Keppel FELS, Sembcorp Marine deny allegations of Brazil bribery

Singapore

SINGAPORE shipbuilders Keppel FELS Ltd and Sembcorp Marine Ltd's unit Jurong Shipyard Pte have firmly denied any allegations of participation in Brazil's ongoing bribery scandal involving contracts to build deep-water drilling vessels.

Both companies, global leaders in off-shore deep-water engineering, were among several other companies alleged to have paid bribes through intermediaries in order to obtain contracts worth around US$800 million each, which would allow the construction of 21 deep-water drilling vessels, said a report by Bloomberg on Tuesday.

The contracts allowed the construction of deep-water rigs which would then be leased to the state-controlled oil producer by a company established by several Brazilian banks and Petrobras called Sete Brasil, the report added. The allegations were based on a testimony released on Friday by a Brazilian court.

In a statement issued on Tuesday, Keppel FELS strongly refuted allegations regarding its involvement in the payment of bribes relating to the investigations surrounding Petrobras.

"We would like to emphasise that Keppel Group has a Code of Conduct which prohibits, among others, bribery and corruption. Our employees are required to conduct themselves with integrity, in an ethical and proper manner, and in compliance with the applicable laws and regulations of the countries in which we operate, including anti-bribery laws," the company, a wholly-owned subsidiary of Keppel Offshore & Marine, added.

To comment, Sembcorp Marine referred to a statement made in February, saying: "Sembcorp Marine did not make any illegal payments and the group's policies and contracts prohibit bribery and unethical behaviour."

The allegations in the testimony released on Friday were made by a former Petrobras and Sete executive from the engineering and services division, Pedro Barusco. He has agreed to give up around US$97 million he said he earned from bribes, which included payments made by shipyards to obtain work with Sete, Bloomberg's report added.

The allegations, first made in February, are part of an ongoing investigation codenamed Operation "Lava Jato" or Operation Car Wash that is looking into how government-linked parties implemented money-laundering and corruption schemes involving state- run oil company Petrobras.

However, the claims appeared to have no bearing on the companies' stock prices. Keppel Corporation shares closed at S$8.40 on Tuesday, down a cent, and Sembcorp Marine shares closed unchanged at S$2.88.

In the alleged plan which would have taken place over a decade, Brazil's political parties were said to have helped promote selected candidates to powerful positions within Petrobras, after which these executives would allegedly take bribes for contracts and allegedly use part of the money to fund political campaigns, reported Bloomberg.

The investigation has also seen the recent arrest of Marcelo Odebrecht, chief executive officer of Latin America's biggest engineering and construction group, Odebrecht SA, Bloomberg reported. Odebrecht has refuted all bribery charges.

The report added that the chief executive officers of Kawasaki Heavy Industries Ltd's partners have also been detained and questioned as part of police investigations. Kawasaki partnered companies including Odebrecht in a shipyard that won contracts with Sete.