Keppel O&M Corruption Case – Is the G Corrupt or Incompetent

Most Singaporeans were shocked when it was announced on 27 Dec that Keppel Offshore & Marine (KOM) had to pay a staggering fine of US$422.2 million (S$570 million) for corruption. After all, KOM is a Government-linked Company and has on its Board prominent Singaporeans including ex-Ministers.

The opposition Workers’ Party wasted no time in filing a Parliamentary Questions about the case insinuating that the G is either corrupt or incompetent? But let’s put aside the rhetoric and look at the facts of the case.

Competency. According to US court testimony, the corruption was orchestrated by senior Keppel executives including Tong Chong Heong (former senior executive at Keppel Corp.); Tay Kim Hock (former CEO of Keppel Fels, Brasil); Tay Kim Hock (current CEO at Keppel Fels, Brasil) and Choo Chiau Beng (former Keppel Corp. CEO). No evidence was provided that members of the Board were involved. While it is easy to criticise the Board of incompetency for not detecting the corruption, it is realistically extremely difficult to detect corruption when a group of senior level executives conspire to mislead the Board. This is because those that are meant to be the check and balance to the system are part of the collusion. Hence unless there is a whistle-blower, the corruption will continue for years. In this instance, the corrupt executives disguised the kickbacks as part of the contracted amount and when profits margins are reasonable, there is no reason to suspect anything unusual.

Corrupt. As the US Court has found no evidence to suggest that anyone on the Board was aware of the kickbacks, it is unfair to conclude that the G is corrupt. The illegal payments were deliberately concealed by those complicit in the bribery and structured as agency fees. The agency fees were NOT approved by the boards of Keppel Corporation or KOM as they were built into the contract values of the respective projects and bidding for projects is in the ordinary course of KOM’s business.

The G has a zero-tolerance for corruption and will surely deal firmly with those found guilty as they have always done in the past. The actions of a group of rogue employees conspiring to mislead their Board of Directors cannot be taken to mean that the entire organization is corrupt.

So, in answer to the question of whether the G is corrupt or incompetent, my conclusion is that they are neither.

OS

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