You are here
Petrobras urges US court to throw out investor suit
[NEW YORK] Brazilian state-owned oil giant Petrobras asked a US court on Thursday to dismiss a class-action lawsuit from investors who claim its massive corruption scandal devalued their investments.
Roger Cooper, an attorney for the state-owned Petrobras, told the US District Court in New York that the scandal was the result of "mismanagement" and "irregularities" taken by a handful of Petrobras officials and did not impugn the company as a whole.
Mr Cooper urged US District Judge Jed Rakoff to dismiss the federal case, which has been brought by individual investors and US and European pension funds who argue they overpaid for Petrobras stocks and bonds, based on the company's erroneously inflated value.
The pension funds invested in Petrobras through asset-backed securities, bought from US traders at a high price based on the estimated value of the company at the time.
But after the scandal erupted, Petrobras in April took a US$17 billion write-down of assets and reported a US$7.2 billion loss for 2014.
"They inflated their earnings," said Jeremy Lieberman, an attorney for plaintiffs. "You have a system of (a) revolving door of fraud." Judge Rakoff said he would announce a decision within the next two weeks.
In a case that has been called the biggest corruption probe in Brazilian history, prosecutors say Petrobras executives colluded with construction companies to massively overbill the oil giant for projects and use part of the money to bribe politicians and parties, including the ruling Workers' Party.
Petrobras, the largest company in the world's seventh-largest economy, estimates the scheme cost it more than US$2 billion.
The scandal also has marred the Brazilian construction industry, with police on June 19 arresting the chief executives of construction giants Odebrecht and Andrade Gutierrez.
The heads of five other companies have been arrested in the corruption probe known as "Operation Car Wash."
Two governors, 13 senators and 22 congressmen are also under investigation.