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FCPA Blog Daily News

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Tuesday
Jan022018

At Keppel, it wasn't a rogue employee. It was widespread corruption

Keppel Offshore & Marine acted against 17 former or current employees for their roles in the Brazil bribery scandal the company resolved in December for $422 million.

According to the plea agreement (pdf) between Keppel Offshore's U.S. unit and the DOJ, Keppel Offshore imposed $8.9 million in financial sanctions on 12 former or current employees.

Seven employees involved in the misconduct have left the firm.

Seven others at Keppel Offshore were demoted or given written warnings for failing to detect the misconduct or take appropriate steps to mitigate corruption risks.

Jeffrey Chow, 59, a former lawyer at Keppel Offshore, pleaded guilty in August last year to an FCPA conspiracy. The American citizen worked at the company in Singapore for more than 25 years. 

After his plea deal, he cooperated with the DOJ. He faces up to five years in federal prison.

Keppel and the DOJ haven't released details about other employees involved.

Chow's guilty plea was unsealed on December 22 when Keppel Offshore and its U.S. subsidiary agreed to pay a total penalty of more than $422 million to resolve corruption charges with authorities in the United States, Brazil, and Singapore.

Keppel admitted paying $55 million in bribes to officials in Brazil during a decade-long scheme. It won about $1 billion in contracts.

Keppel is the world's biggest builder of offshore oil and gas rigs. The Singapore government owns about 20 percent of the company.

In the Brazil enforcement action, Keppel will pay $211 million in criminal penalties. In Singapore, it will pay $105 million in penalties. In the U.S. resolution, Keppel will also pay $105 million.

If Keppel pays less than the allocated amounts in Brazil or Singapore, it's obligated to pay the difference to the United States.

The DOJ granted Keppel Offshore full credit for its "substantial cooperation." The cooperation included the remediation and an internal investigation. With the cooperation credit, Keppel received a 25 percent discount off the bottom of the applicable fine range.

But according to Keppel's deferred prosecution agreement (pdf), the company wasn't eligible for voluntary disclosure credit.

By the time Keppel contacted the DOJ about the FCPA violations in Brazil, the DOJ was "already aware of the allegations," the DPA said.

*     *     *

Singapore has always ranked on the Corruption Perceptions Index as one of the cleanest countries in the world.

But in early August 2016, Bloomberg reported allegations that had been made during a judicial investigation of graft in Brazil involving the state oil and gas giant, Petrobras.

In court testimony, Keppel Offshore's agent, Zwi Skornicki, said top executives authorized him to pay bribes on behalf of the company.

Skornicki reportedly told the judge that five Keppel executives were involved:

  • Chow Yew Yuen, Keppel Offshore & Marine CEO
  • Tong Chong Heong, former senior executive at Keppel Offshore's parent company, Keppel Corporation
  • Tay Kim Hock, former CEO of Keppel Fels Brasil (Keppel Offshore's Brazil operating unit)
  • Kwok Kai Choong, then-current CEO at Keppel Fels Brasil
  • Choo Chiau Beng, a former Keppel Corp CEO, then serving as the non-resident ambassador to Brazil

The day Bloomberg's report appeared, Keppel Corporation issued a statement through the Singapore stock exchange denying the allegations.

The statement 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.

Three months later, in October 2016, Keppel Corporation issued another statement through the stock exchange that said an internal investigation showed that "certain transactions" associated with Skornicki "may be suspicious."

Last week three members of Singapore's parliament from the opposition Workers' Party asked for the case to be discussed when parliament convenes on January 8.

A Workers Party leader said the Keppel case "must be one of the largest corruption scandals in the history of Singapore's government-linked companies."

One question the Workers Party members want answered is whether any of the settlement agreements include provisions that prevent Keppel from disclosing the identity of the Singaporeans involved in the Brazil bribery.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.