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Friday, December 6, 2019

Maritime Logistics Professional

Posted by December 13, 2014

Petrobras Delays Results as Corruption Scandal Grows


Brazil's state-run oil company Petroleo Brasileiro SA said it delayed the release of its third-quarter financial results for a second time on Friday as a result of new developments in a widening corruption probe.

Prosecutors on Thursday indicted executives of some of the country's largest engineering firms for allegedly skimming billions of dollars off overpriced contracts with the oil giant in a kickback and bribery scheme.

Petrobras had set Friday as a deadline for the release, but it said in a statement it has until Jan. 15, 2015, to present the unaudited results without breaking covenants. If broken, the covenants could put some of the company's debt into technical default, forcing early repayment.

Petrobras first delayed the release of its third-quarter earnings last month because of the expanding investigation into bribery and money laundering. As new allegations surfaced, Petrobras' auditor, PricewaterhouseCoopers, declined to certify the company's accounts.

The corruption accusations have rattled the company, which was among the world's 10 largest by market value only six years ago and has seen its stock-market value shrink to about $50 billion from nearly $300 billion.

Petrobras did, however, release limited financial data that it said will not be hit by asset-price adjustments related to the investigation. It did not release profit or loss information. The company may be forced to write off up to 21 billion reais because of the scandal, investment bank Morgan Stanley said Nov. 19

Among the details it released was third-quarter unaudited net sales of 88.4 billion reais ($33.4 billion), 14 percent more than the 77.7 billion reais reported a year earlier.

The scandal is putting pressure on President Dilma Rousseff to remove top management. While Rousseff chaired the Petrobras board from 2003 to 2010 she has denied knowledge of the scheme.

Opposition leaders on Friday called for the replacement of CEO Maria das Graças Foster after newspaper Valor Economico reported that she had been warned about inflated costs at refinery projects from a former executive and did not act.

The newspaper said Petrobras management not only failed to stop the misuse of funds but transferred the executive, Venina Velosa da Fonseca, to Singapore.

Petrobras said in a statement that Fonseca's complaints were duly investigated. It said Fonseca was fired last month for threatening to divulge alleged irregularities if she did not get a management job.

($1 = 2.65 Brazilian reais) (Writing by Jeb Blount and Anthony Boadle; Editing by Ken Wills)

Morgan StanleyPetrobrasPetroleo Brasileiro SA