US city sues Brazil's Petrobras and its chief

GMT 00:27 2014 Saturday ,27 December

Arab Today, arab today US city sues Brazil's Petrobras and its chief

People walk past Petrobras' building in Rio de Janeiro
New York - AFP

The US city of Providence has filed suit against Petrobras and senior officers of the company over investor losses due to a corruption scandal at the Brazilian oil giant.
The complaint by Providence, the largest city in the northeastern state of Rhode Island, follows other investor suits against Petrobras in the United States in the wake of a massive corruption scandal that has depressed Petrobras' stock value.
But the Providence case, filed December 24 in New York by law firm Labaton Sucharow, is the first to bring allegations against key executives, including company president Graca Foster and chief financial officer Almir Barbassa, according to Brazilian newspaper O Estado.
The suit accuses Petrobras of making "materially false and/or misleading statements" to investors in Petrobras stocks and bonds that inflated the value of the company before the corruption scandal broke.
"However, when the truth about Petrobras' asset values, expenses, net income and material weaknesses in its internal controls became known to investors," the price of Petrobras investments plummeted, the suit alleged.
"These price declines caused significant losses and damages to plaintiff and other members of its class."
The class includes investors which, like Providence, purchased securities of Petrobras and its affiliates from 2010 to 2014. The suit seeks unspecified damages.
Other defendants include 15 banks, such as JPMorgan Case and Morgan Stanley, which worked on stock or bond offerings by Petrobras during the period.
Foster and Barbassa have denied having been aware of the corruption scheme.
Investigators say some $4 billion were skimmed off inflated Petrobras contracts over the course of a decade and filtered to corrupt politicians.
So far, 39 people have been charged, including Paulo Roberto Costa, a former director of supplies at Petrobras who is cooperating with investigators as part of a plea bargain.

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