Brazilian oil giant Petroleo Brasileiro SA (Petrobras) could be facing penalties of $1.6 billion to settle corruption charges uncovered during U.S. civil and criminal investigations.
According to an unidentified official source who has been briefed on the situation the penalties are the largest ever levied by U.S. authorities in a corporate corruption investigation.
The previous largest corporate corruption charge settlement with the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) was in 2008 Germany's Siemens AG, where the German industrial giant settled bribery charges for $800 million.
Two other sources with direct knowledge of the case, although not revealing settlement figures, described them as being "large".
All three sources said Petrobras hasn't yet begun official settlement talks with U.S. authorities.
Whatever the final settlement figure, it would be a major financial burden to Petrobras, whose market value has dropped to $40 billion from $300 billion just seven years ago.
Last November, a SEC subpoena was sent to Petrobras requesting information about corruption investigations against major private contractors, senior Brazilian politicians and top company officials. According to the sources the DOJ, is also likely to lay criminal charges following completion of its own investigations.
Although lawyers for Petrobras claim the company was a victim of corruption and bid-rigging by engineering firms and other suppliers, former employees who allegedly arranged bribes, and Brazilian politicians who received kickbacks from the suppliers, confirmed the U.S. investigation would very likely show Petrobras itself broke U.S. Foreign Corrupt Practices Act (FCPA) and securities laws.
Two senior Petrobras executives are among a dozen people who have already been convicted in Brazil for offences such as money laundering and racketeering.
Petrobras comes under U.S. jurisdiction because company shares are traded in the United States – recently being the largest foreign owned company on the New York Stock Exchange.
The unidentified sources claim Petrobras had been warned that if money related to the case moved within the U.S. banking system, the company could be prosecuted and that Brazilian prosecutors have found that some of the illegal payments had been arranged on U.S. soil.
In December, Brazil's Prosecutor-General Rodrigo Janot said his prosecutors were cooperating with the SEC and the DOJ to see if the corruption scheme had hurt U.S. investor interests in Petrobras shares listed in New York.
Petrobras has declined to comment directly on the investigations or any estimates of case settlement figures.
The company has been working to limit damage and in November hired U.S. law firm Gibson, Dunn & Crutcher and Brazilian law firm Trench, Rossi e Watanabe to carry out an internal investigation, promising to hand over findings to authorities.
Legal experts said cooperation with ongoing investigations by the U.S. authorities may reduce the amount of penalties.