Seatrium will pay financial penalties to both Singapore and Brazilian authorities totalling some $241.7 million to settle a long-drawn corruption case in Brazil, when the company was known as Sembcorp Marine.
With this payment as part of a deferred prosecution agreement, or DPA, the authorities have concluded joint investigations on Seatrium, and no further action will be taken.
Seatrium shares, which were halted before market opened ahead of the announcements, opened at $2.42, or up 1.68% when trading resumed at 11.30 am.
Both Seatrium, then known as Sembcorp Marine, and Keppel, were winning numerous contracts to build oil rigs in Brazil.
Keppel had as early as 2017 reached a DPA of its own by paying US$422 million but the investigations involving Sembcorp Marine took longer.
As announced by Singapore's Attorney-General's Chamber on July 30, Seatrium will pay a financial penalty of US$110 million ($141.45 million) as part of a DPA.
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In addition, Seatrium has on July 30 signed a leniency agreement with the Public Prosecutor’s Office in Brazil (MPF) in relation to the same probes, and "is expected" to sign similar agreements with other Brazilian authorities, the Brazilian Attorney-General’s Office (AGU) and the Comptroller General of the Union in the "next few days".
In total Seatrium will pay the Brazil BRL728,933,258.581, or $168.4 million.
However, under the DPA, Singapore's AGC will allow Seatrium to take US$53 million, or $73.3 million of the US$110 million to be credited to what it has to pay Brazil.
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This means Seatrium's total financial penalty is $241.7 million.
"The DPA will come into force only when the High Court approves it after determining that it is in the interests of justice and that its terms are fair, reasonable and proportionate," reads a statement from the AGC.
Besides paying the US$110 million, Seatrium is required to review and make further improvements to its ethics and compliance programme to reduce the risk of a recurrence of any similar conduct.
If Seatrium subsequently fails to comply with the terms of the DPA, AGC may apply to the High Court to terminate the DPA.
In the event the DPA is terminated, AGC may then initiate criminal proceedings against Seatrium in respect of the alleged offences.
According to Seatrium in its separate announcement, it has made provisions in its financial statements for the in-principle settlement payment and financial penalty.
Following the finalised agreements with the Brazilian and Singapore authorities, it has reversed a provision of $14 million in its financial statements for the financial period ended June 30 to take into account the finalised settlement payment and financial penalty, current exchange rates and other expenses.
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"There is therefore no material impact on the net earnings and net tangible asset per share of the group for the financial year ending 31 December 2025," says Seatrium.
The company has also been told by the Monetary Authority of Singapore and the Commercial Affairs Department that they have concluded their joint investigations into potential offences under the Securities and Futures Act 2001, the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992.
As such, no action will be taken against the company or its executives.
"With this positive development, the company is keen to move forward, to ride on the energy market tailwinds to create transformative offshore energy solutions globally and ultimately deliver long-term sustainable growth.
"We would like to take this opportunity to thank all stakeholders for their patience and support over the years," says Seatrium.
Seatrium says it "remains committed to the highest standards of corporate governance and business integrity, including zero-tolerance for fraud, bribery and corruption.
"Robust policies and procedures have been put in place to instill the highest standards of discipline, ethics, and compliance across our global operations," the company states.
