Seatrim Reaches Settlement in Brazil in Decade-Old Corruption Case

Singapore-based Seatrium, a shipyard and marine engineering operator, has reached terms with the authorities in Brazil to settle a more than decade-old bribery charges related to the awarding of offshore engineering and construction contracts. Both predecessor companies, Sembcorp Marine and Keppel Offshore & Marine had previously made settlements in Brazil but in 2023 Brazilian authorities confirmed that they had renewed the investigation into Sembcorp Marine’s actions before 2015. Singapore’s Corrupt Practices Investigation Bureau also started a new investigation in 2023 into the pre-2015 activities of Sembcorp Marine’s subsidiary in Brazil.

The case has made headlines over the years with an agent working for the companies at the center of the investigation. In 2012, Sembcorp Marine won seven drillship contracts from Brazil’s Sete Brasil valued at $5.6 billion. Two years later, the investigations began in Brazil into allegations of corruption and bribery. Sembcorp Marine settled with Sete.

The investigation is part of the wider effort which has become known as “Operacao Lava Jato” (Operation Car Wash) in Brazil. It has been described as one of Brazil’s largest corruption scandals involving a broad range of politicians and companies. 

Guilherme Esteves de Jesus who acted as a business consultant to the then president of Estaleiro Jurong Aracruz was indicted in 2020 on charges of money laundering, found guilty, and sentenced to 19 years in jail. The former president of Sembcorp Marine’s Brazilian subsidiary, Martin Cheah Kok Choon was also indicted in 2020 on charges of money laundering and corruption. He had been terminated from the company in 2015 but in December 2023 along with another former executive was acquitted.

 Under the terms of the in-principle settlement agreements, Seatrim will pay approximately US$135 million after cooperating with the investigations. The final amount is contingent on the approval by the authorities in Brazil and ratification of the agreement. The company will also agree to certain post-closing compliance obligations.

“Upon the formal signing of the leniency agreements, the company does not expect there to be any
further grounds for liability to the Brazilian Authorities,” the company writes in its stock exchange filing. “According to Brazilian legislation, the execution of the leniency agreements shall guarantee that the company may participate in future public bidding processes and execute contracts in Brazil.”

The company has a long history of working with Brazil’s offshore industry. In 2022, then Sembcorp Marine won a $3 billion contract for a new FPSO for Petrobras, its largest single order from the Brazilian petroleum giant. The winning bid more than doubled Sembmarine's orderbook by value. In 2022, it also won a contract from Brazil’s Ministry of Defense for a research support vessel.

Seatrim reports it is taking a charge in its 2023 financial reports for the settlement. The company also indemnified Keppel and expects to record more than $60 million under the terms of that agreement. The charge represents 12 percent of Seatrim’s earnings per share at December 31, 2023.

While the company expects this will bring to an end the case in Brazil, the investigation in Singapore is still ongoing.