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  HOME | Brazil (Click here for more)

Debts of Brazil Companies Probed in Petrobras Scandal up 1,424%

SAO PAULO – The debts of 21 of the 27 construction and engineering companies under investigation in a massive corruption scandal centered on Brazilian state-controlled oil giant Petrobras rose 1,424 percent in the first four months of 2015, the local press reported Saturday.

Those companies owed their suppliers 411.5 million reais (some $132.5 million) at the end of April, the daily Folha de Sao Paulo reported, citing a report from the Brazilian Machinery and Equipment Association’s Petroleum and Gas Council.

Most of that debt, which is mainly owed to makers of pipes, boilers, compressors and valves, stems from refinery projects such as Comperj and Abreu e Lima.

Those 21 construction firms are accused of paying bribes to secure inflated contracts with Petrobras, splitting the extra money with corrupt executives of the state-controlled company while setting aside some of the loot to pay off politicians who provided cover for the graft.

All of the firms under investigation are barred from bidding on new contracts with Petrobras, although their attorneys are appealing that court ruling on the argument that they have not been convicted of wrongdoing and that the ban is complicating their financial situation and leaving many on the verge of bankruptcy.

Of the total debt load, 258.9 million reais (some $83.3 million) correspond to equipment that has been delivered but not paid for by the construction companies and the rest to the cancellation of firm orders based on contractual arrangements.

Separately, the Petrobras scandal once again touched the upper echelons of Brazilian politics Saturday with revelations about an alleged meeting in January 2006 between then-President Luiz Inacio Lula da Silva and the oil company’s former refining and supply director, Paulo Roberto Costa, who has cooperated in the corruption investigation as part of a plea deal.

Costa, who is under house arrest in Rio de Janeiro, allegedly met with Lula about the $1.25 billion purchase of a refinery in Pasadena, Texas, in 2006, according to Petrobras internal documents.

That controversial deal was a financial disaster, draining public coffers to the tune of $792 million.

Costa has confessed to receiving hundreds of thousands of dollars in bribes in connection with the refinery purchase from Belgium-based Transcor Astra Group.

 

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