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Seatrium to pay $76.5 mil to Singapore authorities under deferred prosecution agreement

Felicia Tan
Felicia Tan • 2 min read
Seatrium to pay $76.5 mil to Singapore authorities under deferred prosecution agreement
A provision for the sum has already been made in the group’s financial statements for the FY2023. Photo: Seatrium
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The Attorney-General’s Chambers (AGC) has agreed to enter into a deferred prosecution agreement (DPA) with Seatrium following the alleged corruption offences that occurred in Brazil.

Under the DPA, Seatrium is required to pay a financial penalty of US$110 million. Of the total sum, the AGC has agreed to credit up to US$53 million of the payments to the Brazilian authorities against the penalty.

As such, Seatrium will have to pay US$57 million or $76.5 million.

In a separate update, Seatrium says it is including this provision in its FY2023 income statement, which means, the company's net loss for the year ended Dec 31, 2023, is now $2.03 billion instead of $1.95 billion reported earlier.

The other terms of the DPA are to be agreed between Seatrium and AGC in due course.

On March 28, the AGC and Corrupt Practices Investigation Bureau (CPIB) announced that two former Sembcorp Marine S51 -

(SembMarine) employees were charged with bribing officials in Brazil between 2009 and 2014.

See also: Cordlife files police report against group of 'mostly former' employees over storage tank incident

One of them is the former president, executive director and CEO of SembMarine, Wong Weng Sun, who was the managing director of its wholly owned subsidiary Jurong Shipyard (JSPL) when the offences were allegedly committed. The other individual charged is Jurong Shipyard's senior general manager, Lee Fook Kang.

In its March 28 note, DBS Group Research says investors were not expecting these further penalties from the Singapore authorities.

"But we believe it is good that Seatrium can finally put a closure to Brazil Operation Car Wash overhang, that has been haunting them since 2015," says DBS, which notes that the further penalties of $76.5 million is just 1% of the company's NAV. 

See also: Cordlife Group to raise $8.2 mil via proposed placement

DBS notes that Seatrium's share price has been dragged down by several not-so-good news in recent times such as the cancellation of the Empire II HVDC project and US offshore wind supply chain issues, kitchen-sinking FY2023 results and “disappointment” on 5-year financial targets. 

"While these have dampened sentiment and confidence in Seatrium, the good integration progress post-merger and improving operating results needs to be factored in as well," adds DBS.

"We believe the continuous operational improvement and an uptick in contract flows could restore investors’ confidence and drive share price forward," says DBS, which has kept its 'buy" call and 15 cents target price.

Seatrium shares closed at 7.9 cents on March 28, unchanged for the day.

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