Keppel Corporation has strengthened its internal compliance and controls as part of its resolve to stamp out any repeat of corrupt behaviour that implicated its offshore and marine (O&M) unit and its operations in Brazil, its chairman said in response to shareholders' concerns at the group's annual general meeting (AGM).
At yesterday's AGM, a shareholder called on Keppel's board to "give a sincere apology" to those adversely affected after news broke on what transpired in Brazil.
Last December, Keppel disclosed a global resolution calling for US$422 million (S$555 million) in fines to be paid to the authorities in Brazil, the United States and Singapore in relation to corrupt payments made by its O&M unit.
The shareholder pointed out that some of his fellow investors had "suffered" on disposing their Keppel shares after the fines were announced. He argued that since Keppel O&M is part of Keppel Corp, the board of directors for the listed group should apologise.
Responding, Keppel Corp chairman Lee Boon Yang reiterated "regret" and "disappointment" in the actions of the now former employees linked to the corrupt payments. He said such conduct is "avoidable and we will avoid it".
Dr Lee said the group has moved to conduct "more stringent due diligence on any agents" for its businesses. This took into account that in the corrupt payments made in Brazil, "people were able to hide these payments under agent fees (that) formed part of the contract sums". Consequently, these payments did not stand out as "specific items for particular scrutiny".
Keppel Corp also stated in its 2017 annual report that it has "implemented a new agent fees policy setting forth limits, guidelines and authority for review and approval of agent fees". This is among a series of enhancements Keppel has made to its compliance programme since 2015.
Shareholders yesterday also queried the basis for an increase in chief executive Loh Chin Hua's annual remuneration, which one of them pointed out has outstripped the expansion in net profit.
His remuneration rose 12.1 per cent to $6.67 million, up from $5.95 million for 2016. But net profit, excluding the one-off penalty linked to the Brazil graft probe, was $836 million for last year, or 6.6 per cent higher compared with $784 million for 2016.
Board member and remuneration committee chairman Till Vestring said the increase in CEO remuneration for 2017 was the first in three years. For both 2015 and 2016, CEO salaries "went down" along with lower net profits.
But Keppel Corp saw its bottom line improved last year after excluding the lumpy one-off penalty.
Mr Vestring said share price performance was also a factor in CEO remuneration.