24 April 2018
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Keppel O&M wants EIG's 2nd suit dismissed

Straits Times
14 Apr 2018
Grace Leong

It says losses by investors in oil giant's unit were not due to its kickback payments

Keppel Offshore & Marine (O&M) is trying to get the United States federal court to dismiss a second lawsuit brought by a US fund manager to recover US$221 million (S$290 million) in lost investments.

In defence papers filed on March 30, the Keppel Corp unit said EIG Management "offered no facts to support proof of intent" by Keppel O&M to defraud investors of their investment in Brazilian oil giant Petrobras unit Sete Brasil, which went bust after Brazil's biggest corruption scandal was exposed in 2014.

EIG filed its second suit in February under the Racketeer Influenced and Corrupt Organisations (Rico) Act, after its first case was dismissed in April last year.

But the latest suit "does not allege a meeting, conversation, event or document showing an agreement among the conspirators to defraud the investors", Keppel O&M said.

Also, the investors' losses were the "result of material false statements and omissions in investor materials made... by Petrobras and Sete, not kickback payments Keppel made to obtain six drillship contracts with Sete," Keppel O&M said.

EIG had alleged that Keppel O&M authorised bribes, from 2001 to 2011, of about US$40 million to Petrobras and Brazil's Workers' Party to secure seven contracts worth US$4 billion. From 2012 to 2014, Keppel allegedly authorised US$14.4 million of bribes to secure six drillship contracts with Sete.

But Keppel O&M argued that EIG had not proven its investors' money was used to underwrite kickbacks by Keppel. The offshore marine unit also disputed allegations that its bribery and money laundering would have continued at least to next year but for the Brazilian government's investigation.

"The only Sete-related payments alleged in the complaint were made between September 2013 through 2014, a period of less than two years," Keppel O&M pointed out.

EIG, in a response filed on April 4, called Keppel a "member of a criminal organisation that conspired to and did carry out a long-running bribery and kickback scheme... in violation of the Rico Act".

It said the overall objective of the conspiracy was to carry out the bribery and kickback scheme via Sete, and a necessary part of that scheme was to solicit investment funds through fraudulent means. When Brazilian prosecutors discovered this scheme, "Sete collapsed into bankruptcy, and EIG's investment in Sete evaporated", EIG said.

Keppel's admission that it committed violations of the Foreign Corrupt Practices Act when it reached a deferred prosecution agreement with the US Department of Justice in late December "constitutes admissions that it conspired to and did commit the Rico acts of Travel Act violations and money laundering", EIG added. "Keppel, as it admitted in the DPA (deferred prosecution agreement), routed bribes through New York City banks with the intent to promote and conceal its unlawful activity," it said.

The global settlement in late December with the US, Brazil and Singapore related to US$55 million in bribes paid by Keppel O&M from 2001 to 2014 to officials at Petrobras and the Workers' Party to secure 13 contracts with Petrobras and Sete.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.