US class-action lawsuit adds to Petrobras woes

GMT 00:48 2014 Wednesday ,10 December

Arab Today, arab today US class-action lawsuit adds to Petrobras woes

New York - AFP

A US class-action investors lawsuit filed against Brazil's state oil giant Petrobras accuses the company of failing to disclose "a culture of corruption" that has sent shares plunging.
The suit for violations of the Securities Exchange Act was filed Monday in a New York federal court by the law firm Wolf Popper LLP on behalf of Peter Kaltman and others.
It covers all investors who bought American Depositary Shares (ADS) of Petrobras, traded on the New York Stock Exchange, between May 20, 2010, through November 21 this year, the law firm said, estimating that thousands of people could be included.
The plaintiffs are seeking an unspecified amount of money for "all losses and damages" suffered as a result of the alleged violations and ensuing scandal that have hammered Petrobras shares, according to the complaint.
During the period covered by the suit, Petrobras ADS shares lost 40 percent of their value on Wall Street, with most of that occurring since the oil company's scandal emerged in early September, driving shares down 60 percent.
"The complaint alleges that Petrobras issued materially false and misleading statements by misrepresenting facts and failing to disclose a culture of corruption at the company that consisted of a multi-billion dollar money-laundering and bribery scheme embedded in the company since 2006," the law firm said.
"The company is alleged to have overstated its property, plant and equipment line item on its balance sheet because overstated amounts paid on contracts were carried as assets on the balance sheet."
The Brazilian company operates in 17 other countries, including the United States where it produces oil and gas and has refining operations.
In late November Petrobras revealed that the US markets regulator, the Securities and Exchange Commission, had subpoenaed documents.
The company, currently embroiled in a politically momentous corruption scandal at home, did not divulge the issues related to the subpoena. The SEC would not confirm its investigation of the company.
Brazilian authorities are investigating claims by an arrested former Petrobras director that politicians, mostly allies of President Dilma Rousseff, who was re-elected in October, received billions of dollars in kickbacks financed by cash creamed from inflated contracts.
There is no suggestion Rousseff was involved in the money-making scheme and she has vowed to support the wide-ranging investigation.
Separately, since earlier this year, Petrobras conducted an internal investigation of its 2006 purchase of a refinery in Pasadena, Texas, decided when Rousseff was chairperson of Petrobras. Critics say the company paid far more for the refinery than it was worth.
The company paid $1.1 billion for the refinery one year after the then-owner Transcor Astra Group of Belgium paid $42.5 million for it.

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