Petrobras Agrees To Pay $853.2 Mln To Settle Corruption Probes In U.S., Brazil

(RTTNews) - Brazil's state-run oil company Petróleo Brasileiro S.A. (PZE), commonly known as Petrobras, entered into agreements with U.S. and Brazilian authorities and agreed to pay a combined total of $853.2 million in penalties to resolve the U.S. government's investigation into violations of the Foreign Corrupt Practices Act in connection with Petrobras's role in facilitating payments to politicians and political parties in Brazil, as well as a related Brazilian investigation.

According to Petrobras's admissions, while the company's American Depository Shares traded on the New York Stock Exchange, members of the Petrobras Executive Board were involved in facilitating and directing millions of dollars in corrupt payments to politicians and political parties in Brazil, and members of Petrobras's Board of Directors were also involved in facilitating bribes that a major Petrobras contractor was paying to Brazilian politicians.

During this period, for example, a Petrobras executive directed the payment of illicit funds to stop a parliamentary inquiry into Petrobras contracts, and the executive also directed payments received from Petrobras contractors to be corruptly used to pay millions of dollars to the campaign of a Brazilian politician who had oversight over the location where one of Petrobras's refineries was being built.

Petrobras admitted that it failed to make and keep books, records and accounts that accurately and fairly reflected the company's capitalization of property, plant and equipment as a result of the bribes being generated by the company's contractors with the cooperation of certain Petrobras executives, and that certain Petrobras executives signed false Sarbanes-Oxley (SOX) 302 sub-certifications while they were involved in, and were aware that other executives at Petrobras were involved in, obtaining and facilitating the payment of millions of dollars in bribes to Brazilian politicians, to Brazilian political parties and to themselves.

Petrobras also admitted that certain executives failed to implement internal financial and accounting controls in order to continue to facilitate bribe payments to Brazilian politicians and Brazilian political parties.

Petrobras entered into a non-prosecution agreement and agreed to pay a criminal penalty of $853.2 million to resolve the matter. This reflected a 25 percent discount off the low end of the applicable U.S. Sentencing Guidelines fine range for the company's full cooperation and remediation.

In related proceedings, Petrobras reached a settlement with the U.S. Securities and Exchange Commission (SEC) and Petrobras entered into an agreement to reach a settlement with the Ministerio Publico Federal in Brazil.

Under the non-prosecution agreement, the United States will credit the amount that Petrobras pays to the SEC and Brazil under their respective agreements, with the Department of Justice and the SEC receiving 10 percent ($85.32 million) each and Brazil receiving the remaining 80 percent ($682.56 million).

As part of the agreement, Petrobras has agreed to continue to cooperate with the Department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, to enhance its compliance program and to report to the Department on the implementation of its enhanced compliance program.

In the related SEC matter, Petrobras also agreed to pay to the SEC disgorgement and prejudgment interest totaling $933.47 million, which shall be reduced by the amount of any payment Petrobras makes to the class action Settlement Fund in the matter of In re Petrobras Securities Litigation