'No major impact' from World Bank's sanction

Surbana Jurong chief executive Wong Heang Fine said the company is implementing measures to prevent any future wrongdoings.
Surbana Jurong chief executive Wong Heang Fine said the company is implementing measures to prevent any future wrongdoings. PHOTO: THE BUSINESS TIMES

The World Bank's sanction on an Australia-based company owned by Surbana Jurong will not have a major impact as the unit gets only a small part of its work from the bank.

But Surbana Jurong chief executive Wong Heang Fine said the company is implementing measures to prevent any future wrongdoings.

Last September, the World Bank barred SMEC unit, SMEC International, from receiving contracts funded by the World Bank for 12 months, while four other SMEC units - in India, Bangladesh and Sri Lanka - received sanctions of six to 30 months.

Media reports said the World Bank found improper payments made in relation to World Bank-financed projects in Sri Lanka and Bangladesh, and misrepresentations in meeting bidding requirements for World Bank-financed projects in Sri Lanka and India.

Mr Wong said the group was fully aware of the allegations when it acquired SMEC. "These were on things in the past. The current team and management are not involved in the accusations. A lot of things are not done by current management," he added.

He also said accusations of kickbacks were never proven while the false representation was made by one of the sub-contractors of SMEC when bidding for work. A due-diligence team under an independent director, who is a trained lawyer, had looked into these allegations prior to the acquisition.

"Going forward, we will set up a database to track all the experience of sub-contractors we use to prevent such incidents from happening again," Mr Wong said.

  • $400m

  • Amount at which Surbana Jurong bought SMEC in 2016.

SMEC, which was bought in 2016 for $400 million by Surbana Jurong, had its beginnings as the Snowy Mountains Engineering Corporation when it built the Snowy Mountains hydroelectric scheme in 1949.

Mr Wong said Surbana Jurong adopts a "Procter & Gamble" approach to growing its businesses through acquisitions. "We continue to build their brands and, at the same time, ride on their brands to build the Surbana Jurong brand."

It has acquired several firms since 2015, including Singapore engineering company KTP Consultants, Chinese design firm Sino-Sun Architects & Engineers, SMEC Holdings and fellow Australian company Robert Bird Group.

Its partnership with Chinese state-owned China Highway Engineering Consulting Corporation also paved the way for Surbana Jurong to take a 49 per cent stake in two local design firms in China.

The group also acquired security firm Aetos from its parent Temasek Holdings, and has minor stakes in China's CITICC (Africa) Holding and United States-based building design software company Flux Factory.

A version of this article appeared in the print edition of The Straits Times on March 05, 2018, with the headline ''No major impact' from World Bank's sanction'. Print Edition | Subscribe