Singapore's Keppel initiated arbitration proceedings on Tuesday against the local shipbuilder Seatrium over a S$68.4million ($53.33million) claim relating to a Brazilian corruption crackdown.

Seatrium made a provision of S$82.4m in 2022 to pay Keppel for claims relating to Operation Car Wash, the crackdown.

Seatrium stated that the obligation to pay Keppel had expired by February this year, and that there were no legally binding agreements with Brazilian authorities signed before then.

Seatrium announced earlier this year that it would pay 728,9 million Brazilian Real ($134.45 millions) to authorities in South America as part of leniency deals.

Keppel said Tuesday that Seatrium owed S$68.4 millions upon signing the final agreement.

Seatrium is reviewing all the allegations and claims made in the arbitration proceedings and will vigorously defend them.

Seatrium was created in 2023 when Keppel’s offshore and maritime segment merged into Sembcorp Marine. Sembcorp shipyard was searched by Brazilian authorities as part of an investigation into graft.

These investigations were part the Operation Car Wash in Brazil, which was launched to combat corruption. Operation Car Wash began in 2014 to expose corruption schemes throughout the region. It sent dozens of Latin American business and political leaders, including former presidents, to prison.

(source: Reuters)