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Rolls-Royce Roped Into Petrobras Corruption Scandal

Rolls-Royce, the British engineering concern, has become the latest company to be linked to the web of corruption at Petroleos Brasiliero, or Petrobras, Brazil’s semi-public energy giant that already has lost a CEO and five other senior executives because of suspected kickbacks and bribery.

A Brazilian court has released documents including 600 pages of testimony by one former Petrobras executive, Pedro Barusco, who said Rolls paid him $200,000 to help it win a $100 million contract. Barusco, who has agreed to a plea bargain with Brazilian authorities, said that amount was just a small part of the bribes he received from Rolls.

Rolls, most commonly known for its luxury cars and aircraft engines, also makes propulsion and power systems used in oil rigs and ships, including gas turbines for Petrobras offshore oil platforms.

Related: Corruption Scandal Threatens Brazilian Oil Developments

The engineering company is already under investigation by Britain’s Serious Fraud Office for suspected bribery and corruption believed to have been committed in December 2013. And it has been disclosed that the US Justice Department also is investigating the case, though it has received no formal notice of that inquiry.

Nevertheless, a spokesman for Rolls, who withheld his name as is common in Britain, expressed surprise at the new case of suspected corruption and stressed, “We have always been clear that we will not tolerate improper business conduct of any sort and will take all necessary action to ensure compliance, including co-operating with authorities in any country.”

Rolls is only one of 232 companies suspected of involvement in corrupt practices with Petrobras. Among them are SBM Offshore, a Dutch-based supplier of offshore oil tankers; three Brazilian shipbuilders; Keppel Corp. and Sembcorp Marine, both based in Singapore. SBM has been cooperating with Brazilian law enforcement, but Keppel and Sembcorp deny any wrongdoing.

The corruption probe has also put the law enforcement spotlight on 150 Petrobras executives, including directors on its board. Of these suspects, Brazilian police say, 80 already have been charged with various acts of corruption.

Related: Low Oil Prices Compounding Problems At Petrobras

At the heart of the Petrobras scandal are kickbacks that the energy company is believed to have paid to Brazil’s ruling Workers’ Party. Its leader, Brazilian President Dilma Roussef, is a close friend with Maria das Gracas Foster, who was forced to resign as Petrobras’ CEO on Feb. 4 along with five members of the board of Petrobras.

Amid its mounting problems, Petrobras stumbled again, naming a leading banker, Aldemir Bendine, to replace Foster. Bendine is a close friend of the president and many observers say they would have preferred a new CEO with more independence. They also said Petrobras’ new leader should have his roots in energy, not banking.

As for Rolls, despite its fame and reputation it has been suffering financial difficulties recently as governments and companies reduce spending. In its annual earnings report for 2014 it recorded the first revenue loss in 10 years, down 6 percent to under $22.5 billion.

By Andy Tully of Oilprice.com

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  • PaulViannah on February 18 2015 said:
    Escândalos brasileiros envergonham a nação! A nossa dignidade está sendo também furtada pelos esPerTalhões e demais quadrilheiros! O povo brasileiro precisa acordar de vez dessa inércia letárgica! Vamos reassumir o comando da nação, sem quarteladas, mas com a motivação de fazermos uma faxina geral! ACORDA BRASIL!
  • Wubbe on February 18 2015 said:
    The cars are part of BMW right?

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