Seatrium under CPIB investigation for alleged corruption: What you need to know

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By Beansprout • 01 Jun 2023 • 0 min read

The Corrupt Practices Investigation Bureau (CPIB) has started an investigation into Seatrium (formerly Sembcorp Marine) on alleged corrupt offences in Brazil.

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What happened?

The Corrupt Practices Investigation Bureau (CPIB) has started an investigation into Seatrium (formerly known as Sembcorp Marine) and individuals from the company on alleged corrupt offences that occured in Brazil. 

Seatrium believes that this relates to events that occurred prior to 2015 and to the Sembcorp Marine group in existence at that time. 

This would mean that these events would have taken place before the merger with Keppel Offshore & Marine in February 2023. 

Let us dive deeper to understand how this latest development may affect Seatrium's share price performance.

What you need to know about Seatrium

#1 - Seatrium was under investigation for 'alleged irregularities' by Brazilian authorities in March 

Earlier in March this year, Seatrium announced that its subsidiary Estaleiro Jurong Aracruz (EJA) was under investigation for “alleged irregularities”.

According to Seatrium, the Office of the Comptroller General of Brazil (CGU) has initiated a preliminary administrative liability proceeding against its subsidiary Estaleiro Jurong Aracruz (EJA). 

The CGU is Brazil’s anti-corruption agency “responsible for defending public assets” and “acts to prevent, detect and punish cases of corruption”

These relate to investigations of alleged irregularities practiced by EJA, Seatrium’s shipyard in Brazil which started operations in 2014.

However, the Seatrium announced that these proceedings were suspended in April 2023, and it will continue to cooperate with the Brazilian authorities. 

#2 - Seatrium had brushes with Brazilian authorities earlier

Seatrium had faced several brushes with Brazilian authorities previously. Here’s a quick recap of what happened in the past.

What would Beansprout do?

Seatrium share price.png
Source: SGX as of 24 March 2023

 

When Seatrium announced that its subsidiary was under investigation in March, its share price fell by 8% in one day. 

The share price of Seatrium subsequently recovered after proceedings were suspended. 

As its strong order wins led to an increase in its orderbook to above S$20 billion, Seatrium's share price has bounced back strongly since, closing at S$0.123 as of 31 May 2023.

As with the previous episode, Seatrium's share price could see a knee-jerk selloff at the back of this news. The investigations could dampen its share price performance until there is more clarity on the outcome. 

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