Petrobras executives ‘cooked the books’ to hide bribes paid in some cases to halt an investigation into its contacts, US authorities say (Mauro PIMENTEL)

Washington (AFP) – US and Brazilian authorities have fined Brazil’s state oil giant Petrobras more than $853 million for covering up  a massive bribery scheme involving Brazilian politicians and political parties, the US Justice Department announced Thursday.

Petrobras said the issues were uncovered as part of the “Operation Car Wash” investigation — the scandal that snared Brazil’s jailed former president Luiz Inacio Lula da Silva as well as many of the country’s political and business elites.

Petrobras executives at “the highest levels,” including board members, orchestrated hundreds of millions in bribes “and then cooked the books to conceal the bribe payments from investors and regulators,” US Assistant Attorney General Brian Benczkowski said in a statement.

US stock market regulators also charged the company with misleading investors as they concealed “a massive bribery and bid-rigging scheme.”

The company inflated the cost of projects and then contractors “paid 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,” the Securities and Exchange Commission said in a statement. 

Petrobras erroneously recorded these payments “resulting in an estimated $2.5 billion overstatement of assets,” the SEC said.

Petrobras agreed to pay $933.5 million to the SEC to return ill-gotten gains, but this sum will be reduced by the amount of any payments made in a class action lawsuit by investors filed in New York.

– ‘Car wash’ –

The actions the company admitted to occurred while Petrobras was traded on the New York Stock Exchange, giving US authorities jurisdiction, the Justice Department said. 

Petrobras admitted some executives funneled payments to politicians and political parties, and that the company failed to keep accurate books and records about property and equipment, as required by law.

The company said “Operation Car Wash” was “a corrupt scheme that harmed and caused severe financial loss to Petrobras.”

The resolution with US and Brazilian authorities “is in Petrobras’s best interest and that of its shareholders. It puts an end to the uncertainties, risks, burdens and costs of potential prosecution and protracted litigation in the United States,” the company said in a statement.   

Brazilian authorities will receive 80 percent of the fine, and the remainder will be collected by the Justice Department and the SEC.

Prosecutors say a Petrobras executive directed payments to stop a Brazilian parliamentary inquiry into company contracts.

The executive allegedly funneled bribes from company contractors into the campaign of an unnamed Brazilian politician who had power over where Petrobras could build refineries. 

Executives then falsely certified Petrobras financial statements to the US Securities and Exchange Commission even while they were personally involved in the bribery.

“According to Petrobras’s admissions … members of the Petrobras executive board were involved in facilitating and directing millions of dollars in corrupt payments to politicians and political parties in Brazil, and members of Petrobras’s board of directors were also involved in facilitating bribes that a major Petrobras contractor was paying to Brazilian politicians,” the Justice Department statement said. 

As part of the agreement announced Thursday, Petrobras agreed to continue cooperating with in any continuing investigations into the matter, including actions taken by individuals, and to make changes to its internal compliance program.

The settlement involved a “non-prosecution agreement,” meaning no charges will be brought against the company. Prosecutors may separately take action against individuals.

More than 40 countries including the United States have criminalized paying bribes abroad to win business, which authorities say defrauds investors while promoting corruption and political instability.

The company’s shares rose on Thursday morning in Sao Paolo and New York.

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