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Wednesday, June 10, 2015

Brazilian Prosecutors Say Petrobras Didn’t Benefit From Bribery

June 10:

Two Brazilian prosecutors probing a scandal at Petroleo Brazileiro SA that rocked the nation’s political establishment say it would be hard to consider the company a perpetrator in the multibillion-dollar kickback scheme.
Carlos Lima and Deltan Dallagnol lead a group of nine federal prosecutors in South Brazil who, with five police officials and a judge, are investigating a network of contractors who allegedly paid bribes to win business from the state-run energy titan.
While shareholders and bondholders may have good reason to complain about faulty internal controls at Petrobras, especially after the scandal helped knock billions off the stock price, the prosecutors said the company itself is nevertheless a victim.
“I totally understand that stockholders look at Petrobras and say, ‘You could have done more to avoid all this,’” Lima said in a recent interview. “The company has responsibility for the acts, of course, of its agents and employees. I don’t doubt that.”
“In retrospect, you see red flags everywhere but it is easier to say so after it’s happened,” he said.
Lima and Dallagnol argued that the bribe money was taken from the company in the form of overcharges on contracts, and Rio de Janeiro-based Petrobras didn’t benefit in any way.

Uncover Fraud

Evidence of fraud was hard to uncover, as the overcharges - - typically about 3 percent, according to the company -- weren’t obvious on big-dollar contracts, the prosecutors said.
The scheme was set up outside of Petrobras and a few corrupt executives stowed their payoffs in offshore accounts, according to the prosecutors.
The men said the company was a loser in the scheme because it was forced to overpay for construction work.
“These agents and employees were acting to benefit third parties, not the company,” Lima said. “Not in any moment did they benefit Petrobras.”
Two division heads have been sentenced for crimes including money laundering, and a third is awaiting sentencing.
Petrobras declined to comment on the statements by the prosecutors.

Criminal Beauty

Lima said he saw a “criminal beauty” in the scheme, as the contracts appeared to follow the rules, and it would have been very difficult to detect irregularities.
“The fraud happened externally,” Lima said. “I don’t see how Petrobras could, as a company with an auditor, find the fraud in the contract, or how the company could have established controls to avoid this.”


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