Two former Sembcorp Marine executives charged for alleged US$44M bribe in Brazil

SINGAPORE: On Thursday (28 March), two senior executives from Seatrium — formerly known as Sembcorp Marine — along with a subsidiary, were charged with bribery allegations involving Brazilian officials, aimed at furthering their companies’ interests in South America.

Sembcorp Marine, one of Singapore’s primary offshore and marine companies, transformed into Seatrium in 2023 following a merger with Keppel Offshore & Marine (KOM).

The alleged incidents occurred between 2009 and 2014, during which approximately US$44 million was allegedly disbursed through a Brazilian intermediary named Guilherme Esteves de Jesus (GDJ), as stated in a joint news release by the Attorney-General’s Chambers (AGC) and Corrupt Practices Investigation Bureau (CPIB) on Thursday.

The alleged transgressions are subject to the Prevention of Corruption Act.

The first accused, Wong Weng Sun (黄東燊), 62, held the positions of president, executive director, and CEO of Sembcorp Marine, as well as managing director of its wholly-owned subsidiary Jurong Shipyard (JSPL) during the purported offences.

The other accused, Lee Fook Kang (李福根), 75, served as JSPL’s senior general manager.

According to AGC and CPIB, Wong and Lee each face five charges related to conspiring to corruptly offer gratifications to GDJ, to benefit individuals in Brazil and incentivize actions conducive to the business interests of Sembcorp Marine’s subsidiaries in the region.

GDJ, described in Sembcorp Marine’s 2021 annual report as affiliated with the consultant engaged by the company’s subsidiaries in Brazil, played a pivotal role in these events.

Allegations of corruption against the two former Sembcorp Marine executives

The joint statement unveiled that on two occasions in 2009, Wong and Lee purportedly collaborated to provide GDJ with gratifications totalling not more than US$2 million, aimed at benefiting one or more Brazilian officials to further JSPL’s business interests in Brazil.

Between 2010 and 2012, over four instances, the duo allegedly conspired to offer GDJ gratifications amounting to not more than US$1,905,345 in total, intended for one or more officers of Petroleo Brasileiro SA — a state-owned Brazilian petroleum company — to advance JSPL’s business interests.

“Over four occasions between 2010 and 2012, in Singapore or elsewhere, Wong and Lee allegedly conspired to corruptly give to GDJ gratification of not more than US$1,905,345 in total, for the benefit of one or more officers of Petroleo Brasileiro S.A., as a reward to advance the business interests of JSPL in Brazil,” said the joint statement.

Additionally, in 2010, both individuals purportedly conspired to offer GDJ gratifications totaling not more than US$300,000, aimed at benefiting one or more Brazilian officials, as a reward to advance the business interests of Estaleiro Jurong Aracruz (EJA), a wholly-owned subsidiary of Sembcorp Marine.

In the same year, both individuals allegedly conspired to provide GDJ with gratifications in the form of money, not exceeding 2.5 per cent of the contract sums relating to drilling rig units to be awarded by Sete Brasil Participacoes SA to EJA.

These funds allegedly served as rewards for individuals facilitating the awarding of contracts to EJA.

Between 2012 and 2014, gratifications totalling allegedly not exceeding US$26,478,989.80, EUR10,506,608.22 (US$11.36 million), and 5,066,794.77 Brazilian reals (US$1.02 million) were purportedly provided to GDJ in a corrupt manner.

Furthermore, Wong faces an additional charge of obstruction of justice, as he purportedly instructed two Sembcorp Marine employees in 2014 to delete an email sent by GDJ, which was claimed to contain evidence of bribes that GDJ had given or planned to give to other individuals, according to AGC and CPIB.

In February 2020, Sembcorp Marine disclosed in a filing with the Singapore Exchange that GDJ had been sentenced to 19 years and 4 months’ imprisonment along with a fine by a Brazilian court for charges related to corruption, money laundering, and involvement in a criminal organization.

Contrastingly, in a separate filing last December, Seatrium announced that the Brazilian Federal Lower Court had acquitted GDJ of all charges.

Brazilian authorities charged EJA’s former consultant GDJ February 2019 over his alleged involvement in illegal payments connected to drillship contracts that were secured by SembMarine units, in what became part of Operation Car Wash, the Latin American nation’s biggest anti-graft crackdown.

CPIB commences probe into Seatrium in May 2023

In May 2023, CPIB announced the initiation of its investigation into Seatrium and associated individuals for suspected corruption offences that transpired in Brazil.

When questioned by CNA on whether these allegations were linked to a past multimillion-dollar bribery case involving former KOM employees and Brazilian oil company Petrobras, CPIB declined to comment citing the ongoing nature of the investigation.

However, this announcement came two months after Seatrium disclosed that its subsidiary EJA was under investigation for “alleged irregularities” in its practices.

Subsequently, Seatrium clarified that these proceedings were broadly related to “past conduct investigated by Brazilian authorities in connection with Operation Car Wash.”

Nonetheless, a month later, Seatrium declared the suspension of preliminary administrative proceedings against its Brazilian subsidiary.

Operation Car Wash, which commenced in 2014 as a money-laundering investigation into a car wash in Brazil’s capital Brasilia, quickly escalated into a far-reaching probe into Brazil’s most significant corruption scheme.

As the investigation progressed, it uncovered illicit kickbacks from corporate executives to influential politicians in exchange for contracts within Petrobras, the state-operated oil giant.

In February, it was reported that Seatrium had reached a landmark in-principle settlement of payment of R$670,699,731.73 (approximately S$182.4 million) with the Brazilian Authorities.

Negotiations underway for Deferred Prosecution Agreement in Seatrium corruption case

Authorities also indicated in their press release that discussions are underway between the public prosecutor and Seatrium regarding a deferred prosecution agreement (DPA) concerning the alleged corruption offences in Brazil.

A DPA is a negotiated settlement wherein the prosecution agrees to postpone criminal charges against a corporate offender in exchange for the corporation’s commitment to fulfill various conditions.

These conditions may encompass admitting wrongdoing, paying financial penalties, and implementing corporate reforms.

“Under the proposed DPA, the Company will be required to pay a financial penalty of US$110 million.” stated the authorities.

“Of this amount, up to US$53 million may be used to offset the settlement payment totalling 670,699,731.73 Brazilian reals (US$134.5 million) under the in-principle settlement agreements that the Company has reached with the authorities in Brazil, namely, the Brazilian Attorney-General’s Office, Comptroller General of the Union, and Public Prosecutor’s Office in Brazil.”

The specifics and terms of the DPA are pending finalization by the public prosecutor and Seatrium, and they will require approval from the General Division of the High Court.

Authorities said current charges unlike KOM case “where there were evidentiary difficulties”

AGC and CPIB in the statement also highlighted the distinction between the current case and a previous corruption investigation involving Keppel Offshore & Marine (KOM).

“AGC considered all the relevant factors in this case, including the available evidence, and assessed that there was sufficient evidence to mount a prosecution. ”

“This is unlike the Keppel Offshore & Marine Limited case where there were evidentiary difficulties.”

In January 2023, six former KOM senior staff received stern warnings from CPIB regarding alleged bribe payments to Brazilian officials but weren’t prosecuted, evoking public outcry.

Minister Indranee Rajah, in a February 2023 Parliament session, defended that CPIB “had done it best” amid a challenging investigation.

She highlighted the lack of evidence hindering prosecution, attributing the challenge to CPIB’s exhaustive inquiry exacerbated by the absence of key witnesses located abroad.

The Singapore Government has chosen not to name the six who were issued stern warnings over the offences.

However, the plea agreement and media reports have already identified who these six individuals might be.