Brazilian engineering executives charged in Petrobras scandal

Thu Dec 11, 2014 6:19pm EST
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By Caroline Stauffer

CURITIBA, Brazil (Reuters) - Brazilian prosecutors on Thursday formally charged executives of six of the country's largest engineering firms with forming a cartel to funnel kickbacks from state-run oil company Petrobras (PETR4.SA: Quote) to the ruling political party and its allies.

They were also indicted on charges of corruption and money laundering in a landmark case that has shaken President Dilma Rousseff's government and may further weaken a stagnant economy.

The corruption scandal, in which billions of dollars were allegedly paid by the companies in bribes to win Petrobras contracts, threatens to paralyze infrastructure projects because implicated firms could be banned from government contract bids.

Prosecutors charged 36 people, 22 of them from engineering firms OAS [OAS.UL][OAEP.UL], Camargo Correa [PMORRC.UL], UTC Engenharia, Galvao Engenharia [QGDI.UL], Mendes Junior MEND5.SA and Engevix, including board members and vice presidents of the companies.

"These people stole the pride of the Brazilian people," said top Brazilian prosecutor Rodrigo Janot at a news conference. He vowed the investigation "will go to the very end."

The case is expected to implicate dozens of politicians and weaken Rousseff's already fragile governing coalition as she begins a second term on Jan. 1.

The indictments said the companies formed a "club" to corner billion-dollar contracts with Petrobras and paid 1 percent to 5 percent in bribes to land them. The funds were paid through false contracts with front companies that in most cases had no employees.

Prosecutors said they are seeking the return of about 1.18 billion reais ($448 million) from the companies involved in the alleged bribery scheme, and executives of other engineering firms could face charges.   Continued...

The headquarters of Brazilian oil company Petrobras is seen in Rio de Janeiro November 14, 2014. REUTERS/Sergio Moraes