SINGAPORE — The Corrupt Practices Investigation Bureau (CPIB) issued a press statement on Thursday (12 Jan) on the issuing of stern warnings to six individuals who were formerly senior management staff of Keppel Offshore & Marine Limited (KOM) after close to five years of its investigations into offences punishable under the Prevention of Corruption Act (PCA).
The decision to issue the stern warnings on Wednesday (11 Jan) against the six was made in consultation with the Attorney-General’s Chambers (AGC).
The six former executives were arrested by CPIB in Feb 2018, following an investigation brought about by the Department of Justice (DOJ) of the United States of America. The six were subsequently let off on bail, and the matter was then referred to the AGC to decide if charges were to be filed.
The offences relate to bribe payments to officials of Brazilian state-owned corporation Petróleo Brasileiro S.A. (Petrobras), pertaining to rigs-building contracts which Petrobras and/or its related companies had awarded to KOM.
Under the global resolution led by the Department of Justice of the United States of America and involving Brazil and Singapore, KOM was served a conditional warning by CPIB and AGC on 23 December 2017 for corruption offences punishable under Section 5(b)(i) of the PCA.
KOM has paid a total fine of US$422 million and fulfilled all obligations under the conditional warning, said CPIB.
It added that it had conducted investigations into the six individuals who had allegedly conspired with each other to give bribe payments totalling about US$55 million to foreign consultants involved in KOM’s business interests in Brazil.
These consultants then used these monies to pay bribes to Petrobras officials.
According to CPIB, this case is complex and transnational, involving multiple authorities and witnesses from several countries.
“There are evidentiary difficulties in cases of such nature. Many of the documents are located in different jurisdictions. In addition, key witnesses are located outside of Singapore and cannot be compelled to give evidence here. The decision whether to prosecute the six individuals for criminal offences has to take into consideration all relevant factors, such as the culpability of each individual, the available evidence and what is appropriate in the circumstances.”
“Having taken these into consideration, stern warnings were issued to the six individuals.”
While CPIB says that the case is complex and, therefore, may be hard for readers to understand the details of the offences of the six executives, the DOJ has helpfully summarised the details in its plea agreement document that was signed by KOM.
KOM pleaded guilty in the plea agreement to a charge under the Foreign Corrupt Practices Act (FCPA), which was approved by its Board of Directors.
Details of the bribery scheme as described by US DOJ
In or about 2005, KOM USA and an engineering company formed the joint venture KOM JV USA. The purpose of the joint venture was to market tension leg platform technology.
On or about 3 March 2007, a KOM employee sent an email to KOM Executive 2, copying KOM Executive 1, KOM Executive 3 and others, stating that a joint venture manager had expressed concerns that the Consultant would be retained for the P-61 project because under the joint venture partner’s corporate governance rules it “cannot pay [Consultant] to pay government officials -Petrobras ???”
On or about 28 March 2007, KOM Executive 2 sent an email to KOM Executive 4 and KOM Executive 6, copying KOM Executive 3, with the subject line, “Vetting process for [Consultant] -Brazil,” stating:
I spoke to [Consultant]. … he does not want to be tied in with any agency for US company ( can understand why), He suggests way forward is that he is working on behalf of [a KOM subsidiary in Brazil] for these projects and any fees be built into [the KOM subsidiary’s] price to the joint venture on the subcontract fabrication. In this way, in every meeting [the KOM subsidiary] is also present, so he can be present.
On or about 6 April 2007, KOM Executive 2 sent an email to KOM Executive 1, KOM Executive 4, KOM Executive 6, and another KOM employee, explaining that if the joint venture partner and the joint venture are “so hand tied to the US Code of Business Conduct, it would not be possible to involve [Consultant] which in reality diminishes our chances in the project. How we go?”
In or about 2008, KOM JV USA was invited to bid on the P-61 project along with at least two other companies and submitted the first technical proposal to Petrobras for the P-61 project.
After the invitation to bid, Consultant met with Brazilian Official 1, who told him that if KOM wanted to win the contract, it would need to pay a percentage of the contract value in bribes to Brazilian Official 1 and the Workers’ Party.
On or about 25 November 2008, the Consultant sent an email to KOM Executive 2, KOM Executive 3, KOM Executive 4, KOM Executive 5, and KOM Executive 6, copying KOM Executive 1, seeking confirmation, “based on our telecom, some days ago,” that for his work on the P-61 project Consultant would be paid his regular commission, i.e. “rates actually used in the existing contract,” plus an additional two per cent comprised of 0.5 per cent for “the party,” 0.5 per cent for “Group A” and one per cent for “Group B.”
