Petrobras sees cost of corruption at up to 6 billion reais – report

 Fri Apr 10, 2015 2:08pm BST

Petrobras sees cost of corruption at up to 6 billion reais – report

(Reuters) – Brazil‘s state-run oil company Petrobras estimated losses connected to a vast corruption scheme are between 5 billion reais and 6 billion reais (1.1 billion-1.3 billion pounds), a report in Folha de S.Paulo newspaper said on Friday citing sources reviewing past contracts.

The calculation is based upon the 3 percent of what Petrobras overpaid for contracts in a kickback scheme revealed in testimony from arrested executives linked to the scandal and is “conservative” according to unnamed sources in the report.

Petroleo Brasileiro SA, as the company is formally known, was not immediately available for comment.

 In January Petrobras published unaudited third-quarter results in which it estimated net potential write downs of 61.4 billion reais. This estimate, which was mentioned in the release but not actually taken on the balance sheet, was based upon multiple factors including the falling oil price, delays and cost-overruns as well as corruption.

Then-chief executive Maria das Graças Foster said at the time the company wanted to separate the loss of asset value caused by corruption from other factors such as the oil price.

Morgan Stanley estimated Petrobras could take a write down of 29.4 billion reais for the graft scheme in a note published earlier this week.

Petrobras is ensnared in a broad corruption scandal in which police and prosecutors assert the oil company overpaid for engineering contracts, with the extra money kicked back to politicians and executives.

The investigation dubbed “Operation Car Wash” has led to the indictment of scores of executives from Brazil’s top builders and implicated dozens of politicians, the majority of them from President Dilma Rousseff’s Workers’ Party, who allegedly received graft money.

On Friday federal police said they had issued seven more arrest warrants in relation to the investigation.

Petrobras is under pressure to publish audited third and fourth quarter results before the end of the month to avoid risking further trouble with Brazil’s market regulator CVM and the U.S. Securities and Exchange Commission as well as possibly jeopardizing loan terms known as covenants.

Earlier this week Reuters reported the company could vote on April 17 to approve publishing the results, citing a board member. On Thursday Petrobras said in an email to Reuters it was working to release results as soon as possible but had still not fixed a date.

(Reporting by Stephen Eisenhammer Editing by W Simon)

One comment

  1. This is ridiculous. That’s like saying the only “cost” of Macondo was the value of the actual oil spilled. The corruption didn’t ruin Petrobras or the Oil Industry in Brazil. The policies forced on Petrobras, along with the “hubris” of the company, the government, along with the commonly accepted “national feeling” that Petrobras was somehow above all the other Oil Companies in the World insured the destruction of Brazil’s oil industry years ago; at least since the asinine decision to make Petrobras the only Operator of Pre Sal fields. Eliminating the corruption is not really even the first step; its 3 steps before the first step. Petrobras and the Brazilian government got “cocky” and pissed off the entire oil industry. Didn’t anyone notice the gringos clearing out of Brazil long before the corruption scandal came to light?

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