The Petroleo Brasileiro SA (Petrobras) Lava Jato scandal is in the forefront once again as the Brazil state-run company confirmed the findings of contract irregularities; convictions were handed down to three former executives in connection with the scandal; and Brazilian police asked prosecutors to file charges against Odebrecht’s CEO, according to news reports.

Braskem irregularities

Petrobras confirmed earlier this week that irregularities were found in the approval of a 2009 contract to provide naphtha, flammable oil containing various hydrocarbons, with Braskem SA, a petrochemical subsidiary and joint venture between Petrobras and Odebrecht. The investigation began after a plea deal testimony was given from former executive Paulo Roberto Costa and black-market currency dealer Alberto Youssef.

Brazil’s TV Globo reported that Costa and Youssef revealed a bribe paid by Braskem for a deal allowing it to pay below-market rates for naphtha, causing losses to Petrobras. Braskem denied in a statement that it had gotten an unfair advantage in that naphtha contract, citing an excerpt from an internal Petrobras report that said "it was not possible ... to identify a financial loss caused to Petrobras,"according to Reuters.

Lavo Jato’s first convictions

On Monday (20 July), the first sentences were handed down in connection with the developing Lava Jato scandal to three former senior executives from São Paulo-based Construtora Camargo Corrêa,one of Brazil’s largest construction corporations, according to the Wall Street Journal.

Camargo Corrêa former president Dalton Avancini, and former VP Eduardo Leite were convicted of corruption, money laundering and belonging to a criminal conspiracy. A federal judge sentenced Avancini to 15 years and 10 months of house arrest as part of a plea bargain that helped the former executive avoid prison in exchange for providing information about the alleged scheme. Leite received the same sentence, convicted of the same charges and made a similar deal. Former chairman João Auler, who didn't strike a plea deal with prosecutors, was sentenced to nine years and six months in prison.

Also on 20 July, federal police asked prosecutors to file charges against Odebrecht CEO Marcelo Odebrecht, Brazil's largest construction firm, on charges of alleged involvement in the Petrobras scandal, according to the Associated Press. Odebrecht was arrested last month with accusations of bribery and corruption that the Construtora Norberto Odebrecht (CNO) company believes are unnecessary, since the company and its executives have always been available to the authorities to cooperate with the investigation since the beginning of the operation Lava Jato, CNO said in a statement in June.

Along with Odebrecht, Andrade Gutierrez president Otavio Azevedo, and 10 others were arrested in connection with charges that their companies paid US$230 million (710 million reais) in bribe money to politicians.

Petrobras has taken a $2.1 billion writedown and a $14.8 billion impairment charge on its financial statements to date, says law firm Mayor Brown. Financial firm Morgan Stanley estimated the Petrobras financial writedown could be as much as $8.1 billion, and UBS estimated the damage to be between $10-15 billion.

Petrobras’ Lava Jato, consisting of large-scale bribery of government officials and money-laundering corruption, was first revealed in 2009.

Source: www.oedigital.com

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