February 14, 2008
SembCorp Marine to take US$208 million Q4 charge
SembCorp Marine says that its wholly-owned subsidiary, Jurong Shipyard Pte Ltd (JSPL) has now reached a full and final settlement with 9 of the 11 banks involved in a dispute over foreign exchange transactions. The agreements reduce the amount in dispute from US$303 million to $258.7 million.
In compliance with Singapore Financial Reporting Standards, a sum of US$208.0 million will be expensed in the Group's 4Q 2007 Profit and Loss Statement and US$50.7 million will be disclosed as a contingent liability.
SembCorp Marine's forex woes first became public on October 22, 2007, when the company announced that its former Director, Group Finance, Mr Wee Sing Guan, had entered into various unauthorized foreign exchange transactions (for the account of JSPL.
On November 1, 2007, SembCorp Marine reported that it had successfully negotiated the close out of all outstanding unauthorized transactions with 11 banks without prejudice to JSPL and the banks' positions as to whether the transactions were valid or binding on JSPL.
SembCorp Marine says today that JSPL has now reached full and final settlement with nine of the 11 banks involved, "all strictly on commercial basis, as JSPL deems it in its best interests to avoid incurring substantial time and expense to engage in complex litigation with these banks. All the commercial settlements were entered into without any admission on the part of JSPL or the banks as to whether the Unauthorized Transactions were valid or binding on JSPL."
The net position arising from the unauthorized transactions has now been reduced from US$303 million to US$258.7 million. The breakdown is as follows:
The amount of US$198.9 million paid to Societe Generale is comprised of US$83.5 million paid before the unauthorized transactions were uncovered in October 2007 and US$115.4 million that was paid as a pre-condition for closing out of transactions with JSPL, subject to JSPL's right to a refund of the monies from Societe Generale if the dispute is resolved in JSPL's favor.
JSPL intends to recover from Societe Generale the sum of US$198.9 million. The US$50.7 million claimed by BNP Paribas is disputed by JSPL.