Keppel O&M to pay $422 million to settle Brazil corruption case

DECEMBER 26, 2017 — The U.S. Department of Justice reports that Singapore-based Keppel Offshore & Marine Ltd. (KOM) and its wholly owned U.S. subsidiary, Keppel Offshore & Marine USA Inc. (KOM USA), have agreed to pay a combined total penalty of more than $422 million to resolve charges with authorities in the United States, Brazil and Singapore arising out of a decade-long scheme to pay millions of dollars in bribes to officials in Brazil.

KOM USA pleaded guilty December 23 in connection with the resolution. In addition, a guilty plea by a former senior member of KOM's legal department was unsealed.

KOM entered into a deferred prosecution agreement with the Department in connection with a criminal information filed December 23 in the Eastern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. The case is assigned to U.S. District Judge Kiyo A. Matsumoto.

In addition, KOM USA pleaded guilty and was sentenced by Judge Matsumoto on a one-count criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.

Pursuant to its agreement with the Department, KOM will pay a total criminal fine of $422,216,980, with a criminal penalty due to the United States of $105,554,245, including a $4,725,000 criminal fine paid by KOM USA. As part of the deferred prosecution agreement, KOM also committed to implement rigorous internal controls and to cooperate fully with the Department's ongoing investigation.

In related proceedings, the company settled with the Ministério Público Federal (MPF) in Brazil and the Attorney General's Chambers (AGC) in Singapore.

The United States will credit the amount the company pays to Brazil and Singapore under their respective agreements, with Brazil receiving $211,108,490, equal to 50 percent of the total criminal penalty, and Singapore receiving up to $105,554,245, equal to 25 percent of the total criminal penalty.

The Department also unsealed charges December 23 against a former senior member of KOM's legal department, who pleaded guilty to one count of conspiracy to violate the FCPA on Aug. 29, 2017 in the Eastern District of New York. He is awaiting sentencing.

The Department says that, according to admissions and court documents, beginning by at least 2001 and continuing until at least 2014, KOM conspired to violate the FCPA by paying 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. KOM effectuated and concealed the bribe payments by paying outsized commissions to an intermediary, under the guise of legitimate consulting agreements, who then made payments for the benefit of the Brazilian officials and the Brazilian political party.

In reaching the resolutions with the Department, KOM and KOM USA received credit for their substantial cooperation with the Department's investigation and for taking extensive remedial measures. KOM has terminated and otherwise disciplined employees involved in the criminal conduct, and it has implemented an enhanced system of compliance and internal controls to address and mitigate corruption risks. Accordingly, says the Department, the criminal penalty reflects a 25 percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range.


Download KOM deferred prosecution agreement HERE

Download KOM Information - Final HERE

Download KOM Plea Agreement HERE

Download KOM USA Information - Final HERE

Keppel Corp says agreement "brings closure"

In a statement on the agreement, KOM parent company Keppel Corporation said that the resolution with the criminal authorities in the United States, Brazil and Singapore, brings "closure to the investigations into corrupt payments made by a former agent of KOM in Brazil," Mr. Zwi Skornicki.

Dr. Lee Boon Yang, Chairman of Keppel Corporation, said, "Integrity is one of Keppel's core values. We do not and will not tolerate any illegal activity in the conduct of our business. We regret and are deeply disappointed by the actions that we now know to have taken place at the Group's offshore and marine business in Brazil from around 2001 to 2014.

"Global companies such as Keppel have both a legal and moral duty to operate fully within international laws and regulations. Any perception that illegal payments can be condoned, if they are made by agents, is wrong and will not be tolerated.

"Since the allegations emerged, we have moved quickly and decisively to put in place stricter controls and embedded best practices across the Group to ensure that such unacceptable behavior will not be repeated."

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