SINGAPORE - Share prices of Keppel Corp and Sembcorp Marine continued to stay in negative territory, after Keppel "recognised" that certain transactions associated with its agent Zwi Skornicki may be suspicious and notified the authorities in Brazil of its intention to cooperate.
Its statement to the Singapore Exchange referred to allegations in Brazil that illegal payments were made by Mr Zwi Skornicki in connection with contracts entered into between certain Keppel entities with Brazil state oil giant Petrobras and its oil rig supplier Sete Brasil.
"The news while not new is damaging, and until its gets out of the way, some investors may shun the stock for the time being", a dealer said.
As at 4.21pm, Keppel stock was down 2 per cent or 11 cents to S$5.28, while Sembcorp Marine fell in tandem, down 1.9 per cent or 2.5 cents to S$1.28.
The scandal engulfing Brazilian oil giant Petrobras further embroiled both Keppel and Sembcorp Marine, with allegations that US$9.5 million (S$12.9 million) in bribes were paid by agents of the two Singapore companies.
Mr Skornicki, a former third-party commercial representative for Keppel in Brazil, had told a court in Brazil this year that Keppel's top managers authorised him to bribe public officials in exchange for Petrobras contracts that often exceeded a billion dollars.
Both companies had then strongly denied these allegations.
"Following further internal investigations, Keppel recognises that certain transactions associated with Mr Skornicki may be suspicious," the company said in its Monday filing.
It reiterated its zero-tolerance stance against any form of illegal activity, including bribery and corruption, involving its employees or associates.
Some analysts say both stocks are under selling pressure because the companies' contracts may be reviewed by Brazil's new government under President Michel Temer, who has vowed to crack down on corruption.
"There seems to be mounting evidence that Keppel's agent did engage in corruption to get the contracts with Petrobras. The new government may review some of these agreements involving Skornicki, and if there's evidence of corruption, then some of the terms may not be honoured," according to the head of a local brokerage.
Sete Brasil, whose main customer is Petrobras and the key client for the two Singaporean rig builders, has filed for bankruptcy, putting the contracts placed by the Brazilian firm in limbo.