27 December 2017
KOM agreed to pay a huge fine of US$422.2 million (S$570 million) for corruption involving Petrobras in Brazil, announced the US Department of Justice in a press release dated 22 December 2017. The fine will be shared by three jurisdiction which carried out the investigations. Brazil will get 50% of the fine and United States and Singapore governments will get 25% each.
KOM is a government-linked company with a former Cabinet minister, Dr Lee Boon Yang, at the helm.
KOM used legitimate consulting agreements with its former agent in Brasil, Mr Zwi Skornicki. KOM paid the bribes to companies linked to this former agent, who then made payments for the benefit of officials of Petrobras and other parties.
The news released during the weekends came as a shock to many Singaporeans because Singapore companies usually have a squeaky-clean image. The surprising part is the corruption was going on for more than a decade from 2001 to 2014. This case illustrated how a well-reputed and well-managed company had fallen short of the high standards expected of Singapore companies.
Rig-builder, Sete Brasil, has commissioned a large fleet of oil rigs with KOM and SembMarine. These rigs were for the use of Petrobras. Sete Brasil was caught in the ‘operation car wash’ investigations in Brazil. This and the unexpected collapse of oil price made it difficult for Sete Brasil to secure long term funds and hence it has not paid KOM and SembCorp for the work done on the rigs. SembCorp Marine has begun legal proceedings against Sete Brasil. Although KOM has not initiated any legal action, it will be affected by the fallout from the Sete Brasil saga. Sete Brasil got approval from its shareholders to file for bankruptcy.
