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Brazil prosecutors indict ex-Petrobras international boss

Image courtesy of WikipediaProsecutors in Brazil Tuesday charged a former senior executive at the state-controlled energy giant with racketeering, bribery, and money laundering.

Nestor Cerveró, the former head of international operations at Petroleo Brasileiro SA, or Petrobras, was accused of taking bribes from 2003 to 2008. He allegedly helped contractors win engineering and construction contracts.

Prosecutors said he used accounts in Switzerland and Uruguay to hide and move the bribe money.

Earlier this month, Petrobras CEO Maria das Graças Foster resigned with five other executives. She had run Petrobras since 2012.

Cerveró was charged earlier with sharing up to $15 million in kickbacks from South Korean shipbuilder Samsung Heavy Industries. Prosecutors said the kickbacks related to construction of a drill ship that cost Petrobras $586 million.

He has denied all of the allegations.

In September, former Petrobras executive Paulo Roberto Costa admitted taking a $636,000 bribe in connection with the company’s 2006 purchase of a Texas refinery.

Costa alleged that executives were skimming as much as three percent off the price of contracts and giving the money to political organizations, including campaigns run by transportation chief and politician Sergio Machado.

Machado has denied any wrongdoing.

Ex-CEO Foster hasn’t been named in the scandal and has maintained that she was not aware of the activity until police launched a probe into the company.

The scale of the corruption is still unknown. Brazil authorities have claimed kickback and bribery schemes could have diverted from $3.7 billion to $28 billion from the company. The uncertainty has held up Petrobras’ release of quarterly and annual audited results.

Brazil prosecutors indicted more than 30 executives in December. They were from construction and engineering companies accused of bribing Petrobras executives for work.

Ratings agency Moody’s downgraded Petrobras’ bonds Tuesday to “junk,” Petro Global News said. Petrobras, known as the world’s most indebted oil company, has about $110 billion in debt. Fitch Ratings and Standards & Poor currently rank that debt at their lowest investment grades.

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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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