Andy Goodwin, CEO and managing director of SMEC (left) and Wong Heang Fine, group CEO of Surbana Jurong.

Australian company bought by Temasek-owned company, currently have sanctions imposed by World Bank due to bribery offences

by Vincent Low

Last month, Temasek-linked Keppel Offshore & Marine was slapped with a US$422 million fine by US, Brazil and Singapore authorities for involving in millions of dollars bribes in Brazil. The bribery went on for more than a decade from 2001 to 2014, earning Keppel hundreds of millions of dollars as well as fat bonuses for its senior executives.

Other than Keppel O&M, news also surfaced 3 months ago (Sep 2017) that an Australian entity currently owned by Surbana Jurong was allegedly involved in another bribery case.

The Australian Broadcasting Corporation (ABC) that the World Bank has imposed sanctions on SMEC International, based in Melbourne, and its subsidiaries in India, Bangladesh and Sri Lanka after an investigation into their corporate misconduct back in 2011 and 2007.

The investigation launched by Australian authorities found evidence of “inappropriate payments” made in relation to World Bank-financed projects in Sri Lanka and Bangladesh, and “misrepresentations” to meet bidding requirements for projects in Sri Lanka and India. It was alleged that SMEC staff had sought approval to pay kickbacks to foreign officials.

This followed a news report in August 2016 of the allegations against the company.

As a result of the investigations, World Bank announced a Negotiated Resolution Agreement (NRA) that debars SMEC International, a subsidiary of SMEC Holdings for 12 months, as well as four of its controlled subsidiaries based in India, Bangladesh, and Sri Lanka, for periods varying from 6 to 30 months for misconduct in the South Asia region.

SMEC told ABC that it will continue to “strengthen” its corporate integrity compliance programs.

SMEC owned by Surbana Jurong

According to its website, Surbana Jurong owns various companies including SMEC, Robert Bird Group, KTP, Sino-Sun and AETOS.

“Together, we offer expanded capabilities and reach – providing comprehensive sustainable solutions and value add to projects everywhere around the world,” it said.

And according to its history page, Surbana Jurong is 100% owned by Temasek Holdings. The company was formed after a merger between Surbana International and Jurong International in 2015.

Surbana itself started out as the building and development division of HDB. In 2003, the division was corporatised as HDB Corporation Pte Ltd and transferred to Temasek the next year. In 2005, it was rebranded as Surbana Corp.

Meanwhile, Jurong International started out as the technical service group in JTC, which oversees the managing and development of industrial estates in Singapore. This group was then spun off as Jurong International in 2001, which later merged with Surbana.

Surbana Jurong then brought SMEC Holdings in August 2016.

Source: Surbana Jurong’s website

For the $400 million acquisition of SMEC, Surbana Jurong chairman Liew Mun Leong was quoted by media on 1 August 2016, saying there is a need for financing and expertise in infrastructure development across the Asia-Pacific market.

“Singapore and Australia have successfully done many major showcase national development project through Surbana Jurong and SMEC. Besides their complementary strengths, both companies have very similar corporate culture and core values,” he said.

A few weeks later, the alleged bribery scandal was uncovered on international news.

Minister Indranee: We don’t interfere with running of Temasek companies

Earlier this month, when opposition MPs pressed the People’s Action Party (PAP) government in Parliament if Temasek will call for an Extraordinary General Meeting (EGM) with a view to pursue civil action against board members and other senior executives found responsible for briberies and for breach of fiduciary duties, Minister of State Indranee Rajah simply replied:

“As I mentioned earlier, in this instance, the Government and Temasek do not interfere in the day to day running or management of Temasek portfolio companies.”