Impact of World Bank's sanction on SMEC muted, says Surbana Jurong

Singapore

THE World Bank's sanction on Australia-based SMEC Holdings, a company owned by Surbana Jurong, will not have a major impact on SMEC as its "dependence on World Bank's business is small".

But the group is implementing measures to prevent any future wrongdoings, said Surbana Jurong chief executive Wong Heang Fine.

The World Bank made a decision last September to bar a SMEC subsidiary, SMEC International, for 12 months as well as four other SMEC units in India, Bangladesh and Sri Lanka for six to 30 months from receiving contracts funded by the World Bank.

Media reports say that the World Bank's investigation found improper payments made in relation to World Bank-financed projects in Sri Lanka and Bangladesh, and misrepresentations in meeting bidding requirements for World Bank-financed projects in Sri Lanka and India.

Mr Wong said the group was fully aware of the allegations when it acquired SMEC. "These were on things in the past. The current team and management are not involved with the accusations. A lot of things are not done by current management," he added.

According to him, accusations of kickbacks were never proven while the false representation was made by one of the subcontractors of SMEC when bidding for work. A due diligence team led by an independent director who is a trained lawyer had looked into these allegations prior to the acquisition.

"Going forward, we will set up a database to track all the experience of subcontractors we use to prevent such incidence from happening again," Mr Wong said.

Bought in 2016 by Surbana Jurong for S$400 million, SMEC had its beginnings as the Snowy Mountains Engineering Corporation when it built the Snowy Mountains hydroelectric scheme in 1949.

Mr Wong said that the group adopts a "Procter & Gamble" approach to growing its businesses through acquisitions. "We continue to build their brands and at the same time ride on their brands to build the Surbana Jurong brand."

For its new subsidiaries, much of the post-acquisition integration takes place at the back end - mainly the finance, human resources and procurement systems.

Firms that it has acquired since 2015 include Singapore engineering company KTP Consultants and China's design firm Sinosun Architects & Engineering, as well as Australian companies SMEC Holdings and Robert Bird Group (RBG).

Its partnership with Chinese state-owned China Highway Engineering Consulting Corporation also paved the way for Surbana Jurong to take a 49 per cent stake in two local design firms in China. The group had also acquired security firm Aetos from its parent Temasek Holdings, as well as minor stakes in China's CITICC (Africa) Holding and US-based building design software company FLUX Factory.

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