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Seatrium in $134 million settlement over Brazil’s Operation Car Wash

Photo: Sembcorp Marine Seatrium's Tuas Boulevard yard
Singapore yard group Seatrium has agreed to a BRL671 million ($134.3 million) settlement over corruption allegations in Brazil related to Operation Car Wash.

Seatrium said it had reached in-principle settlements with the Brazilian Attorney-General’s Office (AGU), Comptroller General of the Union (CGU), and Public Prosecutor’s Office, over corruption allegations against Sembcorp Marine prior to its 2023 merger with Keppel Offshore & Marine (Keppel O&M).

Under the terms of the settlement agreements Seatrium has agreed to a payment of BRL670,699,731.73, which it said were as a result of its cooperation with the Brazilian authorities.

“This latest development provides us with finality on this legal matter, which has been outstanding for some time, with the Brazilian authorities. It also ensures that we are able to continue to participate in tenders and other bidding projects in Brazil,” Seatrium CEO Chris Ong said in an address.

The settlement is subject to consideration by Brazil’s Federal Court of Accounts followed by Ministerial approval and subject to ratification by the Fifth Chamber for Coordination and Review of the MPF.

“Upon the formal signing of the leniency agreements, the company does not expect there to be any further grounds for liability to the Brazilian authorities in relation to the matters that are the subject of the leniency agreements,” Seatrium stated.

As part of the merger with Keppel O&M, Sembcorp Marine indemnified Keppel Corporation for up to 24 months at a maximum of SGD100 million for claims and other contingent liabilities related to the Operation Carwash Investigations. For the year ended 31 December 2023 Seatrium has made provisions of SGD182.4 million and SGD82.4 million for the agreed Brazilian settlement and the Keppel Corp indemnity, respectively.

The material impact of the provisions on 2023 financial statements equates to 12% of earnings per share and 10% of net tangible assets per share.

Singapore-listed Seatrium reported a group net loss of SGD1.9 billion for 2023 compared to a SGD261 million loss in 2022. The company said the loss was largely due to to non-cash write-downs, provisions for contracts, legal and corporate claims, and merger expenses, amounting to SGD2 billion.

Keppel O&M was also involved in corruption in Brazil and was fined $422m in global resolution between Brazil, Singapore and the US related to $55m in bribes paid between 2001 and 2014. In January this year Keppel O&M said it had paid in full a further BRL343.6m in fines and damages.

Six former senior management staff of Keppel O&M were also given stern warnings by the CPIB in relation to the bribe payments. The Singapore authorities said they had difficulty in gathering evidence for the case in including key witnesses overseas being unwilling to come to Singapore to testify.