Latin America

Petrobras bribery scandal has cost oil firm €1.8 billion, says CEO

For the first time, the state-owned petroleum giant has put a price tag on corruption

The Petrobras headquarters in Rio de Janeiro.
The Petrobras headquarters in Rio de Janeiro.Silvia Izquierdo (AP)

Brazil’s state-owned oil company Petrobras reported €1.8 billion in accumulative losses stemming from the rampant corruption that has plagued the industry for nearly a decade, the firm’s CEO said Wednesday.

It marked the first time petroleum company officials had put a price tag on the amount of money Petrobras has lost over the past eight years, in a scandal that has thrown the country into political and economic turmoil.

Among the 27 companies named in the kickbacks-for-contracts case are some of Brazil’s leading firms

“We have made our best efforts to turn the page on this sad chapter that the company has passed through,” said Aldemir Bendine, who came on board as Petrobras CEO in February after serving as Banco de Brasil president.

At a press conference, Bendine explained that the final loss figure was calculated by taking a three-percent average of the 27 construction firms suspected of participating in the kickbacks-for-contracts scheme, which went on for years at Petrobras.

Around 50 people, including high-ranking lawmakers and leaders from President Dilma Rousseff’s Workers’ Party (PT), are under court investigation for allegedly receiving payoffs in exchange for approving and awarding outside contracts at the company.

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The scandal comes at a time when many Brazilians are pained with personal economic problems as the country finds itself in recession. Anger has also been directed at the president, who is struggling to get a series of austerity measures – including unpopular social-spending cuts – passed by Congress.

Among the 27 companies named in the case are some of Brazil’s leading firms, whose directors are also under investigation.

Sentencing for some of the suspects in the case began on Tuesday. Paulo Roberto Costa, a former supplies director at Petrobras whose name figured prominently in the probe, was given a seven-year sentence.

Because he cooperated with the investigation early on, Costa will be able to serve the first four years of his sentence under house arrest but will have to report to an open prison for the remainder of his term.

The scandal comes when many Brazilians are pained with personal economic problems as the country finds itself in recession

Alberto Yousseff, a money-laundering expert and another major player in the bribery scheme, was sentence to nine years – he will be jailed until 2018 and then will be able to spend the rest of his term in an open prison.

Meanwhile, arrests are still being made in the case. Last week, Rousseff’s government was shaken when police arrested the treasurer of her PT party, João Vaccari, after he was implicated by several cooperating witness of funneling bribes to various allied groups in Congress.

On March 7, prosecutors released the names of 49 people suspected of receiving payoffs in the Petrobras case. Among them were Congress speaker Eduardo Cunha and Senate speaker Renan Calheiros – both members of the government’s allied Brazilian Democratic Movement Party (PMDB).

The company will scale back an ambitious investment plan for its deep water oil fields

Besides explaining how corruption has cost the company, the Petrobras CEO said that oil giant lost $7.5 billion just last year, while its reserves have plummeted to $15.7 billion because of a rising dollar against the Brazilian real.

The company will scale back an ambitious investment plan for its deep-water oil fields and slash capital spending because of falling fuel prices, Bendine said.

When asked by a journalist if Petrobras is capable of managing on its own, Bendine said: “We have been through a great disaster and we have apologized for this. But this has served us as an example. It has forced us to change the way we make decisions so that they are more secure but without being so restrictive.”

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