INTERNATIONAL NEWS

Petrobras Settles U.S. Corruption Class Action For $2.95bn

Brazil’s state-controlled oil company, said on Wednesday it has agreed to pay $2.95 billion to settle a U.S. class action brought by investors who claim they lost money as a result of a corruption scandal.
Petrobras, as the company is known, denied any wrongdoing under the deal, which is one of the largest securities class action settlements in the United States. U.S. District Judge Jed Rakoff in Manhattan must approve the accord.
The settlement was smaller than what many analysts anticipated and was seen as a net positive for the scandal-plagued company. Preferred shares ticked up 0.3 percent to 16.60 reais by midday, roughly in line with the country’s Bovespa .BVSP equities index. U.S.-traded shares (PBR.N) were unchanged at $10.70.
Analysts at Brazilian bank BTG Pactual said the market had expected a settlement of $5 billion to $10 billion. Moody’s said in a note that if approved the fine “would remove the uncertainty related to the amount to be paid to plaintiffs.”
“Simply put, this litigation and its ultimate resolution has yielded an excellent result for the class,” said Jeremy Lieberman, an attorney for the investors. He called the deal “historic” and said it was the largest ever involving a foreign securities issuer.
Investors had sued Petrobras after prosecutors in Brazil accused executives of accepting more than $2 billion in bribes over a decade, mainly from construction and engineering companies.
Petrobras claimed it was itself a victim and denied wrongdoing in a securities filing on Wednesday. But its market value has plunged as its central role in a massive corruption scheme continues to be unwound by investigators.
For the past four years, Brazil has been rocked by the so-called “Car Wash” investigation, which has exposed billions of dollars in kickbacks to executives of state-run companies and politicians who appointed them to their jobs.
Petrobras said it hoped the settlement would resolve all investor claims in the United States.
The accusations relate to possible irregularities in the contracting process for three drilling ships, according to a legal filing by the regulator.

Source: Reuters

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