Brazil's Petrobras to pay $853 million U.S. fine in Car Wash probe

By Carolina Mandl SAO PAULO (Reuters) - Petróleo Brasileiro SA will pay an $853.2 million fine to settle U.S. criminal charges that the Brazilian state-run oil company bribed politicians and then sought to conceal the payments, the U.S. Justice Department said on Thursday

Reuters September 28, 2018 00:05:25 IST
Brazil's Petrobras to pay $853 million U.S. fine in Car Wash probe

Brazils Petrobras to pay 853 million US fine in Car Wash probe

By Carolina Mandl

SAO PAULO (Reuters) - Petróleo Brasileiro SA will pay an $853.2 million fine to settle U.S. criminal charges that the Brazilian state-run oil company bribed politicians and then sought to conceal the payments, the U.S. Justice Department said on Thursday.

Shares in Petrobras, as the company is known, were up 4.2 percent in early afternoon, helped by investors' perception that the pact is another step toward getting past the painful legacy of the landmark "Car Wash" investigation.

"Executives at the highest levels of Petrobras — including members of its executive board and board of directors —facilitated the payment of hundreds of millions of dollars in bribes to Brazilian politicians and political parties and then cooked the books to conceal the bribe payments from investors and regulators,” U.S. Assistant Attorney General Benczkowski said in a statement.

Petrobras said in a statement that it had acknowledged responsibility for "violations of books and records and internal controls provisions." Executives responsible for this have already left Petrobras, the company said, noting that the company did not admit wrongdoing on the bribery allegation.

Under the agreement, which settles violations of the U.S. Foreign Corrupt Practices Act, Petrobras will deposit $682.6 million, or 80 percent of the penalties, in a special fund in Brazil, with the remainder of the fine being split between the DOJ and the Securities and Exchange Commission.

Brazilian federal prosecutors will determine how Petrobras should allocate money in the fund into social and educational programs in an agreement yet to be settled.

Petrobras said in a statement that the deal "puts an end to the uncertainties, risks, burdens and costs of potential prosecution and protracted litigation in the United States."

The oil company will take a third-quarter 3.6 billion real charge - the local currency equivalent of the penalty.

SHARES UP

Although Petrobras had not already provisioned for the U.S. settlement, XP Investimentos' analyst Gabriel Francisco said the penalties will not hurt the companies' results.

"The fines will not hinder Petrobras' plans of reaching a net debt of $69 billion by year end, as it has a comfortable cash position" said the analyst. "The deal means the end of a chapter."

Still, although Petrobras has settled a dispute with the U.S. authorities, it still faces other demands for compensation related to the Car Wash probe.

Earlier this month, for instance, a Dutch court ruled that shareholders in Petrobras will have their complaints heard.

Argentine investors also initiated this month an arbitration proceeding against the firm for losses related to the corruption probe.

(Reporting by Carolina Mandl; Editing by Steve Orlofsky and Marguerita Choy)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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