In December 2017, Keppel Offshore & Marine, the rig-building arm of Singapore conglomerate Keppel Corporation, agreed to pay a staggering US$422.2 million in criminal fines to resolve a decade-long bribery scheme involving officials of Brazil's state oil company Petrobras, one of the largest foreign-bribery settlements in history.
Between 2001 and 2014, Keppel O&M paid about US$55 million in bribes to Petrobras officials and Brazil's then-governing Workers' Party to win 13 contracts. The payments were funnelled through the company's former Brazilian agent, Zwi Skornicki, disguised as legitimate consulting commissions, with his full knowledge or approval of former Keppel O&M executives. The scheme unravelled as part of Brazil's sprawling Operation Car Wash investigation into Petrobras corruption.
On 23 December 2017, a global resolution was announced: Keppel O&M entered a Deferred Prosecution Agreement with the US Department of Justice, its US subsidiary pleaded guilty, its Brazilian unit Keppel FELS Brasil reached a leniency agreement with Brazilian prosecutors, and Singapore's Corrupt Practices Investigation Bureau issued the company a conditional warning in lieu of prosecution. The US$422.2 million total fine, about S$570 million, was split with half going to Brazil and a quarter each to the United States and Singapore. Singapore's share comprised two payments of US$52.78 million, the second later extended to June 2022 amid ongoing discussions with Brazilian authorities.
The scandal stunned Singaporeans, whose companies enjoyed a squeaky-clean reputation. Keppel Corporation's full-year 2017 net profit plunged 72 per cent to S$217 million after a S$619 million provision for the penalty and related costs. Chief executive Loh Chin Hua called it a painful chapter and pledged stronger compliance controls.
US court documents later revealed Keppel had taken disciplinary action against 17 current and former employees, including US$8.9 million in financial sanctions, demotions, written warnings and seven departures. Singapore authorities continued investigating individuals involved in the scheme.
The case exposed how even Singapore's most respected government-linked companies could fall short of the standards expected of them, and it remains the benchmark for corporate corruption enforcement in the city-state, a cautionary tale taught in compliance courses across Asia.
The shock was magnified by Keppel's status as a government-linked company then chaired by former Cabinet minister Lee Boon Yang, long held up as a paragon of Singapore corporate governance. Keppel said it had launched an internal investigation in October 2016 after identifying suspicious transactions involving Skornicki, and cooperated fully with authorities in the United States, Brazil and Singapore. The CPIB's conditional warning, issued in lieu of prosecution, required Keppel O&M to meet undertakings on compliance. Singapore authorities said they continued to investigate the individuals involved, a reminder that the corporate settlement did not close the book on personal accountability.