In connection with the UK Serious Fraud Office (SFO)’s ongoing investigation into Petrofac Limited and its subsidiaries (“Petrofac”), on 6 February 2019 David Lufkin, 51, a British national, and previously Global Head of Sales for Petrofac International Limited, pleaded guilty at Westminster Magistrates’ Court to eleven counts of bribery, contrary to sections 1(1) and 1(2) of the Bribery Act 2010.

These offences relate to the making of corrupt offers to influence the award of contracts to Petrofac worth in excess of USD $730 million in Iraq and in excess of USD $3.5 billion in Saudi Arabia.

The charges included the following:

Payments of approximately USD $2.2 million were ultimately made by Petrofac to two agents in respect of a USD $329.7 million Engineering, Procurement and Construction (“EPC”) contract on the Badra oilfield in Iraq (the “Badra Phase One EPC contract”) awarded to Petrofac in February 2012.

Corrupt offers of payments were also made to an agent to influence the award of contract variations to the Badra Phase One EPC contract, and for the extension of the Badra Operations and Maintenance (“O&M”) contract.  Petrofac was unsuccessful in obtaining these contracts and no payments were made to the agent.

  • Fao [Faw] Terminal, Iraq

Payments of approximately USD $4 million were ultimately made by Petrofac to an agent in respect of an O&M contract on the Fao Terminal project in Iraq (the “Fao Terminal O&M contract”).  The Fao Terminal O&M contract, awarded to Petrofac in August 2012, together with yearly extensions awarded in 2013, 2014 and 2015, was worth approximately USD $400 million to Petrofac.

  • Saudi Arabia

Payments of approximately USD $45 million were made by Petrofac to its agent in respect of the following contracts awarded to Petrofac in Saudi Arabia, between July 2012 and November 2015:

  • Payments of approximately USD $5.8 million were ultimately made by Petrofac to its agent in respect of EPC contracts for the Petro Rabigh Phase II Petrochemical Expansion Project awarded in July 2012 and worth approximately USD $463 million;
  • Payments of approximately USD $21.4 million were ultimately made by Petrofac to its agent in respect of EPC contracts for Jazan Refinery and Terminal Project awarded in December 2012 and worth approximately USD $1.7 billion; and
  • Payments of approximately USD $19.5 million were ultimately made by Petrofac to its agent in respect of the EPC contract for a sulphur recovery plant as part of the Fadhili Gas Plant Project awarded in November 2015 and worth approximately USD $1.56 billion.

Corrupt offers of payments were also made to its agent for the award of other contracts at the time. Petrofac was unsuccessful in obtaining these contracts and no payments were made to its agent.

David Lufkin will be sentenced at a later date.

The SFO’s investigation into Petrofac’s use of agents in multiple jurisdictions, including Iraq and Saudi Arabia, is ongoing.

Individuals with information potentially relevant to this investigation are encouraged to contact the SFO through our secure and confidential reporting channelWhen providing information please quote ‘Petrofac Investigation’.  Please note that it would be of particular assistance if you could provide your contact details for any further queries or questions that we may have.

(Source: UK SFO)

In connection with the UK Serious Fraud Office (SFO)’s ongoing investigation into Petrofac Limited and its subsidiaries (“Petrofac”), on 6 February 2019 David Lufkin, 51, a British national, and previously Global Head of Sales for Petrofac International Limited, pleaded guilty at Westminster Magistrates’ Court to eleven counts of bribery, contrary to sections 1(1) and 1(2) of the Bribery Act 2010.

These offences relate to the making of corrupt offers to influence the award of contracts to Petrofac worth in excess of USD $730 million in Iraq and in excess of USD $3.5 billion in Saudi Arabia.

The charges included the following:

Payments of approximately USD $2.2 million were ultimately made by Petrofac to two agents in respect of a USD $329.7 million Engineering, Procurement and Construction (“EPC”) contract on the Badra oilfield in Iraq (the “Badra Phase One EPC contract”) awarded to Petrofac in February 2012.

