Shareholder action funder to back £400m Petrofac claim

Garrard: Pre-eminent position to assemble and fund action

A specialist shareholder action funder is to back a £400m claim being prepared against oilfield service company Petrofac arising out of an alleged bribery scandal.

Innsworth Litigation Funding and Keystone Law said they were “well progressed in their analysis of potential claims” and were actively putting together a group of institutional shareholders who acquired or held shares after 1 October 2010.

Innsworth used to be called Bentham Europe, which was a joint venture between IMF Bentham, the leading listed Australian funder, and US hedge fund Elliott Management. IMF sold its 50% to Elliott in 2016, and it was renamed a year later.

Innsworth is also involved in funding shareholder actions against Tesco, Volkswagen and Porsche, and says it is investigating possible cases against BT and Banca Monte Dei Paschi Di Siena.

It is claimed that Petrofac shareholders suffered substantial losses arising out of the company’s alleged involvement in bribery, corruption and money laundering, in respect of which it issued false and misleading statements and/or failed to disclose material information.

The events started with media reports that the Monaco-based company Unaoil had facilitated extensive corruption and bribery in the oil industry, leading to a Serious Fraud Office (SFO) investigation.

In May 2017, the SFO announced that it was investigating Petrofac for suspected bribery, corruption and money laundering, in connection with its investigation.

Shortly afterwards, Petrofac made several announcements, including that the SFO did not consider Petrofac to have cooperated with its investigation. The company’s share price roughly halved.

Just this month, David Lufkin, the former global head of sales at Petrofac, pleaded guilty to offering corrupt payments in an attempt to secure contracts in Saudi Arabia worth $3.5bn (£2.7bn) and contracts in Iraq worth $730m.

Petrofac told the London Stock Exchange: “Petrofac confirms that no charges have been brought against any group company or any other officers or employees.

“Although not charged, a number of Petrofac individuals and entities are alleged to have acted together with the individual concerned. No current board member of Petrofac Limited is alleged to have been involved.”

Petrofac shares fell by around 20% in response to the announcement.

René Médori, chairman of Petrofac, said: “The SFO has chosen to bring charges against a former employee of a subsidiary company. 

“It has deliberately not chosen to charge any group company or any other officer or employee. In the absence of any charge or credible evidence, Petrofac intends as a matter of policy to stand by its employees.

“Petrofac has policies and procedures in place designed to ensure that we operate at the highest levels of compliance and ethics.”

Ian Garrard, managing director of Innsworth Advisors, advisors to Innsworth Litigation Funding, said: “Our experience on the leading shareholder case under the Financial Services and Markets Act against Tesco plc on behalf of shareholders puts us in a pre-eminent position to assemble and fund a shareholder group action against Petrofac.”

Keystone said the claim is expected to be worth more than £400m.

Solicitor Matthew Reach said: “The wrongs committed by Petrofac, to the detriment of its shareholders, are plain to see.”

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