Last week, Brazilian media reported claims that Keppel FELS and Jurong, a subsidiary of Sembcorp Marine, had paid bribes to Petrobras directors and PT (Partido dos Trabalhadores, Brazil’s Workers’ Party). In strongly worded statements, both Keppel Corp and Sembcorp Marine have refuted these allegations. Keppel pointed out that Zwi Skornicki, an individual mentioned in reports as representing Keppel in payment discussions, is an employee of Eagle do Brasil, which is the agent of Keppel FELS in Brazil.

Keppel FELS had conducted due diligence review of Eagle do Brasil and Zwi Skornicki. Further, the agency agreement with Eagle do Brasil states that Eagle do Brasil and Zwi Skornicki “shall not make, either directly or indirectly, any improper payment of money or anything of value to an official in connection with the contract”. In addition, Eagle do Brasil’s services are not exclusive to Keppel FELS, and it is also an agent to other reputable multi-national companies.

The scandals and difficulties plaguing Petrobras are unlikely to be over soon and may continue to cast a pall over Keppel Corp [BUY, FV: S$9.14] and Sembcorp Marine [HOLD, FV: S$3.24].

Source: OCBC Research - 9 Feb 2015