Corrupt offers of payments were also made to an agent to influence the award of contract variations to the Badra Phase One EPC contract, and for the extension of the Badra Operations and Maintenance (“O&M”) contract.  Petrofac was unsuccessful in obtaining these contracts and no payments were made to the agent.

  • Fao [Faw] Terminal, Iraq

Payments of approximately USD $4 million were ultimately made by Petrofac to an agent in respect of an O&M contract on the Fao Terminal project in Iraq (the “Fao Terminal O&M contract”).  The Fao Terminal O&M contract, awarded to Petrofac in August 2012, together with yearly extensions awarded in 2013, 2014 and 2015, was worth approximately USD $400 million to Petrofac.

  • Saudi Arabia

Payments of approximately USD $45 million were made by Petrofac to its agent in respect of the following contracts awarded to Petrofac in Saudi Arabia, between July 2012 and November 2015:

  • Payments of approximately USD $5.8 million were ultimately made by Petrofac to its agent in respect of EPC contracts for the Petro Rabigh Phase II Petrochemical Expansion Project awarded in July 2012 and worth approximately USD $463 million;
  • Payments of approximately USD $21.4 million were ultimately made by Petrofac to its agent in respect of EPC contracts for Jazan Refinery and Terminal Project awarded in December 2012 and worth approximately USD $1.7 billion; and
  • Payments of approximately USD $19.5 million were ultimately made by Petrofac to its agent in respect of the EPC contract for a sulphur recovery plant as part of the Fadhili Gas Plant Project awarded in November 2015 and worth approximately USD $1.56 billion.

Corrupt offers of payments were also made to its agent for the award of other contracts at the time. Petrofac was unsuccessful in obtaining these contracts and no payments were made to its agent.

David Lufkin will be sentenced at a later date.

The SFO’s investigation into Petrofac’s use of agents in multiple jurisdictions, including Iraq and Saudi Arabia, is ongoing.

Individuals with information potentially relevant to this investigation are encouraged to contact the SFO through our secure and confidential reporting channelWhen providing information please quote ‘Petrofac Investigation’.  Please note that it would be of particular assistance if you could provide your contact details for any further queries or questions that we may have.

(Source: UK SFO)

By Elena Kornienko.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

A few months ago I was approached by one of my LinkedIn connections, an expat based in Iraq, with an exciting training opportunity for one of the largest oil companies in the region.

Some messages back and forth to clarify details and I am asked to submit a proposal and training programs content. And at this point of time my inner voice of procurement professional with 17 years of buying goods and services for various companies started asking me questions:  “Why you have not received an official enquiry and all correspondence is LinkedIn based? “ – “Well, that’s how the modern world works these days! Social media became integral part of our lives”. My inner voice said: “Ok, fair enough. But why this person did not use corporate e-mail account?” – “Well, it is easier to keep correspondence on a subject in one place, and it will be easier to refer to all discussion details”.

And my inner voice was satisfied with that explanation too. But it kept asking me more questions: “If that is a formal inquiry for services, it have to come using company’s standard, and this company absolutely have templates and even automated procurement system…”, and the next question was “Submission of training materials to a client is always subject to signing “Non-disclosure agreement” where Intellectual Property Rights are clearly defined. So why it does not happen this time?”. And that was the time when I listened to my inner voice and started asking the same questions the potential counterpart. It did not take long to understand that it was a fraud inquiry with a purpose of stealing information which was covered by big and famous name…

It is not a secret that most of International Oil Companies, including the ones which operate in Iraq, have as a part of their contract template schedule “Code of Business Conduct and Ethics” and a failure to comply with all rules is considered as material breach of a contract which leads to further collection of damages or early termination. This contract schedule establishes company’s standards that include business practices and regulatory compliance that applies to all company’s employees.

These standards are expected to be followed by contractors as a part of commitment to execute contracts in trustful and faithful manner. For those of readers who did not come across with such contract articles, here just a few examples of what is typically covered: alcohol and drug policy, insider information trading, bribery, corruption, business records, confidential information, computer and system security, conflict of interest, gifts, engagement with media and information partners. This is typical content of “Code of Business Conduct and Ethics” which is adopted by most of the players in the Oil and Gas industry, however is it enough to make sure that all parties involved are acting in a good faith to all concerned?

