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Business Crimes Hotline
Former Keppel Lawyer Who Cooperated with U.S. Government Fined and Sentenced to Probation for His Role in Petrobras Bribery Scheme
Jeffrey Chow, 61, a former in-house attorney at Singapore-based shipyard operator Keppel Offshore & Marine Ltd (Keppel) was sentenced on November 15 to one year of probation and a US$75,000 fine in a U.S. District Court for his role in the company's overseas bribery in connection with the Petrobras scandal. Chow, a former Keppel legal department director, entered into a plea agreement with the U.S. Department of Justice (DOJ) in 2017 and plead guilty to one count of conspiring to violate the anti-bribery provisions of the U.S. Foreign Corrupt Practices Act (FCPA). As part of his plea deal, Chow agreed to cooperate with the government in its prosecution of his former employer, its U.S. subsidiary, Keppel Offshore & Marine USA, and joint venture partner, Technip FMC for FCPA violations in Brazil.
Chow's sentencing also followed the December 2017 agreement by Keppel to pay combined penalties of over $422 million to resolve enforcement actions in the U.S., Brazil, and Singapore in connection with bribes paid to executives at Brazilian state-owned oil company Petrobras and a Workers' Party of Brazil official. The majority of these penalties were ordered to be paid overseas: approximately 50% to Brazilian and 25% to Singaporean authorities; and marked the first coordinated anti-bribery action between the DOJ and its Singaporean counterpart. The bribes, paid to assist Keppel to secure rig-building work, had been disguised as legitimate consulting fees paid to third-party intermediaries. In a separate related settlement, oil and gas services company Technip FMC agreed to pay criminal penalties of $296 million to resolve FCPA violations in both Brazil and Iraq.
On the same day that the Keppel settlement was announced, a federal judge issued an unsealing order revealing Chow's identity, which had been suppressed to that point as a "John Doe" cooperator in the enforcement action. According to the Information document filed with the court, Chow had engaged in a number of "overt acts" in furtherance of conspiracy to violate the FCPA. These included coordinating the execution of questionable consulting agreements and corresponding with a Keppel executive about the structure of commission payments to an agent accused of bribing foreign officials. In one email to his secretary in September 2011, extracted in the Information document, Chow had stated:
"Put this in a plain paper and pass to [two other involved Keppel executives], then delete email: Further to our t/c, made the suggestion to have one of us go to explain the situation. However, the problem is that we will not be brought to all involved to explain. As such, need to execute the standard Commission Agreement with [Consultant's company], with the 1.5%, as a copy of this will be showed up the line to convey that this is all. Nothing more. We've signed before for other jobs and have seen other agreements with [Consultant's company] for even larger amounts. Would prefer not to, but the [Commission] Agreement may be the only thing that will satisfy people. Other than reverting to original plan, wherein proof would not be required then. At a loss as to alternatives."
Prior to the bribery scheme coming to light, Chow had worked at Keppel for over 25 years. In his December 2017 plea, Chow admitted drafting and approving contracts with the company's Brazilian agent while knowing that they were being used to conceal bribe payments. He acknowledged ignoring obvious red flags, including millions of dollars in overpayments to an agent in Brazil, while knowing that the bribe recipients were Brazilian government officials. At an earlier plea hearing he stated: "I should have refused to draft the contract that we used for paying bribes and I should have resigned from Keppel … While I didn't negotiate the contracts or make the decisions to pay the bribes, I knew that the contracts existed to make the payments legitimate and that they were an important part of the bribery scheme. I am deeply sorry for my conduct."
U.S. District Judge Kiyo Matsumoto said she had weighed Chow's cooperation against the need to deter similar conduct; and concluded that a prison sentence was not called for. The Judge noted that others involved had remained outside of the U.S. and retained earnings related to the scheme. Prosecutors had sought a sentence below sentencing guidelines (which called for a maximum of five years), describing Chow's assistance as instrumental in the successful prosecution of Keppel as well as the Brazilian consultant used to pay the bribes, Zwi Skornicki. Chow's attorney had previously described him as "working in a bad barrel" rather than being a bad apple, submitting that he had lost his livelihood as a result of his misconduct.
The sentence permits Chow, an American citizen born in New Orleans, to serve his one year probation at his residence in Singapore, and visit his mother in Louisiana.
The case is U.S. v. Chow, in the U.S. District Court for the Eastern District of New York (case number 1:17-cr-00466).
— Juliet Gunev, Mayer Brown
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