Petrofac’s woes deepen as fear of £400m legal action looms

A legal fund backed by one of the world’s biggest activist investors, Paul Singer, was on Monday preparing to pull the trigger on a £400 million legal claim over the bribery scandal engulfing oil engineer Petrofac.

The oil services group, headquartered in London, is in the firing line of litigation funding arm Innsworth — which is owned by Singer’s Elliott Management. It previously mounted legal action against Volkswagen and Tesco.

Innsworth is gearing up to file a group claim on behalf of institutional investors such as large US and UK pension funds, claiming they suffered “substantial losses” on their Petrofac investments from 2010 onwards.

The legal funding firm, which backs class action lawsuits in return for getting a cut of any payout, says Petrofac misled investors about corporate compliance governance and business performance, which led to “substantial losses” for shareholders.

Petrofac declined to comment.

Innsworth, formerly known as Bentham Europe, first said it was considering a legal claim against Petrofac in 2017 when a Serious Fraud Office probe emerged before ramping up plans this year.

The claim, which has yet to be filed, is expected to be worth £400 million. Lawyers from London-listed Keystone Law are working on the case.

Petrofac shares have fallen more than 40% since the SFO confirmed an investigation over suspected bribery, corruption and money laundering in May 2017.

The case has been given added impetus after Petrofac’s former global sales head, David Lufkin, pleaded guilty to 11 counts of bribery last week. The guilty plea was linked to corrupt payments made in Saudi Arabia and Iraq to win billions of pounds of contracts.

However, Petrofac confirmed that no charges have been brought against any of its companies 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 is alleged to have been involved,” it added.

Elliott is one of the world’s best-known hedge funds and waged a 14-year legal battle with Argentina’s government over debt defaults.

Aside from its legal funding arm, it takes activist positions and pushed for company overhauls. Most recently it shook up Whitbread by forcing the sale of Costa Coffee to Coca-Cola.