Graft scheme cost US$2.1 bil.: Petrobras


Brazil’s state-run oil com­pany Petrobras said Wed­nes­day that it lost US$2.1 bil­lion in an eightyear kick­back scheme that saw the firm’s ex­ec­u­tives tak­ing bribes for award­ing in­flated con­tracts to sup­pli­ers.

The com­pany re­leased its longde­layed fourth quar­ter fi­nan­cial re­sults that in­cluded a write down of 6.2 bil­lion reais — about US$2.1 bil­lion at the cur­rent con­ver­sion rate to the U.S. dollar. It at­trib­uted the losses to a se­ries of in­flated con­tracts and other graft dur­ing the scheme it says ran from 2004 to 2012.

Re­leas­ing the au­dited re­sults was the first step for Petrobras to try to re­gain in­vestor con­fi­dence and ac­cess to in­ter­na­tional credit mar­kets, which the debt- plagued com­pany des­per­ately needs to de­velop huge off­shore oil fields dis­cov­ered in re­cent years. The com­pany was cut to junk sta­tus by Moody’s In­vestors Ser­vice in late Fe­bru­ary in large part be­cause of the scan­dal.

The U.S.-based Eura­sia Group said in a re­search note af­ter the Petrobras re­sults were pub­lished that “at­ten­tion will now shift to mea­sures that will bol­ster the com­pany’s course cor­rec­tion in the longer-term.”

Rio de Janeiro-based en­ergy con­sul­tant Evan Spona­gle said re­leas­ing the au­dited re­sults would give banks “a rea­son to start lend­ing again” to not just Petrobras but to Brazil’s en­tire oil in­dus­try, which has been frozen un­der the cloud of the cor­rup­tion in­ves­ti­ga­tion.

Fed­eral pros­e­cu­tors say the probe has un­cov­ered the largest graft scheme ever un­cov­ered in Brazil. They also stress that they are still in­ves­ti­gat­ing and the case is widen­ing, with dozens of top busi­ness ex­ec­u­tives along with fed­eral con­gress­men and other po­lit­i­cal fig­ures fac­ing charges, un­der in­ves­ti­ga­tion or al­ready sit­ting in jail.

In­ves­ti­ga­tors say the scheme saw Brazil’s top con­struc­tion and en­gi­neer­ing com­pa­nies pay bribes to a hand­ful of Petrobras’ po­lit­i­cally ap­pointed ex­ec­u­tives in re­turn for win­ning in­flated con­tracts. Pros­e­cu­tors al­lege some of the money then flowed into the cam­paign cof­fers of the gov­ern­ing Work­ers’ Party and its al­lies, which they deny.

In ad­di­tion to the dozens of ex­ec­u­tives who have been charged in the case, the At­tor­ney Gen­eral’s Of­fice last month said it was in­ves­ti­gat­ing over 50 po­lit­i­cal fig­ures, in­clud­ing 21 fed­eral deputies and 12 con­gress­men, for al­leged par­tic­i­pa­tion in the graft. In­cluded among those un­der in­ves­ti­ga­tion are the lead­ers of both houses of congress.

So far, Pres­i­dent Dilma Rouss­eff, who was chair­woman of the Petrobras board dur­ing most of the years the scheme played out, has not been im­pli­cated in the case. She has ex­pressed strong sup­port for the in­ves­ti­ga­tion and for hold­ing the guilty accountable.

But the in­ves­ti­ga­tion creeped closer to Rouss­eff fol­low­ing the ar­rest ear­lier this month of her Work­ers’ Party trea­surer, Joao Vac­cari, who is charged with money laun­der­ing for al­legedly tak­ing in money con­nected to the Petrobras kick­back scheme.

On Wed­nes­day, a fed­eral judge handed down sen­tences to two of the main fig­ures in the case, giv­ing for­mer Petrobras ex­ec­u­tive Paulo Roberto Costa over seven years in pri­son and the scheme’s top money bag­man, Al­berto Youss­eff, over nine years. Both can ap­peal the rul­ing or have their sen­tences re­duced if they con­tinue co­op­er­at­ing with in­ves­ti­ga­tors as they have been do­ing for months.

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