Seatrium to pay over S$240m to Brazilian, Singapore authorities over corruption offences

[SINGAPORE] Seatrium is putting a long-running corruption case behind it with financial penalties of more than S$240 million to be paid to the authorities in Brazil and Singapore.

On Wednesday (Jul 30), the company announced that it signed a leniency agreement with Brazilian authorities in relation to Operation Car Wash – a major corruption probe in the country.

In 2023, Brazilian authorities commenced proceedings against Seatrium’s subsidiary Estaleiro Jurong Aracruz for its past conduct linked to the probe.

Seatrium will make a final settlement payment of around S$168.4 million under the leniency agreement.

Additionally, it is required to pay a financial penalty of US$110 million under a deferred prosecution agreement (DPA) it signed on Wednesday with Singapore authorities, which is now subject to approval of the Singapore High Court.

As the Attorney-General’s Chambers has agreed for a maximum of US$53 million of Seatrium’s payments to Brazilian authorities to be credited against this financial penalty, the company is required to pay Singapore authorities a sum of US$57 million, or around S$73.3 million, under the DPA.

This news comes one day before it is due to announce its first-half earnings on Jul 31.

Seatrium said that there will be no material impact to its net earnings and net tangible asset per share for the financial year ending Dec 31, 2025. This is because it had previously made provisions in its financial statements for the in-principle settlement payment and financial penalty. 

The group called for a trading halt on Wednesday morning, before the announcement. The trading halt has since been lifted.

Shares of Seatrium fell to S$2.29 after the announcement, 3.8 per cent or S$0.09 below Tuesday’s closing price, with some 9.2 million shares changing hands as at 11.41 am.

It was trading at S$2.35 as at the midday trading break, down by 1.3 per cent or S$0.03, with some 13.7 million shares transacted.

The Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) have informed Seatrium that their joint investigation into its potential offences has concluded, the company said.

Moreover, the authorities added that no action will be taken against Seatrium or its employees.

On Wednesday, Citi assigned Seatrium a “buy” call and a target price of S$2.65.

“Although the share price had recovered from the lows during the initial MAS and CAD investigation announcement, we believe the conclusion of the investigation will lift the remaining overhang on Seatrium. The next milestone (or hurdle) to future value creation may come with improving margins and financials during the results,” the bank said.

“We apply a target multiple of 1.2 times on FY2026 (estimates) as we believe the market will look into its long-term prospects as new higher-margin contracts should raise returns further and push return on equity higher,” Citi said.

Seatrium said that it is “keen to move forward” and to ride on energy market tailwinds. It added that it has zero-tolerance for fraud, bribery and corruption.

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