Rig builder Sembcorp Marine said on Wednesday that authorities had executed a search warrant on its shipyard in Brazil as part of an ongoing graft investigation, sending its shares sharply lower.
Sembcorp Marine said the search was in relation to investigations against former consultant Guilherme Esteves de Jesus, adding that the former president of the shipyard Estaleiro Jurong Aracruz, Martin Cheah Kok Choon, was also under investigation.
The probe comes as Sembcorp Marine is already struggling with falling profits due to a downturn in the global offshore and marine industry.
Sembcorp Marine said the investigations were related to Operation Car Wash - a huge bribery case that has engulfed corporate and political sectors in Brazil for years.
The Company has co-operated fully with the Brazilian Federal Police and provided materials within the scope of the warrant, Sembcorp Marine said in a statement.
Sembcorp Marine's shares fell as much as 7.8 per cent in Singapore on Wednesday - on track for their biggest daily fall in one and a half years - while Sembcorp Industries dropped 2.8% before paring some losses. The broader market was down 0.4 per cent.
Rival Keppel Offshore & Marine, a unit of conglomerate Keppel Corp, agreed in late 2017 to pay a US$422 million fine to resolve charges it bribed Brazilian officials.
Last month, Sembcorp Industries, its biggest shareholder, provided Sembcorp Marine with a US$ one billion loan to help it retire borrowings as well as for working capital and general corporate purposes.
Sembcorp Marine could use some of that to pay off any potential fines, said Joel Ng, an analyst with KGI Securities.