A Review of the Nigerian Energy Industry

Six contractors sued in Brazil over scandal

23 February 2015, News Wires – Brazilian prosecutors filed lawsuits against six construction and engineering groups, seeking 4.47 billion reais ($1.55 billion) in damages in connection with a contract-fixing, bribery and political kickback scandal at state-run oil company Petrobras.

Justice 1The five lawsuits, filed in federal court in Brasilia, are against Camargo Correa, the Brazil unit of Japan’s Sanko; Mendes Junior Engenharia; OAS; Galvao Engenharia; and Engevix Engenharia, the federal public prosecutor’s office, known as MPF, said in a statement seen by Reuters on Friday.

The lawsuits also name 13 of these companies’ subsidiaries and 28 of their executives as defendants, the news wire said.

All the companies except Sanko are Brazilian. Camargo Correa and Sanko are being sued together, the rest of the construction and engineering groups are being sued individually.

The lawsuits seek to recover 319 million reais in lost state funds and 3.19 billion reais in damages and to impose a civil penalty of 959 million reais.

The cases stem from what criminal prosecutors say was a scheme where the construction companies and their executives conspired with Petrobras executives to overcharge for contracts. Much of the excess was then kicked back to Petrobras executives, politicians and political parties as bribes and illegal campaign contributions in a scandal known as Operation Car Wash.

During criminal investigations, prosecutors showed that 16 construction and engineering companies had formed a cartel “allowing them to defraud the public auction process related to some of the projects tendered by Petrobras between 2004 and 2014, increasing the profits of the companies by hundreds of millions of reais”, the MPF statement was quoted as saying.

The lawsuits also seek to ban the companies from receiving government business and prohibit them from obtaining tax benefits or loans from state-run or state-owned banks.

Engevix said it would take the necessary steps to deal with the situation as soon as its lawyers are notified of the case.

The other companies did not immediately respond to requests for comment, according to Reuters.

– Reuters

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