EspañolPetrobras, the Brazilian state oil company, was on the receiving end of a class-action lawsuit on December 8 in a New York court. It stands accused of a wide-ranging scheme of bribery and illicit manipulation of state contracts, which artificially inflated the share price of the company and affected the decisions of investors.
The total amount of bribes paid by Petrobras is estimated to be greater than R$10 billion (US$3.85 billion).
The US plaintiffs seek economic compensation for their losses and damages, but the figure sought has not been revealed to the press.
The legal firm Wolf Popper presented the lawsuit on behalf of investors who bought shares in the petroleum firm between May 20, 2010, and November 21, 2014, on the US stock exchange.
The scandal has sorely affected Petrobras’ share price, which fell by 6 percent on December 8 to its lowest per-unit value since October 2005. Brazil also suffered on the foreign exchange market, with the real dropping by 0.77 percent against the US dollar.
Rot Goes to the Top
“Brazil is extremely corrupt,” said Rodrigo Janot, Brazil’s attorney general, at the inauguration of the conference of the Ibero-American Association of Public Ministries (AIAMP), held on Brazil on December 9, and coinciding with the UN-backed International Anti-Corruption Day.
Petrobras has been accused since September of distributing millions of dollars worth of bribes to secure state contracts between 2004 and 2012. The bribes were then allegedly funneled to a range of political parties including the Workers’ Party (PT), which is led by the recently reelected President Dilma Rousseff.
The public prosecutor insisted on December 9 that everyone involved in the corruption scheme, which goes to the highest levels of Brazilian politics and business, would be investigated. He also indicated that the company’s management would likely be replaced.
“Brazilian society is demanding a more thorough and deeper investigation into these criminal activities, and the punishment of all responsible. The country will no longer tolerate the shameful corruption of bad public officials and bad companies,” Janot said during an international anti-corruption conference.
“We will offer a firm response to those who are criticizing Petrobras. We are expecting the appropriate reforms to be made, including the eventual replacement of their management, whether they’re guilty or not,” he added.
The attorney general’s comments come as 11 executives from six construction firms linked to two former Petrobras directors are being indicted for their part in a web of corruption — the same illicit activities on which the US investors’ complaint is based.
Public Deem Rousseff Responsible
The scandal may even touch President Dilma Rousseff. According to a survey by Datafolha published in Brazilian media on December 6, 68 percent of 2,896 respondents believed that the president bore some responsibility for the corruption within Petrobras, while 43 percent judged Rousseff to be “highly responsible” for the bribes, and 25 percent believed her to only share “a little” of the blame.
Only some 20 percent denied presidential responsibility completely, with 12 percent having no opinion. The same survey found that 85 percent of those surveyed believed that corruption existed within the state petroleum firm, while only 2 percent rejected the idea entirely, with the remainder being unsure.
During the presidency of Luiz Inácio Lula da Silva (2003-2010), Rousseff was the minister responsible for mining and energy, later becoming his presidential chief of staff. During the same period, she was a member of the Petrobras executive board.
In November, Brazilian police arrested 16 senior executives and public officials, after former Petrobras directors agreed to disclose details of the corruption operation in exchange for reduced sentences. Among those apprehended were the former director of Petrobras’ supply unit and two directors of a contracting company. These three similarly agreed to offer evidence, receiving house arrest in turn while investigations are ongoing.
Another 13 businessmen — directors, senior executives, the former director of Petrobras, and a money-changer who facilitated the money-laundering operation — are currently detained without contact with each other while awaiting judgement.
Petrobras is the largest company in Brazil, with some 86,000 employees engaged in refining 98 percent of the petrol consumed by South American nation. It has commercial links to more than 20,000 Brazilian companies, and is responsible for a tenth of all investment in the country.