Photo: SembCorp

What happens now to Sembcorp Marine after Keppel pays US$422m in fines for corruption?

by Vincent Low

Last December, it was reported that Keppel O&M had to pay a colossal US$422m in fines after reaching a global resolution on corruption probes by authorities in US, Brazil and Singapore.

Allegations of huge corruptions occurring in Brazil first surfaced in 2015 when Brazilian authorities carried out a massive investigation code named Operation Car Wash to look into how their government-linked parties implemented money laundering and corruption schemes involving their state-run oil company Petrobras.

As a result, a key Petrobras official, Pedro Barusco, was arrested by the Brazilian authorities. In exchange for leniency, Barusco then gave testimony to Brazil’s federal police. He made allegations against Keppel’s agent, Zwi Skornicki, and Jurong Shipyard’s agent, Guilherme Esteves that he had received bribery monies through them. Jurong Shipyard is a unit of Sembcorp Marine.

Both agents, Skornicki and Esteves, were subsequently arrested. According to an earlier report by Bloomberg, Skornicki later testified in a Brazil court that 5 leading Keppel executives had authorised him to bribe Barusco in exchange for contract wins. Keppel at first denied the allegation in 2015 but now, it acknowledges that the corrupt payments made by their agent to Brazilian officials were “made with knowledge or approval” of their former senior executives.

Dr Lee Boon Yang, Keppel Chairman, even apologized, “We regret and are deeply disappointed by the actions that we now know to have taken place at the Group’s offshore and marine business in Brazil from around 2001 to 2014.”

In the case of Sembcorp Marine, its Chairman, Tan Sri Mohd Hassan Marican, has yet to say anything with regard to the corruption allegations made by Barusco.

Tan Sri Mohd Hassan Marican is the former President & CEO of Malaysia’s Petroliam Nasional (PETRONAS). He is also a senior international advisor at Temasek International Advisors.

However, Sembcorp Marine did issue two public statements with regard to the matter when news of corruptions began to surface in Brazil in 2015.

On 8 Feb 2015, it said it did not make any “illegal payment”:

“Sembcorp Marine refers to various media reports relating to statements made by Petrobras’ former engineering manager Pedro Jose Barusco and wishes to state that Sembcorp Marine did not make any illegal payment and the Group’s policies and contracts prohibit bribery and unethical behaviour.”

And on 30 Mar 2015, it said:

“The Company is unable to comment on the truth or otherwise of these allegations and its internal (legally privileged) investigations are continuing. The Company and the Group have a strict anti-bribery policy and do not condone any action that will result in the violation of any country’s anti-corruption laws. The Company and the Group also do not and will not tolerate any improper business conduct.”

It remains to be seen what the authorities in US and Brazil would conclude with regard to their investigations of Esteves, the Brazilian agent acting on behalf of Sembcorp Marine’s subsidiary, Jurong Shipyard.