Keppel O&M to pay US$422m in fines as part of settlement over corruption probe

Keppel O&M to pay US$422m in fines as part of settlement over corruption probe

Keppel Offshore and Marine (Keppel O&M) will pay US$422 million (S$567 million) in fines as part of a global resolution reached with criminal authorities in the US, Brazil and Singapore over corrupt payments made by a former agent in Brazil.

SINGAPORE: Keppel Offshore and Marine (Keppel O&M) will pay US$422 million (S$567 million) in fines as part of a global resolution reached with criminal authorities in the US, Brazil and Singapore over corrupt payments made by a former agent in Brazil.

As part of the resolution, Keppel O&M was also issued a conditional warning by the Corrupt Practices Investigation Bureau (CPIB), according to a press release issued by the conglomerate on Saturday (Dec 23).  

"These agreements relate to corrupt payments by Mr (Zwi) Skornicki in relation to several KOM projects in Brazil, which were made with knowledge or approval of former KOM executives," it stated. 

The US Department of Justice (DOJ) also said in a news release on Friday that the company entered into a deferred prosecution agreement in the US, while US subsidiary Keppel O&M USA pleaded guilty in federal court in Brooklyn to conspiring to violate the US Foreign Corrupt Practices Act (FCPA)

Investigations showed the payments were made between 2001 and 2014 to officials of Brazilian state-run oil company, Petroleo Brasileiro (Petrobras), said the Attorney General’s Chambers (AGC) and CPIB in a joint release issued on the same day.  

This was "in order to win contracts with Petrobras and/or its related companies", the release stated. "KOM concealed these corrupt payments by paying commissions to an intermediary, under the guise of legitimate consulting agreements, who then made payments for the benefit of officials of Petrobras and other parties." 

Five Singaporeans were among the executives involved, court documents showed. "KOM Executive 1" was a senior executive of Keppel O&M between 2002 and 2014. 

"KOM Executive 2" was a senior executive of a Keppel O&M Singapore-based subsidiary between 1989 and 2009, and a Keppel O&M senior executive between 2013 and 2017. 

The third, a US permanent resident up until 2013, was a senior executive of Keppel O&M USA between 2002 and 2011, and a Keppel O&M senior executive between 2011 and 2017. 

The fourth Singaporean was a Keppel O&M executive between 2002 and 2017, and a Keppel O&M USA executive from 2011 to 2017, while the fifth, "KOM Sub Executive", was a senior executive of a wholly owned, Brazil-based subsidiary of Keppel O&M between 2000 and 2007.  

Another two Keppel O&M executives - a legal permanent resident of the US who held executive positions at several of the company's subsidiaries in Brazil between 2003 and 2007, as well as a US citizen who held various senior positions in the company's legal department around 1990 and 2017 - were also implicated in the US court documents. 

In total, the company earned US$351.8 million through the bribery scheme, according to court papers.

The DOJ said the US will receive about US$105.6 million of the settlement, including a US$4.7 million criminal fine paid by Keppel O&M USA. Brazil will receive more than US$211 million, or about 50 per cent of the total amount, and Singapore will receive about US$105.6 million, or 25 per cent of the settlement.

The Justice Department also revealed on Friday that a former member of the company's legal department pleaded guilty in August to a charge of conspiracy to violate the FCPA, in connection with the ongoing investigation. He is awaiting sentencing.

The Singaporeans are no longer under the employment of the conglomerate, a Keppel O&M spokesperson told Channel NewsAsia, adding that it is "unable to comment on what actions the respective authorities might take against the individuals," the spokesperson added. 

AGC and CPIB said they were unable to share further information about the individuals involved in the case as "investigations in respect of the individuals involved are ongoing". 

KEPPEL O&M GAVE "SUBSTANTIAL COOPERATION": AUTHORITIES

About US$53 million was to be paid to Singapore within 90 days from the date of the conditional warning, said AGC and CPIB, with a further US$53 million due within three years from the date. These payments were part of the total criminal fine. 

AGC and CPIB added that in issuing the conditional warning, due consideration was given to the "substantial cooperation" rendered by Keppel O&M to investigations including its own reporting of the corrupt payments, as well as the extensive remedial measures it has taken. 

Such measures were also noted in the DOJ's resolutions with Keppel O&M and Keppel O&M USA, the Justice Department said in the news release. The criminal penalty accordingly reflects a 25 per cent reduction off the bottom of the applicable US Sentencing Guidelines fine range, it added.

Keppel Corp chairman Dr Lee Boon Yang said the company was "deeply disappointed" by the incident, adding that "global companies such as Keppel have both a legal and moral duty to operate fully within international laws and regulations". 

"Since the allegations emerged, we have moved quickly and decisively to put in place stricter controls and embedded best practices across the group to ensure that such unacceptable behaviour will not be repeated," Dr Lee added. 

Keppel Corp CEO Loh Chin Hua also said that "effective compliance controls are now thoroughly embedded" across its businesses, "supported by rigorous anti-corruption training and robust compliance and governance regimes". 

He said that the global resolution meant Keppel Corp "can draw a line under this difficult issue, which has been a key focus of the board and senior management since the bribery allegations first emerged, and look to the future". 

Acting Assistant Attorney General John Cronan of the DOJ’s Criminal Division said the case represents the first coordinated FCPA resolution with Singapore and the most recent of several coordinated resolutions with Brazil. 

"The Criminal Division is committed to working with our international partners to ensure that honest, law-abiding companies are able to compete on a level playing field across the globe," he said. 

Source: CNA/Reuters/hs/mz

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