Exclusive: U.S. graft probes may cost Petrobras record $1.6 billion or more - source

Tue Aug 18, 2015 6:58pm EDT
 
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By Jeb Blount and Mica Rosenberg

RIO DE JANEIRO/NEW YORK (Reuters) - Brazil's Petrobras may need to pay record penalties of $1.6 billion or more to settle U.S. criminal and civil probes into its role in a corruption scandal, a person recently briefed by the company's legal advisors told Reuters.

State-run Petroleo Brasileiro SA, as the company is formally known, expects to face the largest penalties ever levied by U.S. authorities in a corporate corruption investigation, according to the person, who has direct knowledge of the company's thinking. The settlement process could take two to three years, this person said.

To date, the largest settlement of corporate corruption charges with the U.S. Department of Justice and the U.S. Securities and Exchange Commission was a 2008 agreement with Siemens AG, the German industrial giant. It agreed to pay the United States $800 million to settle charges related to its role in a bribery scheme, and paid about the same amount to German authorities.

The person told Reuters the legal advisors said they believed Petrobras faced fines that could be as large as, or more than, the $1.6 billion in combined U.S. and German penalties that Siemens faced.

Two other sources with direct knowledge of Petrobras' plans also said that any settlement, while several years away, would likely be "large," but declined to give a specific estimate.

All three sources requested anonymity, and cautioned that any estimates for the size of possible fines were very preliminary. Petrobras has not yet begun settlement talks with U.S. authorities, whose investigations are believed to be in an early phase, they said.   

In November, the SEC sent a subpoena to Petrobras requesting information about the widening corruption investigations that have ensnared top company executives, major private contractors and senior politicians in Brazil. According to people familiar with the matter, the DOJ, which can bring criminal charges, is also investigating the company.

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A fuel storage tank is seen at the company Petroleo Brasileiro SA, or Petrobras, in Sao Caetano do Sul, near Sao Paulo July 24, 2015.  REUTERS/Nacho Doce