Petrobras Probe Points to Pension Fund

Maritime Activity Reports, Inc.

December 30, 2014

Clarification: This story has been updated to include the full name a company which is under investigation for involvement in a corruption scandal with Petrobras. The name of the Brazilian company is UTC Engenharia, not UTC as initially reported. There are several global companies known as UTC, and only the Brazilian firm UTC Engenharia is implicated.

Brazil's state-run oil company Petrobras on Monday said a growing corruption scandal may implicate its employee pension fund and has led to a freeze on payments to 23 contractors allegedly involved in the scheme.

Petros, the 66 billion real ($24 billion) employee-pension fund of Petroleo Brasileiro SA, as Petrobras is formally known, was singled out by an internal investigation, Petrobras said in a statement.

The law firms that are conducting the internal investigation "have found possible links to the facts that have been investigated" regarding the pension fund, according to the statement.

It did not give details of any possible links.

The investigation was launched after Brazilian prosecutors alleged that Petrobras executives conspired with construction companies to inflate the cost of contracts and then kick back proceeds to executives, politicians and political parties as bribes and campaign contributions.

In a separate statement, Petrobras said it was blocking payments to 23 companies implicated in a police investigation into the alleged kickback scheme.

The list includes Brazil's largest construction firms Odebrecht SA, Camargo Correa and Andrade Gutierrez, as well as Italo-Argentine conglomerate Techint and Sweden's Skanska AB .

The other companies on the list were: Alusa, Carioca Engenharia, Construcap, Egesa, Engevix, Fidens, Galvão Engenharia, GDK, IESA, Jaraguá Equipamentos, Mendes Junior, MPE, OAS, Odebrecht, Promon, Queiroz Galvão, Setal, Tomé Engenharia and UTC Engenharia.

The blacklisted companies are banned from bidding and receiving contracts for Petrobras work, the company said.

The move will reduce the number of companies Petrobras is able to work with in its $221 billion five-year investment plan - one of the largest in the global oil industry - as it looks to exploit giant oil reserves off the coast of Brazil.

Petrobras said it aims to revise its planned investments for next year as it tries to avoid a cash squeeze in the midst of the corruption scandal and lower crude oil prices. (Reporting by Stephen Eisenhammer

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