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Crime

Brazilian state oil giant Petrobras agrees US$2.95 billion payout over corruption scandal

A massive embezzlement and bribery scheme involving a network of company executives and politicians is estimated to have caused the company more than US$2 billion in losses

PUBLISHED : Wednesday, 03 January, 2018, 10:28pm
UPDATED : Wednesday, 03 January, 2018, 10:28pm

Petrobras has agreed to pay US$2.95 billion to settle a class-action suit in New York brought on behalf investors harmed by a huge corruption scandal at the Brazilian state oil giant, the company said Wednesday.

“The agreement, which will be submitted for consideration of the judge, seeks to close all suits currently under way,” Petrobras said in a statement filed with the regulator of Brazil’s capital markets.

The oil company, which admits no guilt under the settlement, proposes making the payment in two US$983 million instalments, followed by a third payment of US$984 million.

The first payment would be made within 10 days of the settlement’s preliminary approval by the judge, the second within 10 days of a definitive green light and the final one within six months or by January 15, 2019, whichever comes first.

The settlement would be reflected in the company’s fourth quarter 2017 earnings.

Petrobras said the agreement would eliminate the risk of an adverse verdict, which could have “material adverse effects for the company and its financial situation”.

The agreement “does not constitute an admission of guilt or of the practice of irregular acts” as the company regards itself as “a victim” of the crimes uncovered by Brazilian prosecutors.

A massive embezzlement and bribery scheme involving a network of company executives and politicians is estimated to have caused the company more than US$2 billion in losses.

The lawsuit was filed by individuals and pension funds that had invested in Petrobras through complex financial products.

Those had been acquired at a price based on the estimated value of Petrobras’s assets. After the scandal broke, however, the company’s assets were depreciated, causing losses for numerous investors.

The company wrote off a loss of more than US$2 billion on its 2014 earnings.