The Chartered Institute of Purchasing and Supply (CIPS) developed and implemented Corporate Code of Ethics with more focus for procurement professionals. It guides companies on ethical behavior in supply chain and promotes usage of procurement strategies to drive away unethical practices from the supply chain, assists to ensure that procurement decision minimize any negative impact, helps to put ethical policies and procedures in place to ensure compliance and the most important – mandates the education and training of all staff involved in sourcing, contractor selection and management to professional standards.  Great initiative that helps not only companies, but procurement professionals to set and follow rules of ethical procurement. It promotes professional behavior of procurement personnel who have the biggest exposure in a company for potential fraud and corruption.

While some of the companies are more advanced in implementing and following ethics standards in procurement, for others it is a new unknown road. Iraq has its own challenges in procurement and we can all contribute the development of ethics in supply chain by letting our inner voice ask questions even in circumstances when we feel great excitement for fantastic business opportunity.

Elena Kornienko has more than 15 years of professional experience in contracts, procurement and tendering in various roles from demand-identification to contract close-out. She has worked on major international oil and gas projects, including the Sakhalin-1 and Sakhalin-2 fields in Russia, and Iraq’s West Qurna-2. Now based in Dubai, she provides consultancy services to the oil and gas industry. Elena is a fluent English and Russian speaker, and a graduate of the Moscow State University of Commerce, holding a degree in Economics. She also graduated with distinction from the School of Business Administration at Portland State University and holds a CIPS diploma.

(Picture: Ethics signpost, from 3D-creation/Shutterstock)

The co-owners and chief operating officer of one of the largest Iraqi dinar exchangers in the United States were convicted last month by a federal jury following a five-week trial.

Tyson Rhame, James Shaw, and Frank Bell were each convicted of mail and wire fraud conspiracy, as well as multiple counts of mail and wire fraud. Rhame and Bell were also convicted of making false statements to federal law enforcement agents.

“These executives engaged in a lengthy campaign to defraud investors by spreading lies about the investment potential of the Iraqi dinar,” said Acting U.S. Attorney Kurt R. Erskine. “These convictions resulted from years of investigation, which included dozens of electronic and physical search warrants, hundreds of witness interviews, and extensive financial analysis.”

“The conviction of these three defendants is the result of an extensive effort by the government to protect investors from those who make unsubstantiated claims about the potential revaluation of a foreign currency,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “Their greed led them to steal the hopes of unsuspecting investors and ultimately led them to their demise. The FBI and its partners make it a priority to root out and punish anyone who preys on investors for their own selfish desires.”

“This was a trial about fraudulent inducements, conspiracy, investment fraud and outright greed,” said Thomas J. Holloman, Special Agent in Charge, IRS-Criminal Investigation. “Rhame, Shaw, and Bell saw an opportunity to build their personal net worth and business position in the currency market by seizing on investors’ desire for high returns on their investments. At the end of the trial, the jury agreed with the government and found the Sterling Currency Group co-owners and chief operating officer guilty of the conspiracy and the underlying frauds. Despite the challenges these complex cases present, IRS-CI is committed to working with our partners at the FBI, and the U.S. Attorney’s Office to show white-collar fraud is still an investigative priority.”

According to Acting U.S Attorney Erskine, the charges, and other information presented in court: Rhame and Shaw owned and operated the Sterling Currency Group, which was once one of the country’s largest sellers of the Iraqi dinar. Bell was Sterling’s chief operating officer. Between 2010 and June 2015, Sterling grossed over $600 million in revenue from the sale of the Iraqi dinar and other currencies, while Rhame and Shaw received over $180 million in distributions.

The evidence at trial established that the defendants took steps to make investors believe they would get rich by investing in the Iraqi dinar. At one point, Rhame posted information on Sterling’s website falsely suggesting that the dinar was about to revalue. At other times, Rhame and Bell falsely claimed that Sterling would cash out investors at airports around the country following a dinar “revaluation.” The defendants also paid substantial sums of money to third parties who in turn spread false information about the dinar on conference calls and Internet chat rooms.

