Sembcorp Marine files suspicious transaction report after Brazil bribery probe
Singapore-based offshore drilling rig constructor Sembcorp marine has filed “a suspicious transaction report“ to the Singapore police following last week’s police raid of its subsidiary’s offices in Brazil as part of a bribery probe.
Companies in Singapore are required to file a Suspicious Transaction Report if they have reasonable grounds to suspect that any of their properties may be connected to criminal activity, and failure to file an STR may constitute a criminal offense.
The filing of the report by Sembcorp Marine follows last week’s police raid of offices of Estaleiro Jurong Aracruz, Sembcorp subsidiary in Brazil as part of Operation Car Wash (Lava Jato) investigation, related to a widespread bribery scandal related to the Brazilian oil company Petrobras.
The investigation is related to alleged illegal payments made in relation to several of Sembcorp’s rig construction contracts signed back in 2012 with Sete, a company formed in 2011 to own and operate drilling rigs to be used by Petrobras.
Martin Cheah Kok Choon, former President of Estaleiro Jurong Aracruz Ltda whose employment was terminated in June 2015, has been named in the search warrant executed last week in Brazil “as being subject to investigations by the Brazilian authorities.”
In a statement on Monday, Sembcorp said: ”The Company wishes to update that in light of the investigation by the Brazilian authorities into the activities of Mr Martin Cheah Kok Choon (“MCKC”) during the time he was in the employment of the Group, the Company has lodged a suspicious transaction report in respect of MCKC with the Commercial Affairs Department of the Singapore Police Force.”
“Other than MCKC, the Company is not aware that any director or management of the Company is a subject of the current investigations being conducted by the Brazilian authorities,” Sembcorp added.
Sembcorp Marine also provided a brief summary of the events in Brazil that have led to the investigation. See below:
“In 2012, the Company’s subsidiaries secured a number of drill rig construction contracts (the “Contracts”) with the subsidiaries of Sete Brasil. Companies connected to Mr. Guilherme Esteves de Jesus (“GDJ”) were engaged by the Company’s subsidiaries as consultants in Brazil.
In February 2015, there were various media reports that, inter alia, Mr. Pedro Jose Barusco (“PJB”), Petrobras’ former engineering manager, had made statements to the effect that illegal payments had been made in connection with contracts entered into by Petrobras and/or Sete Brasil. Following the publication of these media reports, the Company established a Special Committee of the Board (the “Special Committee”).
The Special Committee then appointed legal counsels from Singapore and Brazil to conduct internal investigations and to advise the Company. The Company announced on 30 March 2015 that it had received a copy of a plea bargain entered into between PJB and the Brazilian authorities, in which PJB made allegations against GDJ in connection with the Contracts, and that GDJ was arrested by the Brazilian authorities in late March 2015.
In April 2017, GDJ was charged by the Brazilian authorities and he defended the charges when his trial commenced in 2018. These criminal proceedings against GDJ have not been concluded and the Company has been monitoring and continues to monitor, such proceedings.
All contracts for consultancy services provided to the Company’s subsidiaries by companies connected to GDJ were suspended and remain suspended. The Group has not had any dealings with GDJ or the companies connected to GDJ following such suspension.
As announced by the Company on 3 July 2019, the Brazilian authorities executed a search warrant on EJA in connection with the ongoing investigations related to Operation Car Wash and against GDJ, who has been arrested by the Brazilian Federal Police. The Company co-operated fully with the Brazilian Federal Police and provided materials within the scope of the warrant. The Company also learnt that the investigations which led to the execution of the search warrant on EJA have been expanded to include MCKC.
The Company wishes to reiterate that the Group is committed to the highest standards of compliance with anti-corruption laws and does not condone and will not tolerate any improper business conduct. The Group has a strict compliance program and continuously works to ensure that policies and procedures are in place to prevent any violation of any anti-corruption laws applicable to our operations.
The Company will continue to monitor developments in Brazil and other jurisdictions with respect to the above matters, and will make appropriate announcements in the event of any material developments.”
As previously reported, Guilherme Esteves de Jesus, mentioned by Sembcorp Marine above, was arrested back in March 2015 as a person connected to drilling rigs construction contracts between Brazilian drilling contractor Sete Brasil and Sembcorp Marine, after a former Petrobras director accused both of Singapore’s largest rig builders, Sembcorp Marine and Keppel, of paying bribes to get rig contracts in Brazil. The two companies at the time issued statements denying the allegations.
However, Keppel then in 2017 agreed to pay fines totaling $422 million to resolve charges arising out of a decade-long scheme to pay millions of dollars in bribes to officials in Brazil.
According to admissions and court documents, beginning by at least 2001 and continuing until at least 2014, Keppel paid approximately $55 million in bribes to officials at the Brazilian state-owned oil company Petrobras and to the then-governing political party in Brazil, in order to win 13 contracts with Petrobras and another Brazilian entity.
Sembcorp Marine’s 1Q documents from May 2019, showed seven Sete drillships in a section named ” projects in a suspended state.”