Bribes for overseas deals: 2 local firms charged since 1997

Keppel subsidiary Keppel Offshore & Marine (KOM) was fined US$422 million (S$562 million) for making corrupt payments in Brazil.
Keppel subsidiary Keppel Offshore & Marine (KOM) was fined US$422 million (S$562 million) for making corrupt payments in Brazil.PHOTO: KEPPEL CORPORATION LIMITED

Over the past 20 years, two local companies and 15 Singaporeans have been prosecuted in Singapore for giving bribes totalling $10.8 million to secure business deals overseas, the Corrupt Practices Investigation Bureau (CPIB) told The Straits Times yesterday.

One of the two companies taken to task was Keppel Shipyard - which was charged and fined in 1997, it noted. The other firm was Federal Hardware Engineering Co, which was charged in 2004.

The prosecutions were possible because of the extra-territorial nature of the Prevention of Corruption Act, which allows charges to be filed against Singaporeans and Singapore firms - even for corrupt acts committed abroad.

A week ago, Keppel subsidiary Keppel Offshore & Marine (KOM), ensnared in a massive global corruption scandal, was fined US$422 million (S$562 million) for making corrupt payments in Brazil.

This happened between 2001 and 2014, and involved US$55 million in bribes to officials at Brazilian state-owned oil company Petrobras and to the then governing political party in Brazil.

But that was not the first time it got into trouble. Keppel Shipyard - now part of KOM - ran afoul of the law in 1997 for paying bribes to get business overseas. KOM was incorporated in 2002 through the integration of Keppel Shipyard, Keppel FELS and Keppel Singmarine.

When asked, Keppel told The Straits Times yesterday: "We will not comment on events from the 1990s or draw any comparison between the two cases."

CONTROLS STEPPED UP

The past practices uncovered at KOM do not reflect how the Keppel Group conducts business today. Effective compliance controls are now thoroughly embedded across all our businesses, supported by rigorous anti-corruption training and robust compliance and governance regimes.

KEPPEL

In 1997, Keppel Shipyard was fined $300,000 after pleading guilty to paying $8.53 million in bribes to Mr Cornelius van der Horst, a manager of Petroleum Shipping, a British unit of oil giant Exxon Corp.

The bribes were given between 1992 and 1995 to reward him for helping Keppel get contracts to repair 17 of Exxon's tanks.

In that case, Mr Tong Chong Heong was one of the Keppel directors who made the decision to give Mr van der Horst a 1 per cent cut of the contract sum for all tenders awarded to Keppel by Petroleum Shipping.

Mr Tong served as chief executive of KOM from 2009 until he retired in 2014.

In 2016, he made the news again, this time for being among five key executives accused by Keppel agent Zwi Skornicki of authorising him to bribe officials in exchange for contracts - often exceeding a billion dollars - with Petrobras.

Keppel had denied the allegations made by Mr Skornicki.

Corporate governance academic Mak Yuen Teen said the fact that Keppel was implicated in two cases suggests a "deeper corporate culture issue that spans many years".

He added: "There are always early warning signs. Often, whistleblower complaints are ignored. In the KOM case, there is the question of whether there were whistleblowers. Although, if wrongdoing involves senior management, whistleblowers often feel it is futile to complain. So, what did the board do after the 1997 incident?"

Yesterday, Keppel said: "The key issue is that Keppel has significantly enhanced its compliance and internal controls systems.

"The past practices uncovered at KOM do not reflect how the Keppel Group conducts business today. Effective compliance controls are now thoroughly embedded across all our businesses, supported by rigorous anti-corruption training and robust compliance and governance regimes."

 

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A version of this article appeared in the print edition of The Straits Times on January 06, 2018, with the headline 'Bribes for overseas deals: 2 local firms charged since 1997'. Print Edition | Subscribe