Former Leighton Holdings CEO faces trial in Sydney over alleged bribery by Singapore-based Leighton Offshore

AUSTRALIA: David Savage, the former CEO of Leighton Holdings, recently returned from France to attend court hearings in Sydney as prosecutors aim to establish sufficient evidence for a potential criminal trial.

Mr Savage held a position at Leighton, now recognized as CIMIC, from 1998 to 2011.

In January 2021, the Australian Federal Police (AFP) arrested him and filed charges related to an international bribery scandal.

This alleged scheme was purportedly orchestrated to secure oil contracts valued at over US $1.4 billion in the Middle East.

Australian authorities investigation unveils alleged improper payments by Singapore’s Leighton Offshore

These charges stemmed from a long-running AFP investigation known as “Operation Trig”, which focused on suspected improper payments made by Singapore-based Leighton Offshore.

These payments were allegedly linked to two contracts granted by Iraq Crude Oil Export in 2010 and 2011.

The contracts were worth a combined $US1.46 billion and aimed to construct onshore and offshore oil pipelines to bolster Iraq’s crude oil exports.

Approval from the Iraqi Ministry of Oil and the South Oil Company of Iraq was necessary for Leighton Offshore Pty Ltd to obtain these contracts.

Leighton Offshore Pty Ltd allegedly channelled bribes through entities associated with United Arab Emirates businessman Ramjee Iyer and Monaco-based energy company Unaoil Ltd to secure approvals for the Iraq Crude Oil Export contracts.

The investigation identified approximately US$ 77.6 million in suspicious payments made via third-party contractors.

Melbourne-based newspaper The Age first reported in 2013 suggesting that certain former executives at Leighton were aware of a $42 million kickback paid to Monaco-based company Unaoil in exchange for securing contracts.

The revelation centred on a memo dated November 23, 2010, handwritten by former Leighton chief executive David Stewart.

The memo purportedly indicated that Mr Savage, then the Managing Director of Leighton International, had disclosed during a meeting that he was aware of this kickback.

The AFP investigation began investigating in November 2011 following a report from Leighton Holdings regarding suspicious payments made by Leighton Offshore, suspecting a possible breach of its code of ethics.

The AFP has brought charges against Mr Savage and another former Leighton executive, Russell Waugh, on two counts related to foreign bribery.

Both individuals were granted bail and are currently defending the charges.

According to The Australian Financial Review (AFR), the prosecution is being handled by the Commonwealth Director of Public Prosecutions (CDPP).

During the committal stage of the proceedings, both Mr Savage and Mr Waugh have requested prosecution witnesses, including AFP witnesses, for cross-examination to challenge their evidence, as confirmed by a CDPP spokesman.

Separately, Ata Ahsani, the founder of Unaoil, appeared via video link in the Downing Centre local court in Australia on the same day.

He faced questioning from legal counsel regarding previous or ongoing investigations into corrupt conduct.

Mr Ahsani cited medical documents suggesting poor short-term memory when he stated he couldn’t recall past events, likening it to not remembering what he ate the day before.

Mr Ahsani expressed a lack of memory along with uncertainty about signing non-prosecution agreements or discussing alleged bribery payments with David Tinsley, the founder of Miami-based 5 Stones intelligence.

While not a lawyer, David Tinsley was allegedly actively involved in helping the Ahsanis.

In 2019, Saman Ahsani and Cyrus Ahsani, sons of Ata Ahsani, pleaded guilty in the US for conspiring to facilitate bribes to secure oil and gas contracts from 1999 to 2016.

Saman Ahsani received a sentence of over a year in jail, following his late January sentencing in the US.

Hearings will continue this week and are expected to resume in September 2024.

Unaoil’s suspected bribery tactics supporting Keppel’s Kazakhstan Contracts unveiled in 2016 investigative report

An investigation conducted by Australian Fairfax Media and The Huffington Post in 2016 unveiled leaked files exposing Unaoil’s involvement in bribery activities in Kazakhstan to aid Singaporean conglomerate Keppel in securing contracts.

A confidential 2007 Unaoil memo outlined strategies to assist Keppel in winning contracts for offshore oil rig and barge projects within the expansive Kashagan oil field.

Unaoil considered Keppel an attractive client due to its purportedly lenient anti-corruption measures compared to Unaoil’s other multinational partners.

Additionally, Unaoil believed Keppel possessed connections with allegedly corrupt officials in the Kazakh government.

