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| US court to hear arguments that Brazil oil giant should stand trial for corruption | US court to hear arguments that Brazil oil giant should stand trial for corruption |
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| A US court will hear arguments on Thursday that oil giant Petrobras should stand trial for a culture of bribery and corruption that has rocked Brazilian businesses and political elite and lowered the company’s value by $90bn. | |
| Investors, led by the UK Universities Superannuation Scheme, which manages the pension funds of British academics, claim they lost billions as a result of the huge money laundering and corruption scheme. The investors, which also include the retirement funds of state workers in Ohio, Idaho and Hawaii, claim in court filings that Petrobras was “rotten to the core”. | Investors, led by the UK Universities Superannuation Scheme, which manages the pension funds of British academics, claim they lost billions as a result of the huge money laundering and corruption scheme. The investors, which also include the retirement funds of state workers in Ohio, Idaho and Hawaii, claim in court filings that Petrobras was “rotten to the core”. |
| The scandal, which has been dubbed “operation carwash” because huge amounts of money were allegedly laundered through a money exchange in a nondescript gas station in the Brazilian capital, has already led to the indictment of more than 40 Brazilian executives allegedly involved in the bribery scheme dating back to 2006. | The scandal, which has been dubbed “operation carwash” because huge amounts of money were allegedly laundered through a money exchange in a nondescript gas station in the Brazilian capital, has already led to the indictment of more than 40 Brazilian executives allegedly involved in the bribery scheme dating back to 2006. |
| Corruption allegedly spread from the boardroom to politics, with Brazilians taking to the streets earlier this year to call for the impeachment of President Dilma Rousseff. She was chairwoman of Petrobras’s board between 2003 and 2010, when most of the alleged corruption took place. Rousseff has denied any knowledge of the scheme and no evidence has linked her to the corruption. | |
| The Brazilian government owns the of majority of Petrobras’ shares, and controls the company with seven of 10 seats on the board. | The Brazilian government owns the of majority of Petrobras’ shares, and controls the company with seven of 10 seats on the board. |
| The lawsuit claims that Petrobras executives accepted bribes for inflating the value of construction contracts and “used the money to bribe politicians through intermediaries to guarantee they would vote in line with the ruling party while enriching themselves.” | The lawsuit claims that Petrobras executives accepted bribes for inflating the value of construction contracts and “used the money to bribe politicians through intermediaries to guarantee they would vote in line with the ruling party while enriching themselves.” |
| The investors in the US class action, which merges eight separate suits, are being represented by Pomerantz Law, which helped investors sue BP in the wake of the Gulf of Mexico disaster and some of those that lost out in the Enron scandal. | The investors in the US class action, which merges eight separate suits, are being represented by Pomerantz Law, which helped investors sue BP in the wake of the Gulf of Mexico disaster and some of those that lost out in the Enron scandal. |
| Petrobras has called for the case to be thrown out because the company was also a victim of the scheme. “Petrobras itself was the victim in this scandal, carried out by a criminal cartel of Brazil’s largest construction and engineering companies,” the company said in papers filed at the district court in lower Manhattan. | Petrobras has called for the case to be thrown out because the company was also a victim of the scheme. “Petrobras itself was the victim in this scandal, carried out by a criminal cartel of Brazil’s largest construction and engineering companies,” the company said in papers filed at the district court in lower Manhattan. |
| If Judge Rakoff, who is known for his tough stance on corporate wrongdoing, allows the case to go ahead, senior executives and Brazilian politicians will likely be called to appear before the New York court. | If Judge Rakoff, who is known for his tough stance on corporate wrongdoing, allows the case to go ahead, senior executives and Brazilian politicians will likely be called to appear before the New York court. |
| Meanwhile, Brazilian prosecutors investigating the scandal have asked the Department of Justice and the Securities and Exchange Commission (SEC) to help them build their case as its tentacles spread beyond the board. | Meanwhile, Brazilian prosecutors investigating the scandal have asked the Department of Justice and the Securities and Exchange Commission (SEC) to help them build their case as its tentacles spread beyond the board. |
| In a statement, this week, prosecutors said they had been “inspired by the Fifa case”, in which the US brought bribery and corruption charges against several senior executives in world soccer. | In a statement, this week, prosecutors said they had been “inspired by the Fifa case”, in which the US brought bribery and corruption charges against several senior executives in world soccer. |