• Global Anti-Corruption Practice

Case Detail

In re Petróleo Brasileiro S.A. – Petrobras (2018)


Case Details
  • Case Name
  • In re Petróleo Brasileiro S.A. – Petrobras (2018)
  • Date Filed
  • 09/26/2018
  • Enforcement Agency
  • DOJ
  • Countries
  • Brazil
  • Foreign Official
  • Senior executives at Petrobras, Brazil’s government-controlled oil and gas company; unnamed Brazilian politicians and third parties.
  • Date of Conduct
  • 2004 to 2012
  • Nature of Business
  • Petróleo Brasileiro S.A. – Petrobras (“Petrobras”) is a Brazilian government-controlled oil and gas company. Petrobras’ stock is registered with the Securities and Exchange Commission under Section 12(b) of the Exchange Act and trades on the New York Stock Exchange as American Depositary Shares (“ADSs”). Petrobras is headquartered in Rio de Janeiro, Brazil.
  • Influence to be Obtained
  • According to the DOJ, Petrobras senior executives and managers participated in a far-reaching bribery scheme and assisted major Petrobras contractors in securing contracts with the company by rigging bids in their favor at the expense of more qualified contractors. Additionally, the executives inflated contract costs (often as fabricated consultant charges) to allow more money to flow to the contractors. In reward for their cooperation, the executives and managers received kickbacks from the contractors that ranged from one to three percent of the contract’s value. The executives kept a portion for themselves, and shared a portion with Brazilian politicians and political parties as bribes as a way to ensure the company and its projects continued to be viewed favorably.

    The DOJ also alleged that Petrobras failed to keep accurate books and records. As the bribery scheme continued, Petrobras began trading ADSs on the New York Stock Exchange in 2010. The company was required to file annual reports and financial statements with the SEC. The DOJ alleged that the executives were aware the filings made omitted information about the bribery scheme and the executives still falsely certified that the filings were accurate.
     
    The DOJ further alleged that Petrobras failed to implement internal controls over the company’s financial, accounting, and contracting processes. Specifically, Petrobras’ policies were inadequate to guard against manipulation of the bidding process and improper political influence.
  • Enforcement
  • On September 26, 2018, the DOJ entered into a non-prosecution agreement with Petrobras, pursuant to which it agreed to pay a monetary penalty of $853,200,000 (ten percent of which is to be paid to the US Treasury, ten percent to the SEC, and $682,560,000 to the Ministerio Publico Federal in Brazil). Petrobras received a twenty-five percent discount off the recommended minimum sentence under the U.S. Sentencing Guidelines for the company’s full cooperation and remediation.

    On September 27, 2018, the SEC issued a cease-and-desist order to Petrobras in which it agreed to pay $933,473,797 in disgorgement and prejudgment interest.
  • Amount of the Value
  • More than $1 billion.
  • Amount of Business Related to Payment
  • Not stated.
  • Intermediary
  • Agents; Consultants.
  • Citizenship of Parent Entity
  • Brazil
  • Total Sanction
  • $ 853,200,000
  • Compliance Monitor
  • No
  • Reporting Requirements
  • Yes (3 Years)
  • Case is Pending?
  • No
  • Total Combined Monetary Sanction
  • $ 1,786,673,797
  • Cooperating Foreign Enforcement Agencies
  • Brazil
  • Industries
  • Energy
  • Regions
  • Latin Amer. & Carib
Defendants

Petróleo Brasileiro S.A. – Petrobras

  • Citation
  • In re Petróleo Brasileiro S.A. – Petrobras (2018).
  • Date Filed
  • 09/26/2018
  • Filed Under Seal
  • No
  • FCPA Statutory Provision
    • Anti-Bribery
    • Books-and-Records
    • Internal Controls
  • Other Statutory Provision
  • None.
  • Disposition
  • Non-Prosecution Agreement, Non-Prosecution Agreement
  • Defendant Jurisdictional Basis
  • Issuer
  • Defendant's Citizenship
  • Brazil
  • Individual Sanction
  • $853,200,000.
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