A BRIBERY scheme of US$55 million (RM220 million) continued over 10 years undetected. Not a squeak within Singapore or Keppel. As recent as 2016, Keppel denied allegations that it bribed to win Petrobras contracts. Instead it was Brazil’s investigations into Petrobras and its politicians that unearthed Keppel’s wrongdoing.

How did the Singapore government not see the large-scale corruption in its own GLC? Temasek Holdings owns 20.43% of Keppel Corporation. Keppel Corporation’s wholly owned subsidiary, Keppel Offshore & Marine Ltd. (Keppel O&M) signed a deferred prosecution agreement with the US Department of Justice (DoJ) to pay US$422 million for its subsidiary’s violation of the Foreign Corrupt Practices Act (FCPA).

According to DoJ, Keppel took action against 17 people. That’s a lot of people implicated. Yet not one of them tried to stop the bribery scheme between 2000 to 2013.

Fear and futility are the two primary reasons people do not report wrongdoing.

Singapore’s anti-corruption laws are weak and its work culture does not encourage reporting.

Unlike Malaysia and most developed economies, Singapore does not have whistleblowing protection laws. It is easy to terminate employees by giving them notice. For expatriate workers, this means leaving Singapore at short notice, uprooting their families. It is harder to fire people in Malaysia. Employers must give clear grounds for dismissal and follow a stringent process.

When an employee is asked to facilitate a bribe, his first instinct is to refuse. But he is riddled with fear. Would he lose his job? He wants to tell someone in order to stop it, but who can he trust?

Retaliation against whistleblowers is real. Therefore it is important that a whistleblower knows that he can disclose wrongdoing anonymously and feel safe that he will not lose his job or worse, be physically harmed. And without strong evidence, would he be sued for defamation?

The US Sarbanes Oxley Act requires listed companies to provide independently operated hotlines which allow anonymous reporting. Keppel Corporation is listed but does not have a hotline. After much searching on its website, I found its “whistleblower policy”. Employees may approach internal audit, with the warning that action would be taken against false reporting. Hardly encouraging for the scared whistleblower.

The employees could have reported the wrongdoing to the Corrupt Practices Investigation Bureau (CPIB). But the bureau head is appointed by the prime minister. The prime minister is married to the CEO of Temasek Holdings. This casts doubt on the ability of CPIB to objectively investigate any Temasek company. Employees would naturally worry what if their report leaks back to Keppel and their neck is on the line?

Singaporeans are drilled into obedience. Great for the military but less so in the corporate world. An obedient person will face conflict when asked to process payments to a Brazilian agent’s bank account. He may be suspicious but if he has never learnt to question his superiors, he’s unlikely to suddenly become brave and report them. He will do what he is told, and stay silent. After all, he must trust that what his bosses are doing are for the best and who is he to question them?

The concept of blind obedience was identified as one of major causes behind the Fukushima nuclear reactor disaster.

“What must be admitted – very painfully – is that this was a disaster ‘Made in Japan’. Its fundamental causes are to be found in the ingrained conventions of Japanese culture: our reflexive obedience; our reluctance to question authority; our devotion to ‘sticking with the program,e’; our groupism; and our insularity,” said the Fukushima Nuclear Accident Independent Investigation Commission

What leaders say has a big impact. In 2015, Prime Minister Lee Hsien Loong reminded the public service: “We watch Singapore’s rankings internationally on corruption, on transparency, on the quality of government, very closely… Overall, we have done well – usually among the top few in the world, and in Asia, the top one or two and usually by a long way.

“In our own region, Southeast Asia, corruption is endemic. It is a cancer in so many countries.

“Fortunately, in such a complicated world, Singapore is the shining exception. But never take this for granted. Not only must we uphold our high standards, which already takes unremitting effort, but we must enhance them, and maintain our zero tolerance for corruption ...”

Hubris makes people blind. The louder you shout about your achievements, the harder it is for people to tell you that you’re wrong. Who wants to be the person who says, er, PM Lee, let me point out to you the little greasy stain on our spotless image?

And Singaporeans do not tell their leaders they are wrong. So if they discover something that does not fit into the perfect picture, the natural reaction is to cover it up. After all, you do not want to air your dirty laundry in public. Face saving is key.

It could very well be that Keppel O&M’s management covered it up. That it went no higher. Because for Keppel Corporation or even Temasek to know about it would be to acknowledge their hypocrisy. Ho Ching as CEO complicated matters, which is why good governance dictates that spouses of heads of government relinquish their business interests.

It is precisely this that could have deterred Keppel’s O&M’s executives from blowing the whistle. They may have feared that Keppel’s corruption was condoned at the highest levels. Speaking up could come at great personal cost. Besides losing their jobs, they could be societal outcasts. In a small country like Singapore, its devastating.

When you are in a clean environment, naivety develops. You will not recognise corruption. Keppel’s employees, auditors and other gatekeepers may have unquestioningly accepted that large payments to an entity in the US under the terms of a “consultancy agreement” were genuine. After all Keppel is a GLC of Asia’s cleanest country. Even if an employee discovered the truth, they would chose to believe what is told to them.

Even after the expose. Singapore’s mouthpiece, the Straits Times published a letter explaining why Keppel O&M shouldn’t be penalised.

“Paying bribes abroad is sometimes viewed as an almost unavoidable cost of doing business. We should not allow our MNCs to suffer from an uneven playing field because foreign competitors are happily paying bribes,” it said.

What this Singaporean does not realise is that the rest of the world has moved on. Globally, there is a huge battle against corruption, fraud and bribery. Singapore’s laws, including its Prevention of Corruption Act languishes behind these countries – all of which rank lower than Singapore on TI’s CPI:

Malaysia formed an Anti-Corruption Commission (MACC) with stronger powers than Singapore’s Corrupt Practices Bureau. Recognising that government corruption, including within GLCs, is a problem, MACC officers are seconded to GLCs. The law may be amended further to introduce corporate liability and to grant MACC the power to prosecute.

South Korea realised the custom of giving gifts and entertaining was being abused and in 2016, enacted a law prohibiting meals with officials (including journalists and teachers) above US$27 and gifts above US$45.

The UK Bribery Act in 2010 made businesses criminally liable for failing to prevent bribery on their behalf. As a defence, businesses need to prove that they have adequate procedures in place to prevent bribes. Enforcement agencies have focused on charging individuals, particularly senior executives. Barclays former CEO and three senior executives are charged for fraud involving Qatari investments.

The US has taken a similar tack in going after individuals. In 2015, the DoJ issued the Yates Memo to hold individuals accountable for corporate wrongdoing. Rather than merely penalise corporations which ultimately were paid for by shareholders, DoJ’s focus is to investigate individuals within the organisation and charge them accordingly. Rolls Royce, Volkswagen and Wells Fargo are among the more high profile cases.

Keppel is now in the FCPA Top Ten of highest penalties. It holds 7th place. Singapore is the only non Western country on the list.

Singapore is now at the crossroads. Pretend that Keppel is a small matter and the individuals have been dealt with or tackle the ugly beast head on. That second option may need the Prime Minister and his wife to step aside to allow full transparency to ensure the real culprits are brought to justice. But I see Singapore taking the easy way out. Platitudes that all is well, move on. Take that route and Singapore’s shining model that Lee Kuan Yew worked so hard to build is destroyed. In the eyes of the world, Singapore is dirt.

* Animah Kosai, formerly a lawyer in the oil and gas industry, is the founder of Speak Up, which aims to raise awareness of how corporate wrongdoing can be reduced by enabling employees to speak up. 
 

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.