Top Keppel executives accused of bribing officials in Brazil

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By: 永久浪客/Forever Vagabond

International news agency Bloomberg reported last week that Keppel’s 3rd party commercial representative in Brazil, Zwi Skornicki, had told a Brazilian court that top executives in Keppel authorized him to pay bribes so as to win contracts with the state-controlled Brazilian Petroleum Corporation (Petrobras). The contracts were believed to be worth more than 1 billion dollars.

In a court proceeding last month on 21 Jul, Mr Skornicki told the judge that 5 Keppel top executives were involved. The 5 were named in Brazilian court:
1. Chow Yew Yuen, Keppel Offshore & Marine CEO
2. Tong Chong Heong, former senior executive at Keppel Corp
3. Tay Kim Hock, former CEO of Keppel Fels Brasil
4. Kwok Kai Choong, current CEO at Keppel Fels Brasil
5. Choo Chiau Beng, a former Keppel Corp CEO and current non-resident ambassador to Brazil

They were said to have known about and authorized the bribes to the Brazilian officials, according to Mr Skornicki’s testimony in court. Mr Skornicki also said that his own representative firm was located inside Keppel’s office in Brazil. He testified that he had a formal contract with Keppel to represent the company and he was given enough autonomy to sign contracts with Petrobras on behalf of Keppel.

Mr Skornicki presented his contract with Keppel to the judge to show that he would get a percentage of any deals he cut in Brazil. He used the same accounts where Keppel paid him his formal fee to then bribe officials, he said.

Mr Skornicki further testified that the kickbacks went to Petrobras officials and people including Joao Vaccari, who was the treasurer for the Workers’ Party of Brazil, a member of the ruling coalition. Vaccari was already sentenced last year to 15 years in jail for corruption and for managing bribes for his political party.

Presently, investigations – called Carwash investigations – against leading politicians from the Brazilian ruling coalition are on-going. They are being investigated for using their influence to hand pick members of Petrobras’s top management, who then collected bribes and shared the proceeds with their political benefactors.

Keppel’s contracts with Sete Brasil won with bribes

Separately, Mr Skornicki also claimed he paid bribes to win contracts with Sete Brasil for Keppel. Sete Brasil, the Brazilian oil rig supplier, stopped making payments to shipyards last year and filed for bankruptcy protection in April, after also being implicated in the graft probe.

After Sete Brasil filed for bankruptcy, Keppel made a total of S$230 million in provisions for non-payment for the six rigs that were to be built for Sete Brasil.

It did not say that it was going to take legal action against Sete Brazil. It only said that it will continue to monitor and evaluate the situation to “best protect Keppel’s interests”.

Sete Brasil, a subsidiary of Petrobras, was set up in 2011 to build the world’s biggest deep-water drilling fleet for Petrobras. It fell into financial distress after it failed to secure long-term financing amid a sweeping corruption probe involving the state-run oil producer, Petrobras.

Keppel denies Skornicki’s allegations

When Bloomberg’s article was published on 3 Aug last week, Keppel immediately issued a terse public statement the same day, denying all of Skornicki’s allegations made against the company. Keppel said:

“Keppel refers to the Bloomberg article dated 3 August 2016 reporting allegations made by Mr Zwi Skornicki in criminal proceedings brought against him in Brazil. Keppel strongly denies the allegations reportedly made that Keppel executives authorized Mr Skornicki to pay bribes on its behalf. None of the individuals named in the article, including the current CEO of Keppel Offshore and Marine Mr Chow Yew Yuen, have ever authorized Mr Skornicki to make any payments as bribes.”

Keppel was first cited in the Carwash case in Feb last year when a former Petrobras and Sete Brasil executive from the engineering and services division, Pedro Barusco, testified that he had earned millions from bribes coming from supposedly Keppel and other shipyards.

In Oct last year, the Brazilian parliamentary inquiry recommended further investigation into 10 companies it identified as being involved in illegal transactions with Petrobras and Sete Brasil. Keppel admitted that one of its units, Keppel Fels Brasil, is on the list.

And in Feb this year, it was reported that when the Brazilian federal investigators launched a series of arrests and raids against the people involved in the carwash corruption probe, the prosecutors said they were also looking into possible bribes paid off contracts signed by Petrobras and Sete Brasil with Keppel Fels.

It remains to be seen if any of the Keppel officials will be implicated at the end of Brazil’s carwash investigations.

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