Keppel O&M


May you read this in the best of health.

Keppel unit to pay $422 million to resolve Petrobras bribery probes (Reuters 23rd Dec 2017)
The above was the headline from Reuters a few days ago. 13 contracts were awarded totalling >USD$300m with the help of "dirty" monies.

To put into context, the practice saw USD$55m paid out to different persons of influence between 2010 to 2014. Present and past employees have been disciplined and the most guilty of all are still facing investigations. One has spilled the beans to US authorities in exchange for leniency while the company has been fined across 3 countries worth >USD400m.

Keppel FELS (Far East Levingston Shipbuilding) – a subsidiary of Kepple Offshore & Marine - was once awarded the largest rig builder in the world 2013 for delivering 21 rigs in a calendar year. While the corruption case centered on awarding the contracts to Keppel, there is no mention of the engineering integrity of the rigs delivered; a testament to the ethics of the personnel on the ground performing their duties. 

This case does no justice to these men & women on the ground who are now caught up with a tainted reputation of the organization they belong to. The business of building offshore facilities is a specialized one and the manpower needed is highly skilled.

Of course the repercussion to the scandal is not limited to the fines and disciplinary actions against present and past employees. The company itself co-operated with CPIB and implemented wide-ranging reforms to overcome the deficiencies in it’s internal process that led to the scandal go unnoticed for a number of years. As a result, a conditional warning was issued by the anti-corruption watchdog while investigations to the main perpetrators are ongoing.

A look into CPIB’s website reveals an example of a different case whereby the accused was issued with a Conditional Warning. The Law Gazzette of Singapore (Vol. 1, 2013-09, article 843) defines Conditional (Stern) Warning as a warning with conditions attached to it, typically a requirement for the suspect to remain crime free for a period of time after the warning has been issued (usually 12 months). Along with it, the authorities can still prosecute the accused for the offence that elicited the warning together with a fresh offence that has been committed by the same accused. 

A suspect who remains crime free for the period of time defined in the conditions will eventually be granted a Discharge Amounting to an Acquittal.

A Conditional Warning is a stronger deterrent as the suspect can still be prosecuted with the original offence if another crime is committed within the period of time stipulated in the condition.

Legality aside, tarnishing the reputation of Keppel O&M may have wider implications. As most oil and gas operators become crime-conscious of their business dealings, this blip will be held against Keppel for sometime to come. Against a backdrop of a dip in offshore facilities being constructed for the past few years, landing a potential mega project may not come as easy.

On the bright side, Keppel’s rival at Samsung Heavy Industries (South Korea) have been shaken by a bigger corruption scandal that saw the founder of the parent company go to jail. Furthermore Daewoo Shipbuilding has been fighting to prevent bankruptcy recently due to alleged corruption. While the Korean conglomerates may be bigger than Keppel in terms of yard capacity, the scandals may level out the playing field at the expense of Singapores’ reputation of being corruption-free.

PeAcE OuT

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