5 Things to Note About the Keppel Offshore and Marine Ltd Case

The fine will be paid by Keppel O&M, and will not impact Government’s fiscal position.


KOM

Keppel Offshore & Marine Ltd (KOM) is part of a Singaporean group of companies called Keppel Corporation. KOM’s corrupt payments to officials of a Brazilian oil company and other parties were brought to light in a joint release by the Attorney-General’s Chambers (AGC) and the Corrupt Practices Investigation Bureau (CPIB) in December 2017.

Here are 5 key things to note regarding the case so far.

1. KOM’s fine will not be paid by the Government

KOM has agreed to pay US$422 million (S$567 million) in fines as part of a global resolution with authorities in Singapore, Brazil and the United States. This penalty is about eight times the amount the company paid in bribes.

The fine will be paid fully by KOM to the respective governments. It will not come from the Government budget, nor impact Government revenue.

 

2. The Government has zero tolerance towards corruption

The Government does not condone or tolerate corruption. In Parliament on 8 January 2018, Senior Minister of State for Finance and Law Ms Indranee Rajah emphasised that the Government expects all Singapore companies, their officers and their employees to comply fully with the laws of Singapore and the laws of the jurisdictions in which they operate.

While Singapore companies have to operate in all kinds of environments, they must do so while keeping their systems clean, and complying with the laws of the countries where they operate. They must develop ways of operating which enable them to do this. They cannot lower their own standards of integrity, and they must not import corrupt practices into Singapore.

 

3. The Government has and will take people and companies to task for corruption

The Government has taken actions against people in the past, irrespective of their status. SMS Indranee cited the corruption bust at Singapore Technologies Marine (ST Marine) in 2014, and shared that as long as there is a “good reason to investigate, the authorities will do so whether or not the company is government-linked”.

For the case of ST Marine, at least S$24.9 million in bribes were falsely claimed as entertainment expenses and made to employees of ST Marine's customers in return for ship repair contracts. Seven former ST Marine senior executives were convicted in 2016 for their part in the graft scandal.

4. Role of Government in relation to Government-linked companies

The Government is not a direct shareholder of Keppel Corporation. It owns 100% of Temasek Holdings; Temasek in turn owns a minority stake of about 20% in Keppel Corporation, which owns 100% of KOM.

The Government does not interfere in, nor influence the business decisions or operations of Temasek or its portfolio companies. Likewise, Temasek does not interfere in the business decisions or operations of its portfolio companies. These are the responsibilities of the respective companies’ boards and management.

Temasek holds the boards of its portfolio companies responsible for running the companies honestly and competently. If the boards do not perform, Temasek can, collectively with other shareholders, change the board.

5. Status of investigations into individuals involved in KOM case

Investigations into the individuals involved in the corrupt payments are ongoing. The Singapore investigations are conducted on the same timeframe as the US and Brazilian investigations, and go back to 2001, when the corrupt acts first took place.

KOM itself has taken several remedial measures. This includes taking disciplinary action against 17 employees, parting company with seven employees and imposing millions in financial sanctions on 12 former employees as part of disciplinary actions.

Watch the full exchange in Parliament on the KOM case on 8 January 2018 here:

 

This article is accurate as of Jan 2018. For latest updates, head over to www.agc.gov.sg.


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