“The party” referred to in the email was the Workers’ Party in Brazil, “Group A” referred to Brazilian Official 1 and affiliated persons, and “Group B” referred to Consultant himself.
KOM Executive 4 wrote to KOM Executive 2, KOM Executive 3, KOM Executive 5, and KOM Executive 6 in regard to Consultant’s email about 25 November 2008:
“The problem is that when broken down the parts look reasonable, but the whole is something else … how to deal with this? We have to get this past our partner somehow, else it will remain a matter of we stand alone (too 1isky) or no bid???”
Around a day later, KOM Executive 4 responded to the email chain, including KOM Executive 2, KOM Executive 3, KOM Executive 5, and KOM Executive 6, stating:
[I]f the fees are not reasonably close to what is expected by the vaiious interested parties, there is little incentive for anyone to push our offer. So what is ‘expected’?? Ifwe are not willing or able to offer similar to previous projects, we need to make a very unambiguous statement to those parties.
After discussions about limiting the scope of the Consultant’s services on the P-61 project in light of FCPA and bribery concerns expressed by the joint venture partner, on or about 30 November 2008, KOM Executive 5 emailed KOM Executive 2, KOM Executive 3, KOM Executive 4, and KOM Executive 6, stating,
“[Consultant] also mentioned that [the joint venture] was originally not invited for this project until much lobbying with his friends help. And the fees were told to us sometime ago. If they perceive us as not honoring our commitment, it may be bad for future business.”
In or about 2009, the Consultant received authorization from KOM Executive 3 and an executive at a KOM subsidiary in Brazil to pay bribes equal to a percentage of the P-61 contract value to Brazilian Official 1 and Workers’ Party.
In or about 2009, a KOM subsidiary based in Singapore formed a joint venture with an offshore subsidiary of the joint venture partner, KOM JV Singapore.
On or about 1 November 2009, a KOM subsidiary entered into a Marketing and Sales Representation Agreement with the Consultant (the “November 2009 contract”) in connection with the contemplated P-61 project, for which KOM USA was a shareholder of one of the sub-contracting joint venture entities. While knowing that the Consultant would pay bribes on behalf of KOM from commissions paid under the November 2009 contract, KOM Executive 2 signed, and KOM Executive 3 witnessed the agreement in Houston, Texas.
In or about 2010, KOM JV Singapore won the P-61 project from Petrobras, which then subcontracted a portion of the work on the P-61 project to KOM JV USA.
In or about and between July 2010 and September 2014, a KOM subsidiary based in Singapore made seven payments totalling approximately US$17.6 million to a bank account in Miami, Florida controlled by Consultant, pursuant to the November 2009 contract.
The Consultant subsequently transferred funds from that bank account in Florida to at least one bank account outside the United States in order to further the bribe scheme.
Using commissions received under the November 2009 contract and with authorization from executives of KOM USA and KOM, Consultant paid approximately US$8.8 million in bribes to Brazilian Official I and the Brazilian Workers’ Party in connection with the P-61 project. Brazilian Official 1 shared some of the bribe money with Brazilian Official 2.
CPIB choose not to name six in press release
CPIB seems to have taken a particular position by not naming the six former KOM employees, contrary to its usual practice of naming the individuals charged with corruption even when they have yet to be convicted.
While it has not named the six, a report by Bloomberg back in 2016, revealed that the Consultant as Zwi Skornicki.
Skornicki also reportedly told a Brazilian court that five Keppel executives were involved:
1. Chow Yew Yuen, then-current Keppel Offshore & Marine CEO
2. Tong Chong Heong, former senior executive at Keppel Corp
3. Tay Kim Hock, former CEO of Keppel Fels Brasil
4. Kwok Kai Choong, then-current CEO at Keppel Fels Brasil
5. Choo Chiau Beng, a former Keppel Corp CEO and current non-resident ambassador to Brazil
Chow stepped down from his position on 20 March 2017, while Kwok was no longer in his position as of November 2017.
According to the plea agreement, KOM Executive 6 is a United States citizen whose identity is known to the United States and KOM USA, held various senior positions in the legal department of KOM in or about and between 1990 and 2017.
It was earlier reported that Jeffery Chow, a former senior member of KOM’s legal department, cut a deal to help prosecutors in their probe of Keppel and other former executives.
Chow, 59, pleaded guilty on Aug 29 to conspiring to violate the FCPA as part of his deal to cooperate. He admitted to drafting contracts that were used to make bribe payments, according to court records.
Court records state that Chow, a US citizen, has a residence in Singapore and worked for Keppel for over 25 years.
