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Petrobras scandal could engulf Eletrobras and foreign firms

Petrobras scandal could engulf Eletrobras and foreign firms

Lima said that “there are many charges to come” in an investigation that will probably continue for another two years. Many senior executives have already become embroiled in the Petrobras scandal, while Brazil’s President Dilma Rousseff has seen her reputation battered. The country’s fragile economy has also been shaken.

The announcement that prosecutors may investigate another state-owned company confirms that they are extending the scope of their enquiries. The targeting of evidence of corruption at a number of foreign suppliers to Petrobras could add to similar findings at other foreign firms. These include South Korea’s Samsung Heavy Industries and Danish oil and shipping group Maersk.

The investigation took one of its most significant scalps recently with the arrest of the chief executive at Brazil’s largest construction and engineering conglomerate Odebrecht. Lima said he has no doubt that Odebrecht and competitor Andrade Dutierrez led a cartel that increased prices for Petrobras, with the illicit profits then allegedly forwarded to executives and politicians.

Marcelo Odebrecht has denied any wrongdoing and described the arrests as illegal. Prosecutors have 30 days from arrest in which to bring charges, according to Reuters.

Lima also confirmed that former President Luiz Inacio Lula da Silva is not being investigated for illicit ties to Odebrecht, despite suggestions to the contrary by media in Brazil. “At this point the former president is not part of the investigation,” he said. “All we have until now is just news in the press … The fact is, if we find cause, we will investigate him like anyone else.”

Lima added that lawyers for Odebrecht and other executives had not indicated that they were interested in plea bargains, and that this had provided the ammunition for prosecutors to widen the investigation.

The United States Department of Justice and Securities and Exchange Commission are both also involved in the investigation and want to ensure that companies comply with the Foreign Corrupt Practices Act (FCPA).

When a scandal engulfs a country, it is wise for companies operating in that country to conduct an audit. Conducting an audit will give companies the opportunity to ascertain if they are at risk of becoming embroiled in the controversy. If illicit behavior is found to have occurred, then companies will have the choice to self-report or not. Companies that self-report in Brazil give themselves the chance to continue to operate in the South American country, while those that don’t risk receiving a ban.