Keppel's former agent in Brazil says managers backed bribes

[RIO DE JANEIRO] Keppel Corp's Brazil problems just keep growing.

The world's largest builder of offshore oil rigs has seen investments plummet in one of its most important markets. A major client, Sete Brasil Participacoes, has entered bankruptcy protection.

Then last month a former agent fanned the flames of an ongoing corruption investigation by saying in court that the Singapore-based company's top managers authorised him to pay bribes to win work with state-controlled Petroleo Brasileiro SA.

Zwi Skornicki, the former third-party commercial representative for Keppel in Brazil, told a judge that five leading executives, including current Keppel Offshore & Marine Ltd chief executive officer Chow Yew Yuen, authorised him to bribe public officials in exchange for Petrobras contracts that often exceeded a billion dollars.

Keppel denied the allegations in a July 24 statement, said it has zero tolerance for illegal activities, and that it will "take all necessary steps to eradicate such conduct if discovered."

The other Keppel executives who allegedly knew about and authorised the kickbacks are Tong Chong Heong, a former senior executive at Keppel Corp; Tay Kim Hock, a former CEO of Keppel Fels Brasil; Kwok Kai Choong, the current CEO at Keppel Fels Brasil; and Choo Chiau Beng, a former Keppel Corp CEO, according to Skornicki's testimony given on July 21 to judge Sergio Moro, who heads the so-called Carwash investigation. The testimony was published on a court website as part of the court record.

"The agency relationship with Mr Skornicki had been put on hold. In view of his admission to illegal payments, we will terminate the agency relationship," Keppel said in an e-mailed response on July 29.

Attempts to reach the five executives through Keppel weren't successful.

Mr Choo was Singapore's non-resident ambassador in Brazil at the time of the alleged bribing. The embassy declined to comment.

Mr Skornicki said he had his own firm, located inside Keppel's office in Brazil, and a formal contract to represent the company, with enough autonomy to sign contracts with Petrobras on behalf of Keppel.

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

The kickbacks went to Petrobras officials and people including Joao Vaccari, who was the treasurer for the then- ruling Workers' Party, Mr Skornicki said. The party ruled Brazil from 2003 until May, when President Dilma Rousseff was suspended after Congress started an impeachment trail against her for unrelated charges.

In the so-called Carwash case, leading politicians from the ruling coalition used their influence to hand pick members of Petrobras's top management, who then collected bribes and shared the proceeds with their political benefactors.

Mr Vaccari was sentenced in 2015 to 15 years in jail for corruption and for managing bribes for the Worker's Party. Mr Vaccari's lawyer Luiz D'Urso denied wrongdoing and said his client's sentence was only based on plea bargain testimonies, without proof of illegalities. Petrobras has repeatedly said it was a victim of a few rogue employees and that is collaborating with authorities.

Keppel's legal departments in Singapore and in Brazil reviewed all contracts, Mr Skornicki said in court. Keppel was first cited in the Carwash case in Feb 2015, and Mr Skornicki also claims he paid bribes to win work with Sete Brasil, which stopped making payments to shipyards last year and filed for bankruptcy protection in April, after being implicated in the graft probe.

Sete didn't reply to a request for comment.

BLOOMBERG