Several foreign companies may be indicted over Petrobras corruption probe

11 May 2017 4:24pm

9 May 2017. By Rodrigo Russo.

About 20 foreign companies that did business with the Brazilian state-controlled oil company Petroleo Brasileiro, or Petrobras, could be indicted in the ongoing Lava Jato corruption probe.

"We still have several companies under investigation," federal prosecutor Paulo Roberto Galvão de Carvalho told MLex in an exclusive interview.

"The larger subject of the initial phase of Lava Jato was the formation of a cartel, which involved 16 companies — with foreign firms Skanska and Techint as part of it. Aside from the cartel, we have roughly 20 foreign companies on our radar due to their participation in schemes at other Petroleo Brasileiro divisions," he said.

Carvalho said those indictments haven't been handed down yet because the Federal Prosecutor's Office task force didn't want to overload the federal court in Curitiba, which handles most Lava Jato-related cases, with all the cases at once.

"This would harm the functioning of the federal court," he said.

The prosecutor said that his office has strong cases against several foreign companies.

"They are waiting in line, so to speak," Carvalho said. "Some of them have contacted us in order to discuss leniency agreements."

In January, Rolls-Royce became the first foreign company to reach a settlement with the Brazilian Federal Prosecutor's Office. The company agreed to pay $25.6 million to settle corruption charges over bid-rigging related to projects involving the supply of power generation turbines for oil rigs.

Carvalho also highlighted his office's cooperation with the US Department of Justice as an effective method in obtaining more information about foreign companies' wrongdoing Brazil.

"When a company reports corrupt practices to the DOJ, they now have an incentive to reach out to us as well," he said.

Closer ties with the DOJ have helped in explaining to foreign companies that they bear responsibility for corrupt practices committed in Brazil even before the country's anticorruption law was implemented in 2014.

"Some foreign companies and their legal teams have the wrong idea that if they paid bribes before 2014, prior to the anticorruption law, they don't have any responsibility in Brazil," he said.

"We are aware that a few companies that voluntarily approached the DOJ to disclose their crimes and to reach settlement agreements in the US jurisdiction have said that they wouldn't do the same in Brazil.

"This is a huge legal mistake, because although it is true that the anticorruption law is only applicable to acts that happened since its enactment, the administrative improbity law has been in effect since 1992 and can be applied in [older] cases," Carvalho said.

Sanctions under the improbity law include the freezing of assets, payment of damages, payment of fines that could be as high as three times the amount of the damages, and being banned from signing new contracts with the government.

"We have explained this situation to the American authorities, and they are now relaying this advice to companies that reach out to them. Those companies can be held accountable by the Brazilian legal system. We have plenty of information about foreign companies, and they can be targeted at any moment," the prosecutor said.

Damage Limitation: Trucks & Cartel Claims