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Ex Petrobras director implicates dozens of Brazil politicians in growing corruption probe

The former refining chief of Brazil’s state oil company Petrobras has alleged that dozens of the country’s lawmakers and top officials took bribes and kickbacks from the state-owned oil giant.

Paulo Roberto Costa was arrested in March on suspicion of money laundering. Four months later, police added bribery to his charges.

His allegations of bribery among Brazil’s top politicians could hurt the reelection bid in October of President Dilma Roussef. She’s a former chairperson of Petrobras but hasn’t been named in any investigation.

Costa, pictured above, is now cooperating with investigators.

He has alleged that the lawmakers received three percent commissions on the value of the contracts signed by Petrobras while he served as director of refining from 2004 to 2012.

The Brazil government owns 51% of Petrobras.

In April, Brazil’s senate launched an investigation into allegations that the company overpaid for an oil refinery in Pasadena, Texas in 2006. President Roussef was the chairperson of Petrobras at the time.

The company paid $1.7 billion for the refinery and so far has written off $500 million on the value of the investment.

Police said Costa was involved in $4.5 billion of illegal transactions with an unnamed Brazilian currency broker and unnamed politicians in connection with the refinery purchase.

In March this year, prosecutors opened a criminal investigation into allegations that Petrobras employees took $139 million in bribes from Dutch supplier SBM Offshore in exchange for equipment supply and drilling contracts. Last month, Netherlands-based SBM included a $240 million provision for a settlement of investigatios into improper sales practices in several countries.

Petrobras has been called the most indebted oil company in the world. Its long-term debt grew to $126.5 billion by the end of March, from $90.6 billion just a year earlier.

Police are also investigating $20 billion in transactions between Petrobras and construction firms involved in the company’s Abreu e Lima Refinery near Recife, Brazil.

The Brazil newspaper Folha de Sao Paulo reported that 49 deputies, 12 senators, and several state governors were involved in the bribery and kickbacks. The Globo daily said at least 25 lawmakers have been named. They come from both major political parties, according to Business Insider.

Investments in oil production and refining have been major components of Roussef’s re-election campaign.

“I think it is extremely wrong to use the biggest oil company in Latin America and the biggest company in Brazil, always during elections, as a political weapon,” Rousseff said.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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