Seatrium Ltd settles for S$182.4M in Brazil’s Operation Car Wash

Seatrium Limited, previously known as Sembcorp Marine, has reached a landmark in-principle settlement of payment of R$670,699,731.73 (approximately S$182.4 million) with the Brazilian Authorities, signalling a crucial development in the ongoing Operation Car Wash investigations.

This announcement on Monday (26 Feb) follows a series of disclosures regarding the company’s engagement with legal processes in Brazil, showcasing a concerted effort to address and resolve the allegations.

The settlement agreements, negotiated with the Brazilian Attorney-General’s Office (AGU), Comptroller General of the Union (CGU), and Public Prosecutor’s Office (MPF), emerge from Seatrium Limited’s proactive cooperation with the investigations.

These agreements entail post-closing compliance obligations and an ongoing commitment to cooperate with Brazilian authorities, as announced in March last year by Sembcorp Marine.

In addition to Brazilian legal proceedings, Seatrium Limited is facing scrutiny from the Corrupt Practices Investigation Bureau (CPIB) of Singapore.

Last June, the CPIB initiated investigations into Seatrium for alleged corruption offences related to its activities in Brazil, acting on the information it received. This investigation extends to individuals within the company, reflecting the serious nature of the allegations.

Historically, Seatrium’s wholly-owned Brazilian subsidiary, Estaleiro Jurong Aracruz, was investigated in March of the previous year for alleged “irregularities” related to Operation Car Wash.

Launched in 2014, this operation initially focused on money laundering activities but later expanded to encompass allegations of corruption.

Further complicating the scenario, the merged entity of Seatrium includes Keppel Offshore & Marine (KOM), which also faced allegations of corruption in Brazil.

Unveiled in the same operation, KOM was accused of paying bribes to secure rig-building contracts, leading to a leniency agreement under which it paid fines and damages totalling 343.6 million reais (S$88.3 million). Six KOM officials were eventually issued stern warnings by the CPIB after it was said that evidence could not be secured for their conviction.

For the fiscal year ended 31 December 2023, Seatrium Limited has made significant financial provisions for the settlement with Brazilian authorities and the indemnity related to Keppel Corporation Ltd (KCL), totalling S$182.4 million and S$82.4 million, respectively.

These provisions, representing a considerable portion of the company’s financial statements, highlight the material impact of the historical events on Seatrium’s operations.

Despite these challenges, Seatrium Limited has emphasized its dedication to legal compliance and ethical business practices. The company continues to assist Singaporean authorities in their investigations and remains committed to maintaining the highest standards of corporate governance, including a zero-tolerance policy for bribery and corruption.

Temasek and its affiliates collectively hold the position as the largest investors in Seatrium

Ms Indranee Rajah, Minister in the Prime Minister’s Office and Second Minister for Finance, explained last July that Temasek’s choice to participate in the rights issues of the then Sembcorp Marine in 2020 and 2021, was a result of thorough due diligence, based on the facts and disclosures available at the time.

“Temasek made an independent commercial decision to inject capital into the company,” she stated.

Ms Indranee’s comments came in response to questions raised in Parliament regarding the investigations by CPIB  and Brazilian authorities into Seatrium, which was established in April 2023 through the merger of Sembcorp Marine and KOM.