Daily Management Review

Petrobras Lost $ 17 billion on Bribes


Brazil's state oil company Petrobras has written off about $ 17 billion due to corruption scandal and poor planning. The company, whose debt is approaching $ 90 billion, plans to sell the assets of nearly $ 14 billion and significantly reduce its investment program for 2015 to maintain the balance during the fall of oil prices. In this new leadership, giant plans to restore relations with investors and creditors.

Brazilian state oil company Petroleo Brasileiro (Petrobras) reported the largest in its history net loss. For 2014, it lost $ 7.2 billion, what is higher than its profit in nearly four years. Huge losses are related to the corruption scandal. I.e., in December 2014, the Brazilian prosecutors filed charges of money laundering to several top managers of the country's largest construction companies performing Petrobras contracts. A number of functionaries in the name of the company signed the contracts and got a commission of 3% of the contract amount. These were subsequently used to bribe politicians and officials on contracts worth more than $ 4 billion.
According to investigators, the participants have received about $ 3.2 billion using the schemes. President of Brazil Dilma Rousseff, who in 2003-2010 headed the board of directors of the company, says that she did not know anything about the criminal schemes. She has already promised thoroughly investigate the scandal and cover all the way to corruption in Petrobras.  

The company wrote off $ 2.1 billion in costs and an additional $ 14.8 billion under the revaluation of assets on its balance sheet in connection with the anti-corruption investigation, as well as poor planning and a reduction in the price of oil. Another problem is the high level of Petrobras’ debt. In March, the company announced plans to sell assets worth about $ 13.7 billion in the next two years in order to maintain balance. Petrobras also plans this year to limit the investment of $ 29 billion, which is 34% lower than the average plans for each of the next five years. The company have one of the highest debt levels among the world's largest oil companies - more than $ 88 billion.

- From this moment Petrobras guarantees return to normalization of relations with investors, shareholders and creditors in Brazil and abroad, - said the CEO Aldemir Bendina, who took the post in early February, at the press conference,. The company has not been able to determine what effect corruption scheme had on its performance. Corruption scandal forced to postpone the publication of financial statements in November last year. In this regard, PricewaterhouseCoopers, the primary auditor for Petrobras, refused to sign the company's financial statements since the third quarter of last year. However, the audited annual report was presented yesterday.
source: cnn.com