Tyson Rhame, 53, and James Shaw, 55, both of Atlanta, Georgia, and Frank Bell, 55, of Decatur, Georgia, were convicted of conspiracy to commit mail and wire fraud and multiple mail and wire fraud counts. Rhame and Bell were also convicted of making false statements to federal agents regarding Sterling’s operations. The jury acquitted the defendants of money laundering charges. A fourth defendant, Terrence Keller, was acquitted of all charges at trial.

(Source: US Dept of Justice)

Security forces have reportedly confiscated many USD and Euro bills and 88 million Iraqi Dinars (IQD) in counterfeit banknotes in Erbil province since the start of 2018.

According to Kurdistan24, 100 suspects have been arrested for dealing and trading in counterfeit dinar.

Full story here.

(Source: Kurdistan24)

The UK’s Serious Fraud Office (SFO) has commenced criminal proceedings against Unaoil Monaco SAM and Unaoil Ltd as part of an ongoing corruption prosecution.

This follows charges already brought against four individuals for alleged conspiracy to make corrupt payments to secure the award of contracts in Iraq.

Unaoil Ltd has been summonsed with two offences of conspiracy to give corrupt payments, contrary to section (1) of the Criminal Law Act 1977 and section 1 of the Prevention of Corruption Act 1906.

This relates to alleged corrupt payments to secure the award of a contract worth US$733 million to Leighton Contractors Singapore PTE Ltd for a project to build two oil pipelines in southern Iraq.

Unaoil Monaco SAM has been summonsed with two offences of conspiracy to give corrupt payments, contrary to section (1) of the Criminal Law Act 1977 and section 1 of the Prevention of Corruption Act 1906.

The charges relate to alleged corrupt payments to secure the award of contracts in Iraq to Unaoil’s client SBM Offshore.

The first appearance for the companies will be held at Westminster Magistrates’ Court on 18 July 2018.

(Source: SFO)

From Al Jazeera. Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

Iraq’s electoral commission says it is cancelling the results from more than 1,000 polling stations used in this month’s parliamentary vote.

It says it has evidence of fraud at voting centres both in Iraq and for citizens living abroad.

Iraqi MPs called for votes in the predominantly Sunni provinces of Anbar, Diyala, Salahuddin and Nineveh and all ballots cast by Iraqis living abroad to be manually recounted.

The demand was supported by many Sunni politicians and others who oppose the election results which saw a successful outcome for three main Shia-led blocs in Iraq’s first election since the defeat of ISIL.

Prime Minister Haidar al-Abadi warned in his weekly news conference of potential political instability if demands for recounts continued.

Al Jazeera‘s Charles Stratford has more from Baghdad:

The UK’s Serious Fraud Office (SFO) has brought further charges against two individuals facing trial in relation to the Unaoil investigation.

Basil Al Jarah and Ziad Akle have both been charged with conspiracy to give corrupt payments to secure the award of a contract worth US$733 million to Leighton Contractors Singapore PTE Ltd for a project to build two oil pipelines in southern Iraq.

  • Basil Al Jarah was charged on 15 May 2018 with two offences of conspiracy to give corrupt payments, contrary to section (1) of the Criminal Law Act 1977.
  • Ziad Akle was charged on 16 May 2018 with one offence of conspiracy to give corrupt payments, contrary to section (1) of the Criminal Law Act 1977.

Basil Al Jarah and Ziad Akle will appear before Westminster Magistrates’ Court on 23 May 2018.

The SFO would like to thank the Australian Federal Police for the assistance it provided in connection with our investigation.

The investigation is ongoing.

(Source: SFO)

An indictment was unsealed on Friday charging Ross Roggio, 49, of Stroudsburg, Pennsylvania, and Roggio Consulting Company, LLC, a firm with which Ross Roggio was associated, for alleged involvement in a conspiracy to illegally export firearm parts, firearm manufacturing tools, and “defense services,” including items used to manufacture M4 rifles, from the United States to Iraq, in violation of the Arms Export Control Act and the International Emergency Economic Powers Act.

