Monday, February 26, 2024

LATIN AMERICA | 03-01-2018 14:18

Petrobras pays US$2.95 billion to settle class action suit

Giant state oil firm will admit no guilt as part of deal with individuals and pension funds that had invested in Petrobras, who sued the firm over losses incurred due to massive embezzlement and bribery scheme.

Petrobras has agreed to pay US$2.95 billion to settle a class action suit in New York brought on behalf investors harmed by a huge corruption scandal at the Brazilian state oil giant, the company said Wednesday.

"The agreement, which will be submitted for consideration of the judge, seeks to close all suits currently under way," Petrobras said in a statement filed with the regulator of Brazil's capital markets.

A massive embezzlement and bribery scheme involving a network of company executives and politicians is estimated to have caused the company more than US$2 billion in losses.

The lawsuit was filed by individuals and pension funds that had invested in Petrobras through complex financial products. Those had been acquired at a price based on the estimated value of Petrobras’ assets. After the scandal broke, however, the company's assets were depreciated, causing losses for numerous investors.

The oil company, which admits no guilt under the settlement, proposes making the payment in two US$983 million installments, followed by a third payment of US $984 million.

The first payment would be made within 10 days of the settlement's preliminary approval by the judge, the second within 10 days of a definitive green light and the final one within six months or by January 15, 2019, whichever comes first. The settlement would be reflected in the company's fourth quarter 2017 earnings. The company wrote off a loss of more than US$2 billion on its 2014 earnings.

Petrobras said the agreement would eliminate the risk of an adverse verdict, which could have "material adverse effects for the company and its financial situation." The agreement "does not constitute an admission of guilt or of the practice of irregular acts" as the company regards itself as "a victim" of the crimes uncovered by Brazilian prosecutors.

Ecuador's jailed VP stripped of office

Ecuador's Vice-President Jorge Glas lost his title late Tuesday because he has been absent for more than three months – locked up in prison on a six-year sentence for corruption.

Glas, 48, is the highest-ranking Latin American politician to be convicted and imprisoned for his role in the continent-wide scandal which also involves a Brazilian construction group, Odebrecht, which gave bribes to secure public works contracts.

Glas was given his six-year sentence on December 13 by Ecuador's Supreme Court after being found guilty of receiving US$13.5 million in Odebrecht kickbacks. He says he is innocent and will appeal. But, taking into account his detention since October 2 pending his trial, he has not been able to carry out his duties. That means that at midnight Tuesday, Glas had failed to execute his functions as vice-president for the three months allowed under the Constitution. So he automatically lost his post.

Asked if that was right, the executive secretary of the ruling PAÍS Alliance, Ricardo Zambrano, said: "Of course."

Zambrano added, in comments to the Ecuavisa television network, that President Lenín Moreno would have to ask Congress to choose a replacement.

The Legislature on December 17 had voted to open proceedings to fire Glas. But that still required rulings from the Constitutional Court and a congressional panel before going to a vote before the entire Congress.

It appeared the Constitution's provisions would come into effect before that process ran its course.

"Under the law, the three months of absence means that a temporary deficiency (of vice-presidential functions) becomes a definitive one, without the need for any congressional declaration," a constitutional expert, Rafael Oyarte, told AFP.

Two people are seen as best placed to succeed Glas: current Acting Vice-President Maria Vicuna, and Industries Minister Eva Garcia.
Ecuador's ruling party is split between Moreno and previous president Rafael Correa. Glas was an ally of Correa, who retired to Belgium but returned to his country in late November to battle Moreno for control of their party.

Odebrecht, which was investigated by the US Justice Department, agreed to pay a US$3.5-billion fine after admitting to giving US$788 million in bribes across 12 countries to secure contracts. The scandal has ensnared politicians in several countries, including Mexico, Peru, Panama and Venezuela.

Ecuadorean prosecutors said Odebrecht spent US$47.3 million in bribes in their country to get public contracts.


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