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Current Keppel, KOM boards 'not aware' of Brazil illegal payments
THE current boards of directors of Keppel Corporation and its unit Keppel Offshore & Marine (KOM) were not aware of the illegal payments made to secure projects in Brazil, the group said.
Keppel was responding to queries from BT on board accountability, in the wake of the US$422 million fines imposed on KOM for making corrupt payments in Brazil.
A Keppel spokesman told The Business Times on Thursday: "The illegal payments were deliberately concealed by those complicit in the bribery and structured as agency fees. The agency fees were not approved by the boards of Keppel Corporation or KOM as they were built into the contract values of the respective projects and bidding for projects is in the ordinary course of KOM's business."
He added: "The current boards of Keppel Corporation and KOM were not aware of the illegal payments."
The US Department of Justice, which led investigations leading to a plea deal, said that KOM had engaged in a scheme to pay US$55 million in bribes from 2001 to 2014 to Petrobras officials and the then governing political party in Brazil, the Workers Party of Brazil, to win 13 contracts with Petrobras and Sete Brasil.
When allegations first surfaced in 2015 regarding KOM's involvement in bribery in relation to projects in Brazil, Keppel started its internal inquiry led by external counsel, the spokesman said. The denials by Keppel then and in July and August 2016 were issued after taking into consideration the relevant evidence available at that time.
As the inquiry continued and suspicious transactions in Brazil were uncovered, Keppel, on Oct 3, 2016, announced that its internal investigation - into allegations that KOM's agent in Brazil, Zwi Skornicki, had made illegal payments in connection with some contracts entered into between certain Keppel entities and Petrobras and/or Sete Brasil - revealed that certain associated transactions may be suspicious.
Keppel said that at the same time, it had notified the relevant authorities of its intention to cooperate and work towards a resolution of the underlying issues. For its cooperation and remediation efforts, Keppel received a 25 per cent discount off the bottom of the applicable fine range, which is the maximum cooperation and remediation credit allowed under the US sentencing guidelines.
Asked about the absence of disclosure updates between October 2016 and the announcement of the fines in late December 2017, the Keppel spokesman said: "Due to its ongoing cooperation with the authorities, Keppel was unable to provide additional information until a resolution was reached."
He reiterated: "The agreements with the authorities have specific restrictions regarding public statements by the company. As we said in our media release, for legal reasons, Keppel is unable to comment on the agreed Statement of Facts released by the investigating authorities or on the identities of individual employees."
Effective compliance controls are now thoroughly embedded across all its businesses supported by rigorous anti-corruption training and robust compliance and governance regimes, the spokesman said. "The past practices uncovered at KOM do not reflect how the Keppel Group conducts business today."
Keppel shares closed up 13 cents at S$7.80 on Thursday.