Brazilian oil-and-gas company Petróleo Brasileiro S.A. settled charges with the Securities and Exchange Commission on Thursday for allegedly misleading U.S. investors by filing false financial statements that concealed a massive bribery and bid-rigging scheme at the company.
Petrobras also agreed on Thursday to a non-prosecution agreement with the U.S. Department of Justice. Petrobras agreed to pay a total of $933 million in disgorgement and prejudgment interest and an $853 million penalty. The payments may be offsets by payments it makes to investors in a related class-action settlement and penalties paid to law enforcement authorities in Brazil.
Petrobras admitted to the SEC’s finding of false and misleading filings included materially false and misleading statements to U.S. investors in a $10 billion stock offering completed in 2010. The filings misrepresented Petrobras’s assets, infrastructure projects, the integrity of its management, and the nature of its relationships with its majority shareholder, the Brazilian government.
Petrobras executives worked with Petrobras’s largest contractors and suppliers to inflate the cost of Petrobras’s infrastructure projects by billions of dollars. Petrobras misrepresented billions in kickbacks to the Petrobras executives, who shared the illegal payments with Brazilian politicians who helped them obtain their high-level positions at Petrobras as money spent to acquire and improve assets. That resulted in an estimated $2.5 billion overstatement of assets.
Market Watch | September 27, 2018