Petroleo Brasileiro SA (NYSE:PBR) issued a subpoena by SEC
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Petroleo Brasileiro SA (NYSE:PBR), Brazil government manipulated oil baron claims that it established a subpoena from SEC regarding certain documents about a company started by the U.S Securities and Exchange Commission. Petroleo Brasileiro SA (NYSE:PBR) didn’t give many details about the subpoena or whether the subpoena is regarding its corruption charge once filed against ex employees of Petroleo Brasileiro SA (NYSE:PBR). The corruption charges were regarding mishandling of the company’s construction funds.
Brazilian ruling party members are also alleged of taking bribes as much as 3 percent of the whole construction, from numerous organisations, in return for the construction contract. The U.S authorities have maximized the case into a large multinational investigation, which is turning out to be quite a scandal for the Brazilian ruling party. The ruling part of Brazil has denied involvement in the case and has assured the U.S authorities that it will not provide any hindrance to the ongoing investigation.
The construction companies named in the case have also denied involvement and claim that they’ll cooperate with the investigation being carried out. In the whole scenario Petroleo Brasileiro SA (NYSE:PBR)’s reputation has been marred. It doesn’t matter whether the allegations turn out to be true or false, or whether the subpoena hurts the company, it has undermined the Petroleo Brasileiro SA (NYSE:PBR)’s credibility. The fact that it is associated with a political party already creates an air of uneasiness in the market regarding the company.
The current Brazilian president, which has been reelected and was a minister of energy from 2003-2005 has also denied the allegations deeming them false and baseless. He also claimed that it is an attempt by U.S to undermine the party’s and the oil company’s credibility. The U.S Securities and Exchange Commission stated that there has been widespread corruption in the company for many years, it’s only been a few times that it has been pointed out and since the company is protected by the Brazilian ruling party, it has some sort of immunity.
The commission also stated that it fears there will be intervention from the politicians to thwart the whole investigation. On the other hand Petroleo Brasileiro SA (NYSE:PBR)’s management has claimed that it will fully cooperate with the commission and there will be no obstruction from any external party. Petroleo Brasileiro SA (NYSE:PBR) said that it has suffered because of the subpoena because the company has delayed its third quarter financial results.
The delay makes it difficult for the company to do new business and raise further funds. A delay until 30th April could cost the company billions. In that scenario, Petroleo Brasileiro SA (NYSE:PBR) will have to take bank loans worth 66 billion to reimburse the shareholders. The whole scenario will also repel the investors that are usually interested in the oil companies. The company was expected to yield 150,000 barrels of oil but because of the whole case the whole operation has been put on hold.