Keppel Offshore & Marine (Keppel O&M) has been fined US$422.2 million (S$565 million) as part of a global resolution with the authorities in the United States, Brazil and Singapore. The resolution relates to US$55 million in corrupt payments made by a former Keppel agent in Brazil. The fine is a substantial one, but it will not sink Keppel. However, the costly lesson of this crisis is that it could dent the reputation of Singapore's government-linked companies (GLCs), whose standards of financial probity are expected to match the State's own.
The Keppel group has had to acknowledge the corrupt actions that it now knows to have taken place at its offshore and marine business in Brazil from around 2001 to 2014. There are two overlapping issues here: the anarchic jungle of the international market, and the manicured gardens of Singapore's own.
In the first market, bribery is a law of survival. About a year ago, it was reported that the bribes which change hands every year amount to about 5 per cent of global gross domestic product. Any global company operating in that lawless environment has to contend with less-than-scrupulous competitors, willing to provide worse services while greasing international palms, which are ever ready to simply elbow it out of the game. Companies are not charities: They have to produce results to survive. Yet, companies - and societies - also have reputations to safeguard for the long haul, and short-term profits might come at a very high cost in terms of their international standing.
However, that jungle has to stop at Singapore's borders. The ease and profitability of doing business without having to resort to corruption is a cornerstone of Singapore's presence on the international market. Late last year, the Republic scored not badly among 200 countries ranked according to the risk of encountering commercial bribery. In Singapore, bribery is not merely an unhappy addition to the cost to business. It is a fundamental transgression. For a GLC to run afoul of a national culture of probity, even if only in its dealings abroad, is to tar the country's international standing.
Keppel will be held to its word that it will not tolerate bribery. It has moved decisively to put in place stricter controls across the group. The disciplinary action that it has taken against employees involved in the bribery scandal, including the meting out of financial penalties, is a deterrent message that must be heeded by the rest of its staff, even as the Singapore authorities continue their investigations into the individuals involved.
Keppel's corporate culture must reflect Singapore's intolerance of corruption within its internationalised economic borders. Once lost, that trust will be costly to regain. Some companies never do. Keppel must regain that public trust.