Brazil Bribery Probe: Latest Petrobras Police Raid Involves U.S. Steel

Brazil’s crime of the century keeps rounding up suspects. At this point, the biggest investment in Brazil is turning out to be in the company that makes yellow police caution tape. In the latest raid by federal police — the equivalent of the Federal Bureau of Investigation — a U.S. Steel subsidiary was targeted for allegedly bribing politicians for lucrative contracts with beleaguered oil major Petrobras.

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(Photograph by Dado Galdieri/Bloomberg)

The dragnet ensnared Brazilian pipe supplier Apolo Tubulars, owned 50% by U.S. Steel, and Luxembourg-based Tenaris Confab, Bloomberg newswires first reported on Tuesday.

The companies allegedly paid about R$40 million ($11 million) in bribes to politicians between 2009 to 2013, Curitiba federal prosecutor Roberson Pozzobon told reporters yesterday. The Workers’ Party and its allies in the Democratic Movement Party (now leading an interim government) and the Progressive Party ran a coalition government during that period.

Petrobras is a state owned enterprise with roughly 45% of its shares free-floating in the market. Its stock is one of the most hotly traded on the NYSE, with average trading volume three times greater than ExxonMobil and Chevron. During Wednesday morning’s trading session, roughly 15 million shares of Petrobras were trading, which is three times more than Exxon and Chevron…combined.

The Brazilian company has been bilked for billions of dollars by a combination of construction and engineering firms, shipbuilders, and politicians who accepted kickbacks for personal gain. Some of the monies funneled into political coffers, however, were legally registered campaign donations. The case to discover what was legal and what was not is still ongoing in both the Brazilian Supreme Court and a Federal Court in Curitiba, the southern city that is in charge of civilian white collar crime in this case.

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