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BRAZIL
Petrobras in corruption scandal
Latinamerica Press
4/30/2014
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Questionable purchase of refinery in United States may implicate President Dilma Rousseff.

Brazil’s Supreme Court confirmed on Apr. 23 the request of opposition lawmakers to investigate allegations of impropriety regarding the purchase by state oil company Petrobras of an oil refinery located in Texas, United States, in 2006, when President Dilma Rousseff headed the firm’s board of directors.

The acquisition’s high price tag and the financial losses reported by the Pasadena Refining Company Inc, located near the city of Houston, have put Petrobras under the microscope, and it’s taking a toll on Rousseff, threatening her potential reelection in October.

The ruling party in Congress had requested that the congressional investigation include allegations of corruption in the Brazilian states ruled by the opposition — a dispute that reached the Supreme Court, which confirmed the investigation will include only the purchase of the refinery. It will also address allegations of bribes paid to Petrobras officials by Dutch company SBM Offshore, which provides oil tankers for work at sea, as well as a case of alleged money laundering by a former director of the Brazilian oil company.

In a Senate hearing on Apr. 15, Petrobras President Maria das Graças Foster testified that the purchase of Pasadena, which refines 100,000 barrels of oil a day, “was not a good deal.” Petrobras paid Belgian firm Astra around US$1.2 billion in two phases: in 2006, it paid $360 million for 50 percent of the refinery, and in 2012 it paid $820 million for the remaining half.

“Reviewing these data, there’s no way of  recognizing that it was a good deal, so it wasn’t a good deal. That’s the point. That’s unquestionable from the accounting perspective,” Foster said. “The probability of recuperating (the investment) was very low.”

Secret clauses
Foster said the purchase — which intended to maximize profits on Brazilian heavy crude oil sold in the United States — was approved without the Petrobras Board of Directors knowing about two important clauses in the contract that had to do with compensation to Astra for potential losses and with the option to buy that obligated Petrobras to complete the purchase of the refinery in 2012.

“The Petrobras Board of Directors wasn’t made aware of those clauses,” Foster said. “The director of the [Petrobras] international department, Nestor Cerveró, was the one who was obligated to disclose.”

José Sergio Gabrielli, president of Petrobras when the acquisition took place, admitted his responsibility, although he also blamed Rousseff for the transaction.

“I was president of the company,” he told newspaper Estado de São Paulo. “I can’t escape my responsibility and, likewise, President Rousseff cannot escape her responsibility as president of the board of directors.”

For now, Rousseff is favored to win the first round of presidential elections on Oct. 5, with 38 percent of the of the would-be voters, according to an April survey by polling firm Datafolha.
—Latinamerica Press.


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