2006 Founded as Odebrecht Oleo e Gas SA (OOG)
2010 Temasek invested US$400m (Oct 2010)
2018 Name changed to Ocyan SA
Operation Car Wash :
In 2014 Brazilian police conducted Operation Car Wash, a criminal investigation into money laundering which is still ongoing. It has resulted in more than 1,000 warrants of various sorts in Brazil. The investigation expanded into corruption at very high levels of the governments of Brazil, Argentina, Panama, Mexico, Peru, and Veezuela. Those implicated and brought to justice included senators, top public officials including heads of states, prominent businessmen. In Peru, for example, past presidents Alain Garcia, Ollanta Humala, Pedro Kuczynski, Alejandro Toledo, and Keiko Fujimori are either in prison, on the run, or have committed suicide.
2010 Temasek invested US$400m (Oct 2010)
2018 Name changed to Ocyan SA
Operation Car Wash :
In 2014 Brazilian police conducted Operation Car Wash, a criminal investigation into money laundering which is still ongoing. It has resulted in more than 1,000 warrants of various sorts in Brazil. The investigation expanded into corruption at very high levels of the governments of Brazil, Argentina, Panama, Mexico, Peru, and Veezuela. Those implicated and brought to justice included senators, top public officials including heads of states, prominent businessmen. In Peru, for example, past presidents Alain Garcia, Ollanta Humala, Pedro Kuczynski, Alejandro Toledo, and Keiko Fujimori are either in prison, on the run, or have committed suicide.
Car Wash must be the world's biggest criminal investigation. It initially started off as an investigation into the embezzlement of funds in Petrobas, estimated between US$2-13b. At the centre of all this is the Odebrecht group of companies, a huge Brazilian conglomerate established in 1944. Odebrecht is involved in diversified businesses in the fields of engineering, construction, chemicals and petrochemicals. It is privately owned by the Odebrecht family and it does a lot of huge construction in graft-ridden public works.
Between 2001-2016, Odebrecht paid USD $788 million in bribes across Latin America. Marcelo Odebrecht, the patriach that runs the family business, was arrested in 2016 and is now sitting out a 19 year jail sentence.
Temasek & OOG :
In 2010 Temasek invested US$400m for 13.6% share in Odebrecht Oleo e Gas SA (OOG), a unit in the Odebrecht group. OOG explores and produces oil and gas fields, operates rigs and provides integrated services for other companies from the sector. During the Brazilian oil boom, OOG secured many projects from the state oil company Petrobas, such as the supply of oil rigs, floating platforms, etc. The Petrobas' deals propelled OOG into the forefront of the Brazilian oil & gas industry.
Operation Car Wash uncovered Petrobas officials received massive kick backs from contractors which included Odebrecht and Singapore's Keppel Offshore & Marine Ltd. This led to the state oil company banning OOG in 2014 from further contracts. The company is forced to source for business outside of Brazil. The ban by Petronas, coupled with the fall in oil prices, was a double blow for the company.
OOG had external debts of US$3.7b. By 2015, cash crunch forced OOG to default on debt servicing. Then followed years of negotiation with creditors and banks for capital restructure. This was resolved by end 2017. In 2018 OOG renamed itself Ocyan SA and started to rebuild itself. It is now a shadow of what it once was. At its height in 2015, it employed 6,000 workers, in 2019 it was down to 2,000. It's equity was BRL3.4b in 2015 down to BRL1.9b in 2019. The goods news is Petrobas lifted its ban on the company in 2018.
The investment in 2010 put a valuation of the company at US$2.941b. There has thus been a valuation write down of 35% by 2019. As an unlisted company, such valuation write down is unlikely to be reflected in Temasek's books.
Between 2001-2016, Odebrecht paid USD $788 million in bribes across Latin America. Marcelo Odebrecht, the patriach that runs the family business, was arrested in 2016 and is now sitting out a 19 year jail sentence.
Temasek & OOG :
In 2010 Temasek invested US$400m for 13.6% share in Odebrecht Oleo e Gas SA (OOG), a unit in the Odebrecht group. OOG explores and produces oil and gas fields, operates rigs and provides integrated services for other companies from the sector. During the Brazilian oil boom, OOG secured many projects from the state oil company Petrobas, such as the supply of oil rigs, floating platforms, etc. The Petrobas' deals propelled OOG into the forefront of the Brazilian oil & gas industry.
Operation Car Wash uncovered Petrobas officials received massive kick backs from contractors which included Odebrecht and Singapore's Keppel Offshore & Marine Ltd. This led to the state oil company banning OOG in 2014 from further contracts. The company is forced to source for business outside of Brazil. The ban by Petronas, coupled with the fall in oil prices, was a double blow for the company.
OOG had external debts of US$3.7b. By 2015, cash crunch forced OOG to default on debt servicing. Then followed years of negotiation with creditors and banks for capital restructure. This was resolved by end 2017. In 2018 OOG renamed itself Ocyan SA and started to rebuild itself. It is now a shadow of what it once was. At its height in 2015, it employed 6,000 workers, in 2019 it was down to 2,000. It's equity was BRL3.4b in 2015 down to BRL1.9b in 2019. The goods news is Petrobas lifted its ban on the company in 2018.
The investment in 2010 put a valuation of the company at US$2.941b. There has thus been a valuation write down of 35% by 2019. As an unlisted company, such valuation write down is unlikely to be reflected in Temasek's books.
The investment of US$400m @ 1.7135 = BRL685m (@ 1.3193 = S$520m)
Due to 213% depreciation of Brazilian Real against SGD, the investment is now worth BRL685m @ 4.13 = S$168m.
There is a massive translation loss of S$352m.
At the holding company level, the Odebrecht group is still struggling with a mountain of debt of US$13b. On 17 Jun 2019, Odebrecht filed for bankruptcy protection to restructure its capital. It is still not out of the woods with ongoing police investigation.
Was Temasek's acquisition of 13.6% of OOG an independent investment decision, or was it a business strategy for it's Singapore ship-building subsidiaries to gain greater access to the Brazilian oil market which was booming at the time? The bribery of Petrobas' officials by Odebrecht and Keppel O&M opens up the uncomfortable question of whether the complicity was only at the operating units or did it involve the investment office?
Note: Temasek's holdings of 161,456,737 shares in Ocyan is held in the name of Atlantic Oilfield Services B.V. Google search failed to show anything.
Due to 213% depreciation of Brazilian Real against SGD, the investment is now worth BRL685m @ 4.13 = S$168m.
There is a massive translation loss of S$352m.
At the holding company level, the Odebrecht group is still struggling with a mountain of debt of US$13b. On 17 Jun 2019, Odebrecht filed for bankruptcy protection to restructure its capital. It is still not out of the woods with ongoing police investigation.
Was Temasek's acquisition of 13.6% of OOG an independent investment decision, or was it a business strategy for it's Singapore ship-building subsidiaries to gain greater access to the Brazilian oil market which was booming at the time? The bribery of Petrobas' officials by Odebrecht and Keppel O&M opens up the uncomfortable question of whether the complicity was only at the operating units or did it involve the investment office?
Note: Temasek's holdings of 161,456,737 shares in Ocyan is held in the name of Atlantic Oilfield Services B.V. Google search failed to show anything.
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