“In my opinion we have a lot at stake here, apart from the $30m [in fees from Keppel] – we could set-up a long term association with these guys [Keppel]…. The problems of working with a US or European outfit do not apply here,” a Unaoil executive wrote in a 2007 memo.

Leaked emails provided intricate details regarding Unaoil’s assistance to Keppel.

In 2006, during Keppel’s competition against French multinational Technip for an offshore oil rig construction contract in Kazakhstan, Unaoil utilized a contact known as “small D” to access confidential bidding strategy information.

“Small D” is believed to be an Italian oil executive affiliated with the Kazakh government.

“Please ask small D what does [he] understand [about the bid]… currently offered by the French,” said one email.

“Any news from little D on the outcome of the T [Technip] mtg [meeting]?? — I need to go back to [Keppel senior manager],” Unaoil’s Kazakhstan manager Peter Willimont wrote in yet another message.

It’s important to note that Keppel FELS operates as a wholly owned subsidiary of Keppel Offshore & Marine (KOM), which in turn falls under the complete ownership of Keppel Corp.

Keppel Corporation is largely owned by Temasek Holdings, a Singapore sovereign wealth fund.

Keppel Corp responded to these allegations in April 2016, firmly stating that the company adheres to a code of conduct that expressly prohibits bribery and corruption among other misconduct.

Keppel initially denied bribery allegations in 2016, later acknowledged ‘suspicious’ transactions

In August 2016, Keppel “strongly” denied allegations made in Bloomberg reports, which suggested that its senior management had sanctioned the payment of bribes to secure contracts in Brazil.

The reports stemmed from statements by Zwi Skornicki, a former third-party commercial representative for Keppel in Brazil.

Skornicki stated in court that top Keppel managers authorized him to offer bribes to public officials in exchange for contracts with Petrobras, the state-controlled company.

According to Skornicki, five high-ranking executives, including the current CEO of Keppel Offshore & Marine, Chow Yew Yuen, allegedly authorized these bribes in exchange for Petrobras contracts, often worth over a billion dollars.

Keppel emphasized that neither its executives nor CEO Chow authorized any bribes.

But two months later the company admitted that “certain transactions” associated with Mr Skornicki “may be suspicious” and notified the authorities in the relevant jurisdictions.

In December 2017, KOM agreed to pay fines amounting to US$422.2 million as part of a global resolution with the authorities in the United States (US), Brazil and Singapore.

On 22 December 2018, US Department of Justice (DOJ) revealed that between 2001 and 2014, Keppel O&M “conspired to violate the Foreign Corrupt Practices Act (FCPA) by paying approximately US$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.”

US court documents also revealed that between 2001 and 2011, Keppel O&M executives created and executed agreements on behalf of the company with consulting firms controlled by a consultant.

The court paper stated that Keppel executives and executive of its unit in Brazil authorised the consultant during several phone calls to pay 1 per cent of the contract value as bribes in response to a demand from a Brazilian official.

Accordingly, the consultant paid about US$14.4 million in bribes to the Brazilian official and other related parties.

US court documents also revealed that Jeffery Chow, a former lawyer at Keppel Corp’s oil rig building business, had pleaded guilty to conspiring to violate the FCPA during a plea hearing in New York on 29 August 2017.

Mr Chow said that he drafted contracts with a Keppel agent in Brazil who he realized was being overpaid by millions of dollars so he could bribe Brazillian officials.

Keppel O&M earned a total of US$351.8 million through the bribery scheme.

Stern warnings issued by CPIB to six former senior management of KOM over Brazil’s Petrobras bribery scandal

In January this year, Six former senior management staff members of KOM received stern warnings from the Corrupt Practices Investigation Bureau (CPIB) over a corruption case involving Brazilian oil giant Petróleo Brasileiro S.A. (Petrobras).

Public outcry ensued regarding why these individuals received only warnings despite the gravity of the scandal.

Later in February 2023, Indranee Rajah, Minister in the Prime Minister’s Office defended CPIB’s decision in Parliament, claiming that the CPIB “had done it best” and the enforcement faced difficulties in gathering evidence in the high-profile case.

“In having regard to the rules of evidence, CPIB and AGC are observing the basic rules for a fair and just criminal justice system. What can be inferred from this is that while Singapore has zero-tolerance on corruption, it also strongly adheres to the rule of law, ” she told the House.