It has been reported that a US court document shows that at least six former employees of Keppel Offshore & Marine (Keppel O&M) have been implicated in a Brazilian graft scandal, including some from the firm’s United States and Brazil operations.
The court document states that between 2001 and 2011, Keppel O&M and Keppel O&M US executives created and executed agreements on behalf of the company with consulting firms controlled by a consultant.
The document did not mention the name of the consultant, however, it is believed to be Mr Zwi Skornicki, a former agent of Keppel in Brazil and the man central to the unfolding of the scandal.
According to the paper, the agreements were intended to facilitate bribe payments to obtain business from Brazilian state-owned oil giant, Petrobras, and Sete Brasil and conceal their purpose.
It also stated that Keppel O&M effectuated the bribes by making payments to bank accounts in the US and elsewhere in the names of shell companies controlled by the consultant, who then transferred money from those bank accounts in the US to bank accounts outside the US controlled by or for the benefit of Brazilian and party officials under the guise of these consulting agreements.
In one of the examples of the agreements made under the bribe, Sete Brasil had contracted five companies to commission the construction of a fleet of ultra deepwater rigs for which Petrobras would be the end user between 2011 and 2012.
The court paper stated that Keppel O&M executives as well as an executive of a Keppel O&M unit in Brazil authorised the consultant during several phone calls to pay 1 per cent of the contract value as bribes in response to a demand from a Brazilian official. Accordingly, the consultant paid about US$14.4 million (S$19.3 million) in bribes to the Brazilian official and other related parties.
Bribery allegations involving Keppel O&M first surfaced in the Brazilian media in 2016. The Brazilian media reported that Mr Skornicki was arrested in February 2016 and charged with criminal conspiracy and money laundering, after Mr Pedro Jose Barusco, a former Petrobras executive, gave testimony to Brazil’s federal police in exchange for leniency, and made the allegations against him.
Mr Barusco also made similar allegations against Mr Guilherme Esteves de Jesus, an agent of Jurong Aracruz shipyard owned by Sembcorp Marine’s Jurong Shipyard. He was arrested by the Brazilian authorities in March 2015.
Keppel wrote a statement on Saturday (23 December), saying that it was unable to comment on the agreed statements of facts or on the identities of the other individual employees involved for legal reasons.
The group has separated with all the executives defined as “relevant individuals” in the statements of facts, while Keppel O&M’s relationship with Mr Skornicki was terminated last year.
Bloomberg has reported earlier that Mr Skornicki told a judge in July last year that five leading executives had authorised him to bribe public officials in exchange for contract wins. In response to the report, Keppel strongly denied the allegations then, stressing that none of the executives authorised any bribes.
However, the company later announced in October 2016 that further internal investigations revealed suspicious transactions associated with Mr Skornicki and notified the authorities in the relevant jurisdictions.
On Saturday, the US Department of Justice said that in addition to the fines imposed and agreements, a guilty plea by a former senior member of Keppel O&M’s legal department was also unsealed. Meanwhile, the individual, who was not named, is awaiting sentencing.
Acting US Attorney Bridget Rohde of the Eastern District of New York stated that the resolutions are the result of a multinational effort to investigate and prosecute a corruption scheme that resulted in Keppel O&M and its US unit paying more than US$50 million in bribes to Brazilian officials and earning over US$350 million from business corruptly obtained in Brazil.
She said that in an attempt to conceal their crimes, the defendants used the global financial system – including the United States banking system – to disguise the source and disbursement of the bribe payments by passing funds through a series of shell companies.
Its directors are alleged to have colluded with politicians to redirect money out of contracts for personal use or to fund political campaigns, which has indirectly led to the impeachment of Brazil’s first female president Dilma Rousseff, whose Workers’ Party had appointed its candidates and those of its coalition partners to key Petrobras positions.
Meanwhile, contractors such as construction groups and foreign companies have been implicated in the sweeping probe, with most of them said to have paid bribes to politicians and Petrobras executives in exchange for contracts.
The fallout from the Petrobras corruption scandal was made worse by the oil price crash.
Sete Brasil had commissioned a large fleet of rigs for Petrobras’ use, with both Keppel and SembMarine as contractors. However, they faced difficulties securing long-term financing and making payments amid the oil price collapse. The company then filed for bankruptcy protection last year.
Keppel stopped work on Sete Brasil’s rigs in late 2015, with provisions of $230 million set aside for the project, in the case that is possibly the biggest graft scandal in corporate Singapore history.
In scale, it is larger than a similar earlier case involving ST Marine, where seven former ST Marine executives were convicted in Singapore for their part in the scandal that broke in 2014.
Court documents showed that at least $24.9 million in bribes, falsely claimed as entertainment expenses, were paid in 2000 and 2011. The corrupt payments were made in return for ship repair contracts.