A United States federal judge has dismissed claims arising from the massive corruption scandal engulfing Brazilian oil giant Petrobras against three of Singapore's biggest offshore marine firms.
The judge also found Petrobras' unit, Sete Brasil, was "a corrupt enterprise from its very inception".
A suit brought by fund manager EIG Management against Keppel Corp and its unit Keppel Offshore & Marine, Sembcorp Marine (SembMarine) and its unit Jurong Shipyard, and Sembcorp Industries has been dismissed, the listed companies told the Singapore Exchange yesterday.
Keppel and SembMarine issued statements saying that the court has ruled in their favour and that of their subsidiaries.
EIG alleged that US$9.5 million (S$13.3 million) in bribes had been paid by agents of Keppel and SembMarine to officials of Petrobras, its unit Sete Brasil and Brazil's Workers' Party to procure 12 contracts to build drillships.When the bribery scheme was exposed in 2014, it led to the bankruptcy of Sete Brasil in April last year, and rendered EIG's investment of more than US$221 million "worthless", the suit said.
But US District Judge Amit Mehta found that EIG failed to plead facts establishing that the Singapore defendants conspired to hide the existence of the bribe scheme to induce the fund manager and other investors to invest in Sete. In a 57-page judgment obtained by The Straits Times, Judge Mehta noted that EIG has "failed to allege that the defendants had any knowledge that Sete had equity investors..."
"The amended complaint contains no facts establishing that any defendant was aware Petrobras conceived of capitalising Sete with equity investments; prepared marketing materials to present to potential equity investors; transmitted such materials to the US; or intended to use investor money to underwrite the bribe scheme.
"The court cannot infer from the defendants' mere concealment of the bribe scheme an agreement to defraud Sete's investors. The court can conceive of any number of reasons why the defendants did not disclose the bribe scheme, including most obviously that they did not want to implicate themselves in criminal wrongdoing," according to the judgment issued on March 30.
But it was a different story for Petrobras and Odebrecht, Latin America's biggest construction firm, which were also defendants in EIG's suit. The judge said the court has "strong reason to believe that Petrobras is the subject of ongoing investigations by the US Department of Justice" relating to the graft probe. Further, Odebrecht entered into a plea agreement to "resolve charges with the authorities in the US, Brazil and Switzerland, arising out of their schemes to pay hundreds of millions of dollars in bribes to government officials around the world".
The judge found that Sete is "no different than a company formed for the purpose of perpetuating a Ponzi scheme... That is precisely what Petrobras is alleged to have done here: It induced EIG to part with their money, knowing full well that the money would be used for a criminal purpose, and without disclosing that intention".