Brazil suspends administrative enforcement procedure against 5 Keppel units

THE Office of the Comptroller General of Brazil (CGU) has suspended its administrative enforcement procedure (AEP) against five subsidiaries of Keppel Corp in relation to "alleged irregularities under the Brazilian Anti-Corruption Statute".

In a bourse filing on Thursday, Keppel announced that it had received confirmation of the suspension, and will make further announcements should "material developments" arise. 

The AEP, which was initiated on June 11, was against Keppel Offshore & Marine (Keppel O&M), Keppel Fels, Keppel Fels Brasil, BrasFELS, and Prismatic Services.

Keppel had been advised that the CGU would carry out further investigations following the issuance of the notice.  

CGU had also appointed two officials to form a panel to preside over the proceedings, which would decide if any summons is to be served on the subsidiaries which would then have 30 days to file a defence.

At that point in time, Keppel said, none of the subsidiaries in question had been served with notices or summons. Due to the lack of factual particulars in the notice, the company said it was "unable to assess the matter or its impact". 

The CGU was also said to be mulling the suspension of the AEP pending "ongoing discussions".  

Keppel also understood from the CGU that the AEP will not affect its ongoing negotiations with Brazilian authorities over the payments of a US$422.2 million fine imposed in Dec 2017 for corrupt payments made by Zwi Skornicki, a former agent of a US unit in Keppel O&M. 

These corrupt payments were made by Skornicki on several company projects in Brazil which were carried out with the knowledge or approval of former Keppel O&M executives.

Keppel O&M had concealed these payments by paying commissions to an intermediary, under the guise of legitimate consulting agreements, who then made payments for the benefit of officials of Brazil's largest state-owned oil company Petrobras and other parties.

The fine is part of Keppel's global resolution with criminal authorities in the US, Brazil and Singapore, and was to be allocated between the three countries with Brazil and the US receiving US$211.1 million and US$105.6 million respectively. Singapore was slated to get up to US$105.6 million, said the US Department of Justice. 

Shares of Keppel Corp closed 14 Singapore cents lower, or 2.95 per cent down, at S$4.61 on Thursday.