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  HOME | Brazil (Click here for more)

Brazil’s Petrobras Seeks Inclusion on Stock Market Transparent-Company List

RIO DE JANEIRO – Brazilian state oil company Petrobras, which is taking a series of anti-corruption steps in the wake of a massive graft scandal, has asked to be included among a group of companies traded on the Sao Paulo Stock Exchange that offer investors a higher level of transparency, its top executive said Friday.

The company’s chief executive officer, Pedro Parente, said at an event in Rio de Janeiro to unveil the company’s measures to combat corruption that Petrobras had announced its decision to adhere to the Sao Paulo Stock Exchange’s Grade 2 of corporate governance and would likely migrate to that level in the coming weeks.

“That means more transparency, more account rendering and more respect for minority (shareholders),” Parente said.

The event was held on the eve of International Anti-Corruption Day, which has been observed annually on Dec. 9 since the passage of the United Nations Convention Against Corruption in October 2003.

Companies at Grade 2 apply best transparency practices and offer their shareholders, including those without voting rights, the possibility to voice opinions about the company’s management.

“We’re already a company recognized by the Sao Paulo exchange for our transparency practices, and we’re the state company highest rated by the government in terms of measures to combat corruption,” Parente said.

He said the company had made great strides in bolstering its anti-corruption measures since the discovery of a massive bribes-for-inflated-contracts scandal centered on the oil giant.

“In just three years, Petrobras has been able to build a governance system this is recognized for adopting the most modern practices in that area,” Parente said.

The so-called Car Wash investigation found that Brazil’s largest construction and engineering companies illegally formed a cartel to systematically divvy up Petrobras contracts, overcharge the oil company and bribe corrupt executives at the state-controlled firm over the course of more than a decade.

Extra money was diverted to illegally fund election campaigns and to individual politicians who provided cover for the graft, according to the probe, which began in 2014 and has led to prison sentences for executives of several of Brazil’s largest construction companies, numerous former Petrobras officials and politicians accused of taking kickbacks.

As a result of plea deals, money that was diverted from Petrobras is now being reimbursed to the state-owned company.

The money reimbursed thus far represents around 13 percent of the roughly 10.8 billion reais ($3.4 billion) to be returned pursuant to 163 plea deals with individual defendants and companies implicated in the diversion of funds, a prosecutor said Thursday.

Parente said that as part of its anti-corruption drive nearly 50,000 employees at all levels, as well as workers at third-party companies, have received training on the adoption of best practices.

In addition, 3,000 evaluations of staff and 15,000 evaluations of companies from which Petrobras has acquired products or services have been carried out, he added.

“Now we’re not only verifying the integrity of our contractors and clients, but we’re also demanding that they too adopt ethical management models,” Petrobras’ chief governance and compliance executive officer, Joao Elek, said for his part.

Sergio Moro, the federal judge who has spearheaded the Car Wash investigation, attended Friday’s event in Rio as a special guest.

He called on Brazil’s largest company to learn from its mistakes and correct the flaws in its system that allowed the multi-billion-dollar graft scheme to operate.

Moro praised the steps Petrobras has taken thus far but also offered suggestions for making the company even less vulnerable to corruption.

He said the primary cause of all of Petrobras’ problems was a clientelist system whereby the government, the company’s majority shareholder, appoints people to executive positions based on the recommendations of parties in the ruling coalition.

“In my opinion, the root of the crimes at Petrobras was the political distribution of positions at the company. It’s a fact that the executives were named with a clear mission: raise funds for the parties and the politicians who had backed their appointments,” the judge said.

“Even though the current management is trying to professionalize the company and combat that political interference, we can’t depend on the goodwill of the majority shareholder at the moment. We must adopt mechanisms to prevent political appointments once and for all,” Moro said.


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