10 January 2018

Keppel and Lava Jato corruption: Is there a cover-up in Singapore?

News of Keppel Offshore & Marine's (Keppel O&M) decade-long bribery in Brazil has filtered slowly into Singapore. The initial announcements in 2014 happened in a country far away. The denials by Keppel's chairman, a former cabinet minister, were robust enough. What really did happen? Investigations were taking place and Singaporeans were willing to give the benefit of the doubt, hoping that all would be revealed in due course.

It is only after investigations have been complete, record regulatory fines paid to anti-corruption agencies in Brazil and the United States that Singaporeans are beginning to realise the enormity of the situation (the enormity being Keppel's fine ranks number 7 in FCPA penalties, historically!)

Lava Jato involved international companies paying bribes to Petrobas,
kickbacks moved down the economic chain, and to also the ruling party and its coalition
But the response from Singapore's government has been most disappointing and a cause for concern.

Meaningless conditional warnings by anti-corruption watchdog

A government in Brazil has fallen, a new ruling party ushered in, and countless more politicians, officials, and companies continue to be implicated, investigated, and jailed. Regulators in the US and Brazil have concluded their investigations, found many guilty in court (including former Keppel officials who pleaded guilty), and issued hefty fines to all major players involved in Brazil's pay for play racket.

What has happened in Singapore appears to be far more lenient than a slap on the wrist. The Corrupt Practices Investigation Bureau (CPIB), previously a fierce anti-corruption body that struck fear in both the public and private sector, has lost all sense of proportion and issued a "conditional warning" to Keppel Corporation, the parent of Keppel O&M. The terms of that conditional warning are secret.

Okay, this guy's reaction is even more lenient and meaningless than CPIB's
Following the illustration of Jolovan Wham v AG, it follows that Keppel has gotten off with nothing more than an opinion by the CPIB that amounts to nothing, legally. Any warning, as the court tells us, is not an indication that a crime has been committed; it is only the opinion of the issuing authority that it believes a crime may have been committed, but it is only the court that has the power to declare if it is so.

Not only has Keppel gotten away with a warning that has no legal effect or indication that it has indeed committed serious crimes, the warning comes with secret conditions. The public will not be able to know if these secret conditions are the standard ones (i.e. CPIB will recommend prosecution for this case if Keppel or its subsidiaries are accused of any similar crime within a period of x years) and thus ineffectual and lighter than a slap on the wrist, or whether these secret conditions are of a special nature that should properly be made in open, given public interest, Keppel's status as a government-linked and government-owned company, and the international nature of its crime.

Meaningful evasion in Parliament

Following the unique traditions and customs of Singapore, the very next session of parliament was dominated by the Keppel issue. MPs asked for more information on the corruption investigations, a clearer stance by the Singapore government on Keppel, a company owned in the name of the Singapore government, and most importantly, they asked for the government whether more steps will be taken to discipline Keppel.

The answers provided by Indranee Rajah, the senior minister of law, were most illustrating, if the purpose was to obfuscate.

A whole bunch of nothings;
infographic courtesy of Andrew Loh
Like the CPIB, the government's response is one that has lost all sense of proportion, given Keppel's officials have admitted to investigators and regulators in two other countries that they participated in Brazil's largest pay for play racket in decades.

Here, the government delays punitive action in the name of "ongoing investigations". It appears that when it suits its interest and helps avoid sharp questions, the government does believe in the principle that one is innocent until proven guilty to the ridiculous extent that even when admissions of guilt have been made and punitive fines have been meted out in two other countries, Keppel O&M and its directors are still under investigation in Singapore and thus innocent until guilty in Singapore. This presumably frees the Singapore government from comment or calls for deeper investigations.

The senior minister of state also appears to have invented from thin air a state policy that veils the operation of government-owned companies from their sovereign fund, and that sovereign fund from government oversight. Is this policy a novel instrument designed to enable overseas subsidiary to commit crimes overseas without being answerable and accountable to Singapore's sovereign fund and its government, or is this merely a poorly designed policy, a bad policy?

In other words, is there an undergoing cover-up of Keppel or is this a sign of incompetence of the civil service and the government?

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