Keppel unit faces probe over deals with Petrobras

Keppel said in a statement to the Singapore Exchange that its Keppel Fels Brasil shipyard is on a list of 10 companies recommended for further investigation by a Brazilian parliamentary inquiry.
Keppel said in a statement to the Singapore Exchange that its Keppel Fels Brasil shipyard is on a list of 10 companies recommended for further investigation by a Brazilian parliamentary inquiry.PHOTO: KEPPEL

But stock unlikely to be hurt by bribery case involving Brazilian oil firm and rig builder: Analysts

A unit of conglomerate Keppel Corp may be investigated for deals it made with Brazilian national oil company Petrobras and rig builder Sete Brasil, but analysts say any probe is unlikely to hit the firm's stock.

A Brazilian parliamentary inquiry recommended further investigation into 10 companies it identified as being involved in transactions with Petrobras and Sete Brasil.

Keppel said, in a statement to the Singapore Exchange at around midnight on Thursday, that its Keppel Fels Brasil shipyard is on the list.

It "intends to extend its full cooperation to the authorities if approached".

The investigations follow allegations by a former engineering manager at Petrobras that bribes were paid to executives of the two Brazilian companies to obtain work.

When the scandal surfaced in February, Keppel had said that its employees were required to adhere to a code of conduct, "which prohibits, among others, bribery and corruption".

Sembcorp Marine's Jurong Shipyard is believed to be the other Singaporean firm facing investigation.

When contacted yesterday, it referred to a statement made in February: "Sembcorp Marine did not make any illegal payments and the group's policies and contracts prohibit bribery and unethical behaviour." The spokesman declined further comment.

An analyst who declined to be named noted that most investors are already aware that the two local firms have been drawn into the scandal. And being under investigation does not mean there is evidence of corrupt practices, said RHB analyst Lee Yue Jer.

Mr Lee said it was expected that the anti-corruption drive in Brazil would lead to investigations into all "significant" contracts.

"Semi-submersible and drillships costing more than U$500 million (S$697 million) each definitely will come under scrutiny, so it's not surprising that Keppel's contracts have come under scrutiny," he said.

He expects only a "knee-jerk reaction", if any, to news of the possible investigation.

DBS analyst Ho Pei Hwa maintained her hold recommendation on Keppel Corp saying: "We should not be overly alarmed by this at this juncture." Keppel and Sembcorp Marine shares fell yesterday, a day after both reported poor results for the third quarter.

Keppel closed 0.55 per cent, or four cents, down at $7.25, while Sembcorp Marine closed 3.15 per cent, or eight cents, down at $2.46.

A version of this article appeared in the print edition of The Straits Times on October 24, 2015, with the headline 'Keppel unit faces probe over deals with Petrobras'. Print Edition | Subscribe