Petrobras Sees Its Three Former Construction Executives Sentenced in Graft Case
Two executives made plea bargains to reduce their sentences.
Petrobras Brasileiro Petrobras’ SA (ADR) (NYSE:PBR) contractor, which happens to be the largest Brazilian construction company, has seen three former construction executives sentenced for involvement in money laundering on top of other charges as part of the graft case that has targeted the Brazilian oil and gas major.
It is a watershed moment, since it marks the first ever sentence handed down to senior executives hailing from the construction industry (from the top conglomerate), who were involved in the unprecedented bid rigging and bribery scheme.
Among the first to convict is Dalton Avancini, 48 years old, a former president of Camargo Correa Construcoes e Participacoes, Sao Paulo based company. He is sentenced to more than 15 years in prison as part of a plea bargain in return for exchanging information regarding the alleged scheme.
Other executives sentenced include former Camargo Correa Vice President, Eduardo Eduardo Elite, 49, on similar charges and made the similar deal in spilling the beans on the alleged fraud.
Finally, but not the least, the same company’s former Chairman, Ricardo Auler, was also arrested but did not struck a plea deal. Plea bargains seem popular method for prosecutors who see this as a win between the two sides, as evidenced with at least 18 cooperation contracts that have been signed so far.
During the time the former officials have been under investigation, the construction firm has pledged to cooperate with authorities, while trying to improve its control systems, but most of all its corporate governance.
Petrobras has also pledged the same, but with a warning, pointing out that it has been a victim of the scheme, which was beyond the company’s control. This presents a challenging situation to the company nevertheless.
The three men were taken into custody and detained as part of ‘Operation Car Wash’. Investigations showed that big Brazilian construction companies had been at play in forming a cartel to drive up prices, limiting options for the company, which calls for bids for construction contracts, in turn leading to kickbacks to enterprise insiders and politicians.
The three convicted persons are not alone though. Since the operation began, at least four former Petrobras executives, on top of 23 construction executives, accused of money laundering and corruption, with some having admitted to wrongdoing in return for less punishment.
Petrobra’s stock price ended the day at $7.50, a fall of 5.75% the previous day, following the convictions. The further decisions rest with the justice.