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Brazil expands bribery investigation into former Petrobras refining chief

08.22.2014  | 

Investigators have turned to construction companies that allegedly bribed former refining chief Paulo Roberto Costa, according to the federal prosecutor’s office in Curitiba where the case is.

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By PETER MILLARD and SABRINA VALLE
Bloomberg

Prosecutors in Brazil are expanding a money-laundering probe linked to state-run Petroleo Brasileiro, or Petrobras, as a court considers freezing CEO Maria das Gracas Foster’s assets.

Investigators have turned to construction companies that allegedly bribed former refining chief Paulo Roberto Costa, according to the federal prosecutor’s office in Curitiba where the case is before a judge. Eleven additional search warrants to gather evidence on Costa have been issued, the prosecutor’s office said in an e-mailed statement.

Petrobras comes under scrutiny ahead of every national election, according to President Dilma Rousseff, who defended Foster at a campaign event in northern Brazil yesterday. Rousseff is seeking re-election October.

“I think it is extremely wrong to use the biggest oil company in Latin America and the biggest company in Brazil, always during elections, as a political weapon,” Rousseff said.

Petrobras on Aug. 8 denied reports that Foster was at risk of losing her job.

The money-laundering case, dubbed “Car Wash” by police, is gaining speed as Congress conducts a separate probe of Petrobras for runaway spending at refinery projects and allegedly overpaying for a plant in Houston. Meanwhile, Brazil’s audit court is deciding whether it will freeze Foster’s assets in Brazil while the investigations are carried out.

Most Volatile

Costa’s attorney, Nelio Machado and Petrobras’s press office didn’t immediately respond to e-mails and phone calls requesting comment. Rousseff’s press office didn’t respond to an e-mail seeking comment.

Petrobras has been the most volatile oil company with a market value of more than $50 billion in 2014, according to data compiled by Bloomberg. Rousseff’s weak showing in some polls has helped fuel a 22% rally this year as investors speculate a new administration may end fuel subsidies, boosting profits at the most-indebted publicly-traded oil company.

Shares fell 2.6% to 20.84 reais at 1:29 p.m. in Sao Paulo.

The Rio de Janeiro-based company is the biggest publicly-traded oil company in Latin America. State-owned Petroleos de Venezuela SA has larger proven reserves.



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