Petrobras probe ‘blames suppliers’

The initial report of a Brazilian congressional investigation into corruption at state-run Petrobras concluded late Monday that the company and politicians did no wrong, and that suppliers and rogue employees were responsible for graft, according to a report.

The report by the committee’s official rapporteur Luiz Sergio, a member of Brazil’s ruling Workers’ Party, also criticised police and prosecutors handling of the so-called Lava Jato, or Operation Car Wash, probe into  contract fixing, bribery and political kickbacks at Petrobras, according to congressional news service Agencia Camara, cited by Reuters.

A parade of witnesses, as well as court testimony by former Petrobras officials and contractors convicted for their role in the scandal, have told the committee under oath that money was diverted to political parties, including the Workers’ Party.

The rapporteur criticised the use of “an excess” of plea-bargains in exchange for reduced sentences to win confessions from key players in the case. He also said there was no proof that money was diverted from Petrobras projects to politicians.

“It’s impossible to believe that there was money directly earmarked (for political bribes) in the companies’ treasuries. That is an exaggerated affirmation by the investigators,” he said.

Brazil’s plea-bargain law requires that co-operating witnesses provide evidence as well as testimony in order to receive reduced sentences.

Luiz Sergio made no recommendations regarding politicians under investigation in Lava Jato, saying such issues were for prosecutors or the Congressional Ethics Committee, not his Petrobras investigation.

The report made 14 legislative proposals to improve governance of state companies and changes to the country’s anti-corruption law.

Several members of the committee have asked to formally review Luiz Sergio’s report and may attempt to make amendments before a final vote is taken on it, possibly this week.

Last week, Brazilian prosecutors said Swiss authorities had frozen $2.4 million in accounts held by Eduardo Cunha, speaker of Brazil’s lower house of Congress, the Chamber of Deputies. Cunha is a member of Brazil’s Democratic Movement Party, part of the Workers’ Party-led coalition.

Federal prosecutors are investigating Cunha over allegations made during plea bargains that he had received a $5 million bribe as part of the Petrobras corruption scheme.

Brazil’s President Dilma Rousseff was chairwoman of the board of Petrobras during much of the time when the corruption scheme was operating.

Rousseff has not been charged or accused of any criminal wrongdoing, nor has any evidence been made public to that effect. She was not asked to testify before the committee.

Meanwhile, five Brazilian banks have agreed to extend into next year a repayment deadline for $3.6 billion in debt owed by Sete Brasil, a company set up to build offshore drilling rigs and other facilities for Petrobras.

The debt, owed to state-led Banco do Brasil and state-owned Caixa Economica Federal as well as Itau Unibanco Holding, Banco Santander Brasil and Banco Bradesco, was supposed to have been repaid on 19 October, the Estado de S.Paulo newspaper reported.

The loan repayment deadline has already been extended twice before and talks about repayment over the last two months have intensified in recent days, the paper reported, adding the banks are counting on new money being available to Sete Brasil next year to pay the loans and reduce their losses.

Sete Brasil was set up to build and lease as many as 28 offshore facilities for Petrobras but the newbuild programme has been scaled back to 18 units due to the ongoing corruption scandal, a plunge in oil prices and a contraction in investments, as well as cost-cutting at the state company.