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  HOME | Brazil (Click here for more)

Petrobras Says It’s Still Tallying Up Losses from Kickback Scheme

RIO DE JANEIRO – Brazilian state-controlled oil company Petrobras said Friday it is still calculating the scale of its losses stemming from a massive kickback scheme, as well as the size of the investment scale-back it will need to carry out due to its financial difficulties.

In a filing with the Sao Paulo Stock Exchange, Petrobras said it could not confirm the figures published Thursday by the daily O Globo, which reported – citing a government source – that the company would take a 10-billion-reais (some $3.85-billion) charge in its delayed third-quarter results.

That figure is the amount the company was defrauded via a massive kickback scheme, according to Federal Police estimates.

O Globo said the company also plans to slash its 2014-2018 investment program by 30 percent; Petrobras did not confirm that figure either in the filing but reiterated that it is revising its investment planning for 2015.

The decision to cut spending is due not only to the corruption scandal, which has hampered Petrobras’s ability to raise funds on international markets, but also to the recent steep drop in global crude prices.

The company said it is adopting measures to ensure the viability of its projects without seeking out new financing in the market, including “reducing its rate of investment,” reviewing its pricing and product strategies, and lowering operating costs.

Petrobras originally was to have reported its third-quarter results in November, but it has repeatedly delayed releasing the information due to the scale of the corruption scandal.

Executives with leading Brazilian construction and engineering companies OAS, Camargo Correa, UTC, Mendes Jr., Engevix and Galvao Engenharia are among those accused of forming a cartel to artificially drive up the price of contracts awarded by Petrobras.

As part of that scheme, the companies paid kickbacks to some Petrobras executives and funneled a portion of the money from the fat contracts to Brazilian political parties.

To date, prosecutors have formally charged 36 people for their alleged role in the corruption scandal, with three Petrobras executives among the accused.

Petrobras plans to release its third-quarter results on Jan. 27, although they must be revised and certified by auditing firm PricewaterhouseCoopers.

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