SHARES of Sembcorp Marine (Sembmarine) : S51 -7.96% ended Friday (Mar 24) down 8 per cent or S$0.009 at S$0.104, following news that one of its units is facing investigations.

 

The counter was the second most heavily traded by value that day, and the most heavily traded by volume &ndash with 769.2 million shares worth S$81.5 million changing hands. No married deals were recorded, according to ShareInvestor data.

 

The company issued a notice on Friday morning that its wholly-owned subsidiary, Estaleiro Jurong Aracruz (EJA), was being investigated for &ldquo alleged irregularities&rdquo in its practices.

 

This comes after the Office of the Comptroller General of Brazil published a notice in the official gazette, saying it had initiated a preliminary administrative liability proceeding against EJA.

 

The notice did not provide further details, and Sembcorp said it was unable to assess the matter or the impact, if any, on EJA. It added that EJA is cooperating fully with the authorities.

 

&ldquo The company will continue to monitor developments in Brazil with respect to the above, and will make appropriate announcements in the event of any material developments,&rdquo said Sembmarine in a statement posted on the Singapore Exchange.

 

EJA is Sembmarine&rsquo s shipyard in Brazil. It commenced operations in the second half of 2014, according to the group&rsquo s website.

 

CGS-CIMB analysts said in a note on Friday that such negative news flow could weigh on Sembmarine&rsquo s share price in the near term, until further clarity is provided. The brokerage, however, reiterated its &ldquo add&rdquo call on the counter, with an unchanged target price of S$0.12.

 

This is not EJA&rsquo s first brush with the law. In 2020, the company&rsquo s previous president, Martin Cheah Kok Choon, was charged in Brazil with money laundering and graft, in connection with contracts entered into by Sembmarine&rsquo s subsidiaries in 2012.

 

Cheah&rsquo s employment with Sembmarine was terminated in 2015.