Brazilian Court Acquits Two Former Sembmarine Executives in Bribery Case
Two executives related to the former Sembcorp Marine’s operations in Brazil were acquitted last week in the long-running corruption, bribery, and money laundering case related to contracts the company won a decade ago from Brazilian offshore energy company Sete Brasil. The company and its then competitor Keppel Offshore were involved in a wide-reaching corruption case which has come to be known as Operacao Lava Jato (Operation Car Wash) in Brazil.
The case stems back to the competition to win contracts in 2012 from Sete. It has been alleged that consultants and the executives of the operation in Brazil, a subsidiary of the then Sembcorp Marine were involved in various schemes including money laundering and bribery to influence the awarding of the contracts. Sembcorp Marine won seven drillship contracts from Sete Brasil valued at $5.6 billion.
The case has been dogging the companies with settlements over contract disputes dating back to 2016. Sembcorp Marine has provided statements acknowledging the different investigations dating back to 2019 and the 2020 indictment of the two executives based on their personal actions.
The former president of Sembcorp Marine’s Brazilian subsidiary, Estaleiro Jurong Aracruz Ltda, Martin Cheah Kok Choon was indicted in 2020 on charges of money laundering and corruption. Martin Cheah had been terminated from the company in 2015.
The case centered around Guilherme Esteves de Jesus who acted as a business consultant to the then president of the company. He was also indicted in 2020 on charges of money laundering. Another court in Brazil had previously sentenced him to 19 years in jail for related charges of corruption.
Seatrium, which was formed through the acquisition of Keppel by Sembcorp Marine, reports on December 20 the Brazilian Federal Lower Court acquitted the two men of all the charges that had been brought against them personally related to the allegations of corruption. The charges were not against the company. They note in the announcement that the Brazilian Federal Prosecutors’ Office may appeal the court’s decision.
In March 2023, the Office of the Comptroller General of Brazil (CGU) published a notice in the official gazette informing of the ongoing investigation into the company’s subsidiary, Estaleiro Jurong Aracruz. Reports were that the investigation was later suspended but the case has continued to linger over the company. Singapore’s Corrupt Practices Investigation Bureau in June 2023 also started a new investigation which the company linked to the pre-2015 activities of Sembcorp Marine’s subsidiary in Brazil.
After the latest developments in Brazil, Seatrium writes, “The company cannot predict how the abovementioned decision by the Brazilian Federal Lower Court will impact the current investigations or allegations relating to Operation Car Wash.”
The company reiterates that it is fully cooperating with the Brazilian authorities and monitoring developments in the investigations. They also said that they do not condone and will not tolerate improper business conduct, but that the potential outcome of the investigations into Operation Car Wash is still uncertain.
China Sentences Ex-Chairman of Shipbuilder CSIC to Jail in $8M Bribery Case
A court in Shanghai sentenced the former chairman of China Shipbuilding Industry Company (CSIC), Hu Wenming, to 13 years in jail after a three-and-a-half-year investigation on charges of accepting bribes and abuse of power. Hu had been one of the leaders in the shipbuilding industry including heading China’s aircraft carrier development program and engineering the merger to create China State Shipbuilding Corporation (CSSC).
Hu was found guilty of taking advantage of his positions of leadership for personal gain and causing “huge losses to national interests.” According to the court papers, he helped organizations and individuals in project contracting, business cooperation, asset acquisition, personnel promotions, and deposit collections. The court ruled he accepted cash and property valued at $8.4 million.
Hu, age 66, had started his career in 1975 and been a member of the Community Party since 1978. He retired in 2019 when the merger of CSSC and CSIC was completed. He was expelled from the Party in January 2021 about seven months after the corruption charges were first announced.
During his career, he was a deputy general manager of the Aviation Industry Corporation of China and later became deputy general manager of CSIC. It was there that he would become head of the carrier program and rise to the role of chairman of CSIC. Hu was accused of using his position between 2001 and 2015 for his personal gain. They alleged he abused his position as chairman of CSIC and party secretary from 2013 to 2015 while helping to drive the effort to merge the two shipbuilding companies to create the largest shipbuilder in the world.
They alleged while in the role of chairman and secretary, he accepted bribes and deliberately violated the management duties of a state-owned company. He was reported to have acquired the assets of private shipyards which he profited from by making them subsidiary companies of CSSC during the merger.
He was ordered to serve 13 years in jail for his crimes and was also fined $700,000. The court ordering the monies he stole to be returned to the state treasury.
This is the third high-profile case of corruption prosecuted by the state against the executives of CSIC. In 2017 and 2018, they charged the yard’s “head of discipline,” and its general manager also with abuse of power, accepting bribes, and corruption. The yard’s former general manager, Sun Bo, was sentenced to 12 years in jail when he was found guilty of corruption.
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