Assistant Attorney General for National Security John C. Demers; U.S. Attorney David J. Freed of the Middle District of Pennsylvania; Special Agent in Charge Jonathan Carson of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office; and said Special Agent in Charge Marlon V. Miller of Homeland Security Investigations Philadelphia Office made the announcement.

The indictment charges Ross Roggio and Roggio Consulting Company, LLC with criminal conspiracy, illegal export of goods, wire fraud and money laundering. Pursuant to regulations of the U.S. Department of Commerce, a license is required to export certain goods and services from the United States to Iraq for reasons of regional stability and national security.  Similarly, defense services and defense articles may not be exported to Iraq without a license from the U.S. Department of State.

The indictment alleges that, beginning in January of 2013 until the date of the indictment, Ross Roggio conspired to export both items and services from the United States to Iraq, without the required U.S. Commerce Department and U.S. State Department licenses.  The conspirators allegedly purchased firearms parts and manufacturing tools from the United States, illegally exported the items to Iraq where the items were utilized and incorporated in the manufacture and assembly of complete firearms in a firearms manufacturing plant constructed and operated in part by Ross Roggio.  It is alleged that the items illegally exported included: M4 Bolt Gas Rings MIL; Firing Pin Retainers; Rifling Combo Buttons, and “defense services.”  The defense services allegedly provided by Ross Roggio and his firm include the furnishing of assistance to foreign persons in the manufacture of firearms.

In addition to the charges relating to export controls violations, the indictment also alleges that Ross Roggio and his firm committed wire fraud on at least three occasions by purchasing items from a United States company and providing said company with false information about the end-user of the items.  Finally, the indictment charges Ross Roggio and his firm with 27 counts of money laundering in the form of bank transfers from Iraq to two accounts within the Middle District of Pennsylvania, in furtherance of their unlawful export conspiracy.

The combined maximum penalty under federal law for these offenses is 705 years of imprisonment, a term of supervised release following imprisonment, and a fine.  The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes.  Any sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.  The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

This case is being prosecuted by Assistant U.S. Attorney Todd K. Hinkley for the Middle District of Pennsylvania, and Trial Attorneys Scott Claffee and Heather Alpino of the National Security Division’s Counterintelligence and Export Control Section.

(Source: US Dept of Justice)

The owner and chief executive officer of an armored vehicle company was sentenced today to 70 months in prison for his role in orchestrating a scheme to defraud the United States by providing the U.S. Department of Defense with armored gun trucks that did not meet ballistic and blast protection requirements set out in the company’s contracts with the United States.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Rick A. Mountcastle of the Western District of Virginia, Special Agent in Charge Adam S. Lee of the FBI’s Richmond, Virginia, Field Office and Special Agent in Charge Robert E. Craig Jr. of the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office made the announcement.

William Whyte, 72, of King City, Ontario, the owner and CEO of Armet Armored Vehicles of Danville, Virginia, was sentenced by U.S. District Judge Jackson L. Kiser of the Western District of Virginia, who also ordered Whyte to serve three years of supervised release following his prison sentence and to pay restitution in the amount of $2,019,454.36.

On Oct. 9, 2017, after a two-week trial, Whyte was found guilty of three counts of major fraud against the United States, three counts of wire fraud and three counts of criminal false claims.  Whyte was charged by an indictment in July 2012.

Evidence at trial demonstrated that Whyte executed a scheme to defraud the United States by providing armored gun trucks that were deliberately under-armored.  Armet contracted to provide armored gun trucks for use by the United States and its allies as part of the efforts to rebuild Iraq in 2005.

Despite providing armored gun trucks that did not meet contractual specifications, Whyte and his employees represented that the armored gun trucks were adequately armored in accordance with the contract, the evidence showed.  Armet was paid over $2 million over the course of the scheme, the evidence showed.

The case was investigated by the FBI and DCIS.  The case is being prosecuted by Trial Attorney Caitlin Cottingham of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Heather Carlton of the Western District of Virginia.

(Source: US Dept of Justice)