This morning (26 February 2024) before the market opened for trading, Seatrium Limited issued four announcements, including its unaudited second half-year and full-year results for the year ending 31 December 2023.
One of the other announcements was with regards to its settlements with the Brazilian authorities in relation to the investigations by the latter into the huge bribery scandal, called Operation Car Wash. This bribery scandal had earlier ensnared Keppel Offshore & Marine (KOM), which paid a US$422 million deferred prosecution agreement settlement in December 2017, after it was found to have paid US$55 million of bribes over a 13-year period.
This latest announcement by Seatrium was the first update since 26 December 2023. Under the settlement, Seatrium has to pay about S$182.4 million. The company will also have to agree to certain post-closing compliance obligations. The settlement has to be considered by the Federal Courts of Accounts in Brazil and is subject to Ministerial approval.
Seatrium said it does not expect there to be any further grounds for liability to the Brazilian authorities. However, it has committed to continuing cooperation with the Brazilian authorities.
It is very disappointing that two GLCs have now being found to have been involved in the bribery scandal in Brazil. It makes their claims of zero tolerance for corruption, good corporate governance, internal controls and risk management sound extremely hollow.
The settlement by Seatrium’s own admission is material. It said that it has made provisions of S$182.4 million and S$82.4 million for the agreed Brazilian settlement and an indemnity it had provided to Keppel Corporation under the business combination of Sembcorp Marine Ltd and KOM. These provisions are said to have a “material impact on the latest unaudited financial statements of the Company for FY2023” and amounts to 12% of earnings per share and 10% of net tangible assets per share as at 31 December 2023.
Seatrium did not mention when the settlement was entered into with the Brazilian authorities. It should disclose this information. This material information should be announced immediately under both the listing rules and the Securities and Futures Act.
Last Friday (23 February 2024), Seatrium’s share price closed 7% down. This reversed a general upward trend in its share price. This raises the issue as to whether the information about the settlement had leaked to the market.
SGX Regco and other regulators should look into whether the information was announced immediately and whether the relevant listing and SFA rules have been complied with.
