subsidiaries.  Although the company was itself incorporated in Jersey, significant group operations were conducted out of its London office.  David Lufkin was Global Head of Sales, based in Saudi Arabia. Back in 2019, after being contacted by the SFO (the precise details of which are not referred to in the sentencing judgment), Mr Lufkin admitted wrongdoing and cooperated extensively with the SFO’s investigation, eventually pleading guilty to 11 counts of bribery under s. 1 BA.  The charges related to securing or attempting to secure various projects for the Company between 2012 and 2015. Mr Lufkin subsequently admitted three further charges in respect of projects in Abu Dhabi between 2012 and 2018.

The Corporate offence

In such circumstances, the Company which benefited is also at risk of liability. The s.7 corporate offence is triggered when a commercial organisation fails to prevent an ‘associated person’ bribing another person intending to obtain or retain business or a business advantage for that organisation.  An associated person is broadly defined to include any person performing services for or on behalf of the organisation and there is a rebuttable presumption that employees are associated persons.  While little is said in the Court documents about this issue, it appears to have been accepted that Mr Lufkin was an associated person of the Company.  Indeed, it was said that the Company pleaded guilty to the s.7 offence as a result of Mr Lufkin’s own guilty pleas.

On Friday 1 October 2021, the Company admitted to failing to prevent employees paying $44m in bribes for contracts that were worth over $3.5bn to the Company.  The offending took place between 2011 and 2017 and involved seven of the 14 offences admitted by Mr Lufkin.

The only defence to a s. 7 offence is where a commercial organisation can show it had adequate procedures designed to prevent bribery.  However, it seems, no adequate procedures defence was raised in this case. 

Sentencing Context

Prior to sentencing there had been submissions as to how much the Company could afford to pay. In a hearing on Friday 1 October 2021, counsel for the SFO suggested that the Company should be fined $131.5m but acknowledged that it could not pay immediately as it would breach an agreement with the Treasury to repay money borrowed during the Covid pandemic.  The Company’s counsel said that it could, after refinancing, raise up to $110m to cover any financial penalty imposed. 

On 4 October 2021, following application of the relevant sentencing guidelines, the judge ordered the Company to pay $95.3m, comprising a $64m (£47.2m) fine, a $31m (£22.8m) confiscation order and £7m for the SFO’s costs.  The confiscation order is payable by 3 January 2022 and the fine/costs payable by 14 February 2022. 

Mr Lufkin was sentenced to a two-year custodial sentence, which was suspended for 18 months. 

Further details of how the financial elements were calculated are set out at the bottom of this article for those interested.


The UK regime of corporate sentencing for financial crime offences (such as fraud, bribery and money-laundering) is quite involved (see the more detailed explanation of the mechanisms applied to calculate the relevant penalties below) and, despite appearances, open to wide discretion of the court.  First, there is the issue of compensating victims (if they can be easily identified and the level of compensation straightforward to calculate). Here, the court could not identify any specific victims and there was no suggestion that the contracts won were not properly performed or over-priced.  Indeed, the evidence indicated that the relevant contracts won were ones where the Company was the lowest bidder and in a number of cases, the Company made substantial losses on them. 

Second, there is the issue of confiscation of gains to the company by reason of the offending. This can be very difficult to establish in a large corporate structure where revenue gets allocated in varying ways between subsidiaries and holding entities. This was solved in this case by means of some very broad assumptions as to the profitability of the various contracts.  It seemed to be accepted that the Company remained in receipt of those gains.

As for the penalty element (fines and imprisonment), it is clear in this case that the court and the SFO were keen to demonstrate the positive benefits for individuals in cooperating with the authorities, even where that means admitting guilt.  They were also keen not to over-burden the Company with penalties which would push it  towards insolvency. At one point the judge remarked:

Despite the very serious offending in this case, having regard to the steps which have been taken by Petrofac, and the financial circumstances of the company, I do not consider that it is necessary for the company to be put out of business and therefore, a fine must be imposed which, whilst being painful for the company, is one which it can pay. In coming to this view I have taken into account the fact that the company has taken these steps to improve, and has accepted and addressed its past offending.”

The real motive for the careful calibration of these sentences is very likely to be a wish to retain incentives for companies and individuals to cooperate with investigations and to plead guilty. If the Company in this case were to be hit with an un-affordable penalty, even on a guilty plea, there would be little incentive for other companies to plead guilty. The same reasoning is employed when assessing the amounts payable in DPAs, each of which are delicate balancing acts between punishment and affordability.

However, what is perhaps surprising in this case is quite how far the court was prepared to elevate those incentives as against the penalties and punishment that may otherwise have fit the crimes admitted to.  The Company had itself indicated it could afford up to $110m in financial penalties, but the Court imposed an even lower figure.  At the same time, despite Mr Lufkin’s admissions warranting a lengthy sentence in principle, the court found a way to reduce it to a level that allowed him to be spared imprisonment.

