Brazilian Authorities Launch Probe Against Sembcorp Marine Unit

Published Mar 24, 2023 11:19 am ET

Illustration only - Estaleiro Jurong Aracruz (EJA), in October 2022 completed the construction of the P-71 FPSO, integrating topsides on the China-built hull. Petrobras started oil production from the FPSO in December of the same year - Credit:Estaleiro Jurong Aracruz

Brazilian authorities have reportedly launched a preliminary investigation into the Brazilian subsidiary of the Singapore-based marine and offshore engineering group Sembcorp Marine.

"Sembcorp Marine Ltd wishes to inform that it has come to its knowledge that the Office of the Comptroller General of Brazil (“CGU”) has published a notice in the Official Gazette (the “Notice”) to the effect that CGU has initiated a preliminary administrative liability proceeding against the Company’s subsidiary, Estaleiro Jurong Aracruz Ltda (“EJA”) for the investigation of alleged irregularities practiced by EJA," Sembcorp Marine said Friday.

The company said that the CGU notice did not provide further facts,"and the company is currently unable to assess the matter or impact, if any."

"EJA is cooperating fully with the authorities. The company will continue to monitor developments in Brazil with respect to the above, and will make appropriate announcements in the event of any material developments," Sembcorp Marine said.

In a subsequent update, Sembcorp Marine on March 29, Sembcorp Marine said it had clarified with the Comptroller General of the Union (“CGU”) that the preliminary administrative proceedings for investigations started by CGU against its Brazilian subsidiary Estaleiro Jurong Aracruz Ltda. (“EJA”) related generally to past conduct investigated by the Brazilian authorities in connection with Operation Car Wash, "of which the company has previously made announcements, the latest being the circular to shareholders dated 31 January 2023."

"Further, the CGU has not brought any civil or administrative charges against the Company or its subsidiaries. The Company will continue to cooperate and work with the Brazilian authorities. The company will continue to monitor developments in Brazil with respect to the above, and will make appropriate announcements in the event of any material developments," Semcorp Marine said.

Operation Car Wash has been described as Brazil's largest corruption scandal, in which government and business officials have been accused of taking bribes from services companies in exchange for hefty Petrobras contracts.