Keppel case made it to Parliament, but are shareholders concerned?

I was in Parliament today to hear what was being said about the KOM corruption case. My report, and some thoughts:

The problem with a “conditional warning’’ is that it sounds like what you tell a teenager who has been caught shoplifting. So that’s what it sounded like to some people when the G said Keppel Offshore & Marine had been given a conditional warning for giving out $55 million of bribes to secure projects in Brazil.

There was some hope that more light will be shed in Parliament but clearly, the G doesn’t know enough about the 13-year scam that also involved the US and Brazil, or can’t/shouldn’t speak because “investigations are on-going’’. It cannot say what conditions or undertakings were attached to the warning. Nor can it say when local investigations will be completed because so many people and evidence- gathering scattered across three jurisdictions are involved. It is also not a general practice to identify possible wrong-doers (never mind if they have been named in other documents).

So it’s no, no, no from Senior Minister of State Indranee Rajah yesterday to some key questions.

Anyway, some facts:

What has happened is that US Department of Justice has fined KOM $422m under what is called a Deferred Prosecution Agreement. Half of this sum would go to Brazil, and the rest split between Singapore and the US. Singapore is supposed to get $52m in 90 days of the US decision, and the rest, three years later.

This penalty, which outstrips even the $351.8 m in gains from the projects, is so much more than what could be imposed under the Prevention of Corruption Act – which is a maximum of $100,000 per charge. In other words, KOM was hit harder by this global resolution involving the three countries than it would be under local law, a point Ms Indranee repeated a few times.

As for individuals, Ms Indranee noted that under the US deal, Keppel had taken disciplinary action, including levelling US$8.9 million in financial sanctions on 12 former and current employees. (So this might satisfy those who have been wondering if bonuses for those involved should be clawed back, something which a couple of MPs asked as well)

This doesn’t mean the end of the matter.

Remember that local investigations into the role of individuals are on-going. So it seems that while KOM, the company, has been granted conditional warning “in lieu of prosecution’’, the individuals might be open to a double whammy if the Singapore authorities file a case against them.

Through her answers, Ms Indranee was attempting to portray a G that is tough on corruption, but had its hands tied because quite a lot of the bad stuff happened abroad (WP’s Png Eng Huat asked about email trails leading back to Singapore. Answer: don’t know/can’t say)

Then there was this notion that because KOM is a GLC, the G in the GLC can intervene in its affairs.

Ms Indranee answered with some maths: The G owns 100 per cent of Temasek, which owns 20 per cent of Keppel Corp which owns 100 per cent of KOM. Neither the G nor Temasek interferes with day-to-day operations but Temasek does have oversight role over the board .

WP’s Pritam Singh asked about the nature of this oversight and the culpability of the board of directors as well as whether Temasek as a shareholder, would consider taking civil action.

Ms Indranee repeated her maths solution and read out what the Keppel had said in its press statement on Jan 5, that the  current boards of directors of Keppel Corp and Keppel O&M “were not aware of the illegal payments” made in Brazil because it had been deliberately concealed as agency fees.

But, seriously, this is a question that comes better from Keppel shareholders than MPs. Is there something prevent shareholders, led by Temasek, from coming together to force an extra-ordinary general meeting to get some answers from the Keppel boards? Or are they only concerned about whether they should sell their shares or buy more? It doesn’t take a financial analyst to wonder whether the previous boards have been asleep on the job or worse, in cahoots, with the malfeasance that seems to have affected the top rungs of the company.

Here’s a list of those made public by Bloomberg which reported a trial in the US involving the middleman in the case* : former CEOs of KOM  Chow Yew Yuen and Tong Chong Heong, former CEOs of Keppel FELS Brasil Tay Kim Hock and Kwok Kai Choong, as well as former Keppel CEO Choo Chiau Beng.

Get this: Mr Tong  had been involved in a 1997 corruption scandal that involved Keppel Shipyard, which has since been subsumed into KOM.  He was one of the Keppel directors who made the decision to give a middleman a 1 per cent cut of the contract sum for all tenders awarded to Keppel by Petroleum Shipping. Some $8.53million were involved, and the company was fined $300,000.

That first scandal doesn’t seem to have blackened Mr Tong in Keppel’s books. He was KOM’s CEO between 2009 and 2014.

There is also Mr Choo, whom WP’s Mr Singh noted, was  Singapore’s non-resident ambassador to Brazil from 2004 to 2016. He asked if Mr Choo had used his official position to help Keppel win contracts.  (Answer: Don’t know)

There was plenty of interest from backbenchers as hands shot up during question time. Deputy Speaker Charles Chong, however, said that Ms Indranee seemed to be repeating herself and limited the number of questions.

It’s a pity.

When the frontbenchers repeat themselves, it’s either because backbenchers don’t understand what they are saying or the frontbench is adamant about not straying beyond the script. The biggest corporate corruption scandal should have been given more air-time in Parliament.

*I earlier said that the names were in US documents. The names appeared in a Bloomberg report on the trial of Zwi Skornicki, Keppel’s former agent in Brazil from 2000 to 2016. I am sorry for the error.