Petrobras Corruption

Corruption in Petrobrás

Ethics and Responsibility

Introduction

In the southern hemisphere of the world and in all Latin America, by market capitalization, Petrobrás is the largest company recorded measured by 2011 revenues. It is the sixth biggest energy company by assets in the world according to Platts (a provider of energy and metals which also sources the benchmark price assessments in the physical energy markets), the company primarily dedicates itself to exploring, producing, refining and selling oil and gas.

In February 2014, the Brazilian Federal Police and public prosecutors began to carry out an investigation called Operation Car Wash. Shortly after Dilma Roussef was re-elected (October), on November 14th of the same year police raids began to report contracts of politicians and businessmen that were deemed of being suspicious. In this operation, Petrobras was allegedly reported in cases of corruption, its directors were accused of accepting bribes from construction companies that were then used to fund the political party “Partido dos Trabalhadores” (PT, Dilma’s party). In addition, Dilma was the known head of Petrobras from 2003 until 2010, a larger issue then arose because the scandal had allegedly begun in 2007, while she was still in charge (although, evidence of her participation has never been found).

The ongoing investigation led Petrobras’ auditing company “Pricewaterhouse Coopers” to sign off on the publication of the 2014 third quarter-audited accounts, making Petrobras lack in credibility among stakeholders. The value of its assets quickly diminished by billions of dollars, by 2015, the company was looking at dangerous exposure to bond markets and aggressive strategies from international investors or hedge funds.

The federal police arrested Paulo Roberto Costa, who was in charge of Petrobras’ refining from 2004 to 2012 due to a money laundering investigation. Mr. Costa who then seeked leniency, confessed this to be true and...