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Petrobras defends anti-corruption measures

05 May 2017 22:33 (+01:00 GMT)
Petrobras defends anti-corruption measures

Rio de Janeiro, 5 May (Argus) — Brazil's state-controlled Petrobras is defending its recent measures designed to stamp out corruption in the face of assertions by federal prosecutors that irregularities persist.

"Nothing guarantees that today we have a company that is truly purged of the past corruption," federal prosecutor Carlos Fernando dos Santos Lima said yesterday, following the early morning detention and arrest of three former high-level Petrobras executives.

Yesterday's federal police operation was the latest in the three-year-old Lava Jato probe into systemic corruption at Petrobras, this time focusing on bribes paid to executives from the company's gas and energy sector.

According to prosecutors, the executives received around R100mn ($31.5mn) in bribes related to Petrobras contracts, with some payments registered as late as July 2016, well into the time the probe was underway.

Petrobras maintains it is the victim of corruption and says it has made many structural and procedural changes to ensure compliance.

The company is still facing multiple lawsuits by investors in the US and Europe, as well as ongoing investigations at the US Securities and Exchange Commission and the US Department of Justice.

Dozens of firms involved in the massive kickback scheme, the starting point for the historic Lava Jato investigation, remain banned from bidding on Petrobras contracts. Brazil's biggest construction firms, such as Odebrecht and Andrade Gutierrez, have turned state witness and revealed details of the scheme that funneled money to politicians in Brazil and many countries in Latin America.

Most of those firms have since retooled their compliance departments and are working on leniency deals that could bring them back into the bidding pool, almost three years after the moratorium came into effect.

In the meantime, Petrobras is moving more projects abroad and is seeking waivers from local content commitments it says are unfeasible considering the disruption in the local supply chain.

The Lava Jato probe has now shifted to a complicated political phase, with prosecutors investigating dozens of sitting and former politicians.

In a deposition today, former Petrobras service director Renato Duque, jailed since 2014, told Sergio Moro, the federal judge heading Lava Jato, that the former governing Worker Party (PT) had full knowledge of the scheme.

The PT, whose popular 13-year rule was cut short by the August 2016 ouster of former president Dilma Rousseff, is allegedly one of the architects of the scheme that helped keep party coffers full. PT allies such as current president Michel Temer's Democratic Movement Party (PMDB) are also alleged to have benefitted from the scheme.

Duque also said former president Luiz Inácio Lula da Silva, known as Lula, led the whole corrupt apparatus, and had even given instructions to close foreign accounts after the Lava Jato probe gained momentum.

Lula denies any wrongdoing. He is already a defendant in at least five corruption cases spawned from the investigation, but remains a favorite in polls for the October 2018 presidential election.