By Khairie Hisyam
MISC has denied any knowledge on its alleged involvement in a global bribery and corruption scandal that centres around its Kikeh field partner SBM Offshore.
“At this point in time, we do not have any further information on the matter other than allegations that were made in Wikipedia and media releases made by SBM Offshore pertaining to the matter on Feb 7 and 10, 2014,” said the Petronas subsidiary in response to KiniBiz queries.
KiniBiz reported yesterday that MISC’s name had surfaced in an internal SBM Offshore document listing possible fraud by the company in various countries spanning Africa, Equatorial Guinea, Brazil, Iraq, Kazakhstan, Italy and Malaysia.
The contents of the document were posted on Wikipedia on Oct 18, 2013 by a disgruntled SBM Offshore employee after he failed to extort money from the company in exchange for not disclosing its contents, according to SBM Offshore who was speaking to Dutch business magazine Quote.
Quote reported last week, quoting SBM Offshore, that the former employee had demanded some €3 million (RM13.69 million) from SBM Offshore to keep mum on the document’s contents but the company had refused to pay.
In the document, the single entry on Malaysia noted that payments were made “to Barnado Limited and Delcom Limited totalling approximately US$10,000,000, paid on (ie. by way of bribes) to ‘MISC’ for the Kikeh FPSO (leased to US oil company Murphy)”.
However the sum of the transaction at US$10 million (RM33.4 million) linked to MISC Berhad appears small in comparison to the estimated total value of SBM Offshore’s much publicised bribery scandal, totalling US$250 million (RM834 million) in bribes and other malpractices spanning six years from 2005 to 2011.
“MISC is fully committed to operating our business with integrity,” said MISC Berhad to KiniBiz. “The MISC Code of Conduct and Business Ethics (“COBE”) prohibits us from engaging in bribery, corruption and any forms of unethical practices in relation to MISC Group’s affairs or business and we certainly do not condone such acts by any employee or party performing works or services for or on behalf of MISC Group of Companies.”
A check on MISC’s website shows that the COBE was officially adopted by the company through a special resolution dated Aug 15, 2012 based on parent company Petronas’ own code of conduct.
It is not immediately clear when the alleged bribery transaction took place, but it is notable that Delcom Limited, one of the two recipients named, was involved with SBM Offshore and Murphy Oil in a fluid transfer lines (FTL) Gravity Actuated Pipe (GAP) project at Kikeh field between 2006 and 2007, which raises the possibility that the alleged bribery transaction may have taken place around that time.
The FTL GAP project was then the first such system in the world. Notably, the Kikeh field, located 120km northwest of Labuan, also marked the first deepwater oil discovery as well as the first floating production, storage and offloading (FPSO) in Malaysia.
Kikeh field is operated by Murphy Sabah Oil Company on behalf of its partner Petronas Carigali on 80:20 ownership basis, comprising an FPSO vessel which receives production from wells drilled from a Spar dry tree unit that has 24 slots. The field is said to have a recoverable reserve base in excess of 400 to 700 million barrels of oil.
MDFT Labuan and MDPX Sdn Bhd, two joint venture companies between SBM Offshore and MISC, own and operate the FPSO respectively.
However it not immediately clear what role Barnado Limited plays in relation to the Kikeh FPSO.
For 3Q13 ending last September, MISC posted RM401 million in net profit from RM2.16 billion in quarterly revenue, up from RM138.8 million in net profit recorded from RM2.15 billion revenue in 3Q12.
Year-to-date, MISC’s 9MFY13 net profit stands at RM1 billion from RM6.82 billion in revenue, an improvement over RM49.13 million in net profit from RM6.72 billion revenue in the previous corresponding period in 2012.
It must be noted however that in 9M12 MISC’s net profits were dragged down by losses from discontinued operations amounting to RM637.5 million.
MISC is expected to announce its 4Q13 results later this week.
At 12.15pm, MISC was traded at RM6.20, up 10 sen.
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