Sembcorp Marine lodges report with CAD following Brazil scandal

Sembcorp Marine has lodged a report with the Commercial Affairs Department (CAD) after revealing last week that its yard in Brazil and its former president were involved in a corruption probe.

The investigation involves Mr Martin Cheah Kok Choon, who was president of SembMarine’s Brazil unit, Estaleiro Jurong Aracruz.

SembMarine said it has “lodged a suspicious transaction report… with the CAD”, adding that Mr Cheah’s employment was terminated in June 2015.

The firm also noted in the exchange filing that it is “not aware that any director or management of the company is a subject of the investigations being conducted by the Brazilian authorities”.

This comes after SembMarine shares were dumped last Thursday following a disclosure that a search warrant had been executed on one of its units in Brazil, renewing fears over potential fines.

The stock tumbled 8.4 per cent to $1.41 on Thursday on trade of around 30 million shares – more than six times its average daily trading volume over the past 12 months.

It was revealed last February that the Brazilian authorities had charged Guilherme Esteves de Jesus, a former consultant engaged by the unit, over allegedly illegal payments linked to drillship contracts won by SembMarine units.

The investigation is part of Brazil’s biggest anti-graft crackdown, known as Operation Car Wash, that has already ensnared SembMarine rival Keppel Corp and sent former Brazilian president Luiz Inacio Lula da Silva to jail.

The scam involved rigged bids for contracts for drillships, oil rigs and other energy industry equipment for Brazilian energy giant Petrobras.

In 2017, Keppel Corp’s offshore and marine unit agreed to pay US$422 million (S$573 million) in fines in relation to corrupt payments made by a former agent in Brazil following investigations.

SembMarine is facing scrutiny over the US$5.5 billion worth of contracts it won from Sete Brasil, a rig-owning unit of Petrobras.

SembMarine shares closed down 0.70 per cent in Singapore at $1.41 yesterday before the announcement.

The Straits Times | July 9, 2019