Keppel ringfenced graft penalty from dividends for FY17, says chairman

Taking into account Keppel Corp's improved performance, excluding its one-off financial penalty from the global resolution and related costs, the board had proposed a final dividend of 14 Singapore cents per share.
Taking into account Keppel Corp's improved performance, excluding its one-off financial penalty from the global resolution and related costs, the board had proposed a final dividend of 14 Singapore cents per share.PHOTO: AFP

SINGAPORE - Keppel Corp had ring-fenced financial penalties from the global resolution with the criminal authorities in the United States, Brazil and Singapore when considering the dividend payout for the year, chairman of Keppel Corp Lee Boon Yang wrote in the company's annual report released on Thursday (March 29).

Taking into account the group's improved performance, excluding the one-off financial penalty from the global resolution and related costs, the board had proposed a final dividend of 14 Singapore cents per share.

Together with the interim cash dividend of eight cents per share distributed last August, this added up to a total cash dividend of 22 cents per share to shareholders for the whole of 2017, compared to 20 cents for 2016.

Mr Lee said: "Last December, we closed a painful chapter with the global resolution reached by Keppel Offshore & Marine (Keppel O&M) with criminal authorities in the US, Brazil and Singapore over corruption investigations in Brazil.

"We regretted and are deeply disappointed by the misdeeds of certain Keppel O&M executives, which we now know to have taken place in Brazil. We have dealt firmly with the issues, including imposing sanctions and separation from these executives, and enhancing the group's compliance regime.

"Integrity is one of Keppel's core values. We do not and will not tolerate any illegal activity in the conduct of our business. The past practices uncovered at Keppel O&M do not reflect how the Keppel Group conducts business today. We have put in place significant enhancements to the compliance and internal controls systems across the group to ensure that such unacceptable behaviour will not be repeated.

"The board and management are determined to hold the company to the highest ethical standards and to rebuild and regain the trust which had been lost. Keppel will win business legally and ethically, on the merit of our collective strengths of superior solutions and execution."

In an interview with CEO Loh Chin Hua published in the annual report, Mr Loh also said that some people have asked Keppel if the global resolution would result in Keppel taking less risks in the future, especially in emerging countries.

His answer was no. "This is not the case. Keppel has grown to what it is today led by generations of leaders who had exercised a spirit of enterprise and taken appropriate business risks." He added: "I encourage all Keppelites to continue taking legitimate business risks for which we expect to be rewarded with appropriate returns. But there are bright lines that we must never cross."