Samsung Heavy Industries, SHI, the South Korean ship builder, has been in the news in Nigeria, since January this year following the arrival into the country of the multi-billion dollar Egina Floating Production Storage and Offloading, FPSO, vessel, built by it for Total and partners in the Egina oilfield project.
The arrival of the vessel at the Ladol shipyard in Lagos for the integration of its topsides was ceremonious being that the vessel is regarded as one of the biggest in the world and also because it would be the first time the nation would be witnessing the integration of the topsides of an FPSO locally.
Samsung's good deed in delivering the vessel is however over-shadowed by its corruption history, which has become well-known in Brazil as in Nigeria. Indeed, in Nigeria, like in Brazil, Samsung Heavy Industries has its name etched in a history of graft.
Samsung's graft story in Brazil is represented by the drillerships, Petrobras 10000 and Vitoria 10000. In Nigeria, its corrupt inclination blew open with the award of the Egina FPSO contract and the company's manipulation of the government and NNPC officials to land the multi-billion dollar deal.
Organised bribery
In Brazil. a judge had in 2015 sentenced Nestor Cervero, former international chief of state-run oil firm Petrobras, to over 12 years in prison on charges of corruption and money laundering related to a bribe allegedly paid to the speaker of Brazil’s lower house of Congress.
Cervero and two other defendants were accused of organising bribes from Samsung Heavy Industries in exchange for two drillship contracts, the Petrobras 10000, which was leased jointly by Petrobras and Mitsui in 2006, and the Vitoria 10000, hired by Petrobras in 2007.
Consultant Julio Camargo, who said in a plea bargain testimony that the then speaker of Brazil’s lower house of Congress, Eduardo Cunha, asked him for a $5 million bribe, was given a 14-year sentence that was reduced to reporting to police twice monthly and doing community service because he collaborated.
Lobbyist Fernando Soares, accused of funneling bribes to Cunha’s Brazilian Democratic Movement Party, PMDB, was sentenced to over 16 years in jail.
Cunha, who quitted former Brazilian President, economist and politician Dilma Rousseff’s ruling coalition a few years back, had accused her government of framing him in the broadening scandal focused on Petroleo Brasileiro SA or Petrobras.
He was not a defendant, but the sentences handed down by federal judge, Sergio Moro, gave federal prosecutors in Brasilia more ammunition to bring charges against Cunha and other politicians thought to have benefited from the price-fixing and political kickback scheme.
Cervero’s 12 years and three-month sentence was the second he had received from Moro.
In May 2015, he was sentenced to five years in prison for using a front company to launder money stolen from Petrobras and buy a luxury apartment in Rio de Janeiro. He was fired from Petrobras in 2014 and arrested in January as he stepped off a plane from Europe.
Despite the degree of graft uncovered in the case, executives at Samsung Heavy Industries were not charged, neither were they investigated in the corruption and bribery case. Its officials, therefore, walked away unscathed.
Corruption at home
Prior to the Brazil event, a corruption scandal broke out at the Samsung Group in 2007, leading prosecutors to open a formal investigation into charges that its chairman, Lee Kun Hee, masterminded a broad scheme of bribery and illegal transactions.
Prosecutors had investigated three major accusations of criminal behaviour: the creation of a slush fund; the bribery of prosecutors and government officials; and an effort by the chairman, and his aide to illegally help his son take over control of Samsung.
“We are ready to unveil the truth through a stern, fair and thorough probe,” The New York Times had reported, quoting Kim Kyong Soo, a prosecution spokesman, then as saying.
In previous scandals that have plagued Samsung, several executives were convicted of illegally trying to help Mr. Lee’s son, Jae Yong, take control of management, and of bribing politicians. But Mr. Lee’s family had escaped largely unscathed. This had led critics to charge that Samsung runs a vast network of bribery and influence-peddling through the government, the judicial branch and the media, making the Lee family untouchable — a claim vehemently rejected by Samsung.
A whistle-blower: Kim Yong Chul, Samsung’s former chief lawyer, had also confessed to having been personally involved in bribing and fabricating court evidence on behalf of Mr. Lee and Samsung.
*Again, Samsung denied all of Mr. Kim’s allegations Tuesday, saying that he was turning against Samsung out of “personal grudges.”
However, in a legal complaint filed with prosecutors Mr. Kim, who worked as an internal lawyer for Samsung for seven years until 2004, said that Mr. Lee and his top aides illegally ordered transactions that allowed his son to acquire Samsung shares from Samsung affiliates at unfairly low prices.
When prosecutors investigated one transaction in 2003, Mr. Kim said lawyers in his legal division at Samsung trained Samsung executives to serve as scapegoats to protect Mr. Lee, even though those executives were not involved.
Two of the executives were found guilty in a court ruling in October 2005.
In interviews with South Korean media, Mr. Kim said he was “sidelined” by Samsung after he refused to pay 3 billion won, or $3.3 million, in a bribe to the judge presiding over the case.
Mr. Kim’s accusations later took on a new drama when he gave a nationally televised news conference in a Catholic church in Seoul.
“Samsung instructed me to commit crimes,” he said at the news conference. “A basic responsibility for all Samsung executives is to do illegal lobbying, buying people with money.”
Samsung later issued a 25-page rebuttal denying all major accounts of Mr. Kim’s allegations. It noted that Mr. Kim did not provide evidence to support his claims.
Samsung in Nigeria
An independent investigation by the leading energy publication SweetcrudeReports in 2013 and this month had uncovered how Samsung Heavy Industries was handed over the Egina FPSO project after heavy bribing of corrupt government officials, who have also promised it other juicy upcoming contracts such as Shell's Bonga and Zaba-Zaba led by Agip.
SweetcrudeReports gathered that Samsung bribed its way to land the Egina FPSO contract award, as another South Korean company which participated in the bids tender processes, Hyundai Heavy Industries, HHI, emerged preferred bidder, and was subsequently recommended by the National Petroleum Investment Management Services, NAPIMS, the investment arm of the Nigerian National Petroleum Corporation, NNPC, making the circumstances in which Samsung was selected appear inexplicable.
Checks revealed that Samsung had entered into a partnership with Intels for execution of the Egina FPSO packages and that the Nigerian company had deployed its immense political clout to pressure the NNPC management into breaking its own tendering processes, and rules of engagement.
It was gathered that at a meeting which took place after a Group Executive Committee meeting, held a few days before 2013 Christmas, Mr. Andy Yakubu, the NNPC group managing director, Abiye Membere, the NNPC group executive director and Mr. Tony Madichie, the NNPC secretary and legal adviser, decided to select Samsung for the FPSO package.
The Group Executive Committee, GEC, of the NNPC at the time explained that the rationale behind the award to Samsung Heavy Industries was that the company gave a 5 percent discount on the bid advanced by HHI for the Egina FPSO package. Strangely, HHI was neither invited by the GEC nor afforded the same opportunity to match or best the SHI offer lending credence to talk of bribery.
Subverting Nigerian Content scope The selection of SHI for the Egina FPSO award ran against the grain of due process, the Nigerian Content scope was completely muddled up, putting in jeopardy the possible gains derivable thereof, and the aspirations of the federal government.
Before the Egina FPSO award, Samsung had never executed any project in Nigeria neither did it have any presence in the country.
An NNPC staff who pleaded anonymity had told SweetcrudeReports as far back as 2013, that “Obviously, no aspect of the FPSO package will be executed in Nigeria if Samsung gets the endorsement of the NNPC Board”.
Continuing efforts to obtain a reaction from executives of Samsung have so far proved abortive.