It seems that the message for the wider corporate world is something like this: Bribery is a very bad thing. However, if a company benefits from it, due to failure to prevent, but then seeks to reform when the matter comes to light, it will suffer, but probably survive.  An individual who takes part in it may avoid prison, as long as he cooperates with the investigation and helps build the case against others (including the company).

It would be interesting to find out what happens to a company which denies everything and pleads not guilty.  In today’s environment, such cases are likely to be very rare.

Detailed explanation of sentences imposed

Company sentence

Confiscation: The normal basis for assessing the amount of any confiscation order is to assess the benefit obtained as a result of the criminal conduct.  In this case, the judge acknowledged that the relevant contracts won by the Company did not always result in profit for the Company – some operated at a loss.  The judge also explained that because the contracts were entered into at subsidiary level, it would be “highly complex” and “not realistically possible” to reconstruct the flow of funds to determine with accuracy the profit the Company itself received from the non-loss-making contracts.  The judge therefore applied an alternative approach to calculating the confiscation amount by looking at the contracts in the indictment as a representative sample of the contracts entered into by the group subsidiaries to see how much profit was typically passed up to the Company.  This was then applied to the profitable contracts on the indictment and resulted in a figure of $24.5m.  $6m was then added to this figure to reflect the benefit the Company obtained from not putting in place an adequate compliance programme.  Finally, the figure was adjusted to take into account inflation, which resulted in a confiscation order of $31,399,945.63 (£22,837,985.04).

Fine: The judge said that the offences were in the highest category for culpability and harm under the Sentencing Guidelines.  This was on the basis that the Company played a leading role in the offences, had responsibility for (but failed) to implement adequate procedures, the offending took place over a sustained period and, in respect of four of the counts, corruption involved public officials.  In terms of calculating the fine for each count, the judge considered if the contract obtained (or sought) by the Company was or was not profitable, and was or was not won. 

  • Where the contract was profitable, a harm multiplier of 325% was applied to the gross profit obtained by the Company as a result of that contract. 

  • Where the contract was loss-making, instead of considering what profit the Company intended to achieve, the judge took the value of corrupt payments made as the value of the harm (as a proxy for the minimum profit expected to be earned on the deal) and applied a 325% multiplier to that.

  • For the contracts where the Company bid but was not awarded the contract and no additional corrupt payments were made in respect of these contracts (four contracts), the judge was satisfied that these had been taken into account in other counts, so no further harm figures were included in respect of them.

The harm multiplier of 325% was determined as appropriate because the category range for high culpability cases is 250-400%, with a starting point of 300%.  The judge weighed up the aggravating factors (serious underlying criminal activities such as false invoices and fraud, cross-border offending, harm caused to the integrity of markets and the endemic nature of the offending) with mitigating factors (subsequent change in management, extensive corporate reform and some cooperation with the investigation).  She considered 325% to be appropriate for each count.  Applying this multiplier resulted in a total fine of £323,479.209 (or $213.8m). 

The judge then took a step back and considered the overall effect of the orders, including the Company’s corporate reform, its financial position and ability to implement an effective compliance programme, as well as the impact on its staff, service users, customers and the local economy.  Irrespective of the above calculation, the judge accepted that because of the Company’s financial position, it could only afford to pay a total of $110m, which would need to include the confiscation amount, fine and the SFO’s costs (of £7m).  This would leave $96m available for a fine, which would be reduced to $64m (£47,197,640) after applying a third discount as a result of the Company pleading guilty at the earliest opportunity.  This represents a very significant discount on the fine that could have been levied on the Company had it had unlimited resources (£323.5m less a third for the guilty plea), much higher than the 50% reduction that has become the norm in DPA penalties where companies self-report and offer extensive cooperation (neither of which the Company did here).

Individual Sentence

Mr Lufkin was sentenced to a two-year custodial sentence, which was suspended for 18 months.  Like the Company, the judge considered the starting point for Mr Lufkin’s sentencing was high culpability and harm, given his integral role in the relationships with corrupt agents, indeed he admitted to twice as many counts of bribery as the Company.  The starting point for his sentence was 7 years and 3 months (the category range for high culpability is 5-8 years, with a starting point of 7 years).  The aggravating factor of the offences being cross-border was then weighed up against the mitigating factors of Mr Lufkin’s ‘good character’ and the effects of the proceedings upon him.  This reduced the starting point to 6 years and 9 months.  The judge said that Mr Lufkin’s assistance to the SFO’s investigation warranted a further reduction to 3 years, before a third discount credit was given for his guilty plea (reducing the sentence further to 2 years’ imprisonment).  Conveniently, that 2-year figure brought the sentence within the range where the Court may consider a non-custodial outcome.  On the basis that the judge considered rehabilitation a realistic prospect and Mr Lufkin’s strong personal mitigation, the judge was content to order that the 2-year sentence be suspended for 18 months.