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

The political crisis, arguably the biggest in Brazil since the military dictatorship, has brought down a sitting president in Dilma Rousseff, and has eroded public confidence in the government. The new interim government’s approval ratings are as abysmal as Dilma’s, with less than 10% approving of her former vice president Michel Temer.

Tuesday’s actions are merely the latest in the so-called “Operation Car Wash” probe in which 205 people have been accused and 105 convicted of crimes so far, most of them civilians. Total prison and other sentences total more than 1,333 years, Reuters reported.

The latest raid targeted only two executives and called in 9 others for questioning, police said without naming names. They also had search warrants from Curitiba for 28 locations.

On Monday, police arrested a former treasurer of Brazil’s Progressive Party, the biggest party listed on an attorney general’s list last year of around 50 congressional leaders in both houses implicated in the Petrobras crime spree. Earlier this week, the new Planning Minister Romero Juca, also of the Democratic Movement Party, resigned after it was revealed in a leaked phone conversation that he was plotting to impede justice in the case.

Even if Brazil’s Supreme Court is cowered by dirty politics, the U.S. legal system is going after Petrobras and its top directors. U.S. prosecutors have already proven to be successful at busting international criminal organizations when in 2015 it launched a successful campaign to uncover financial fraud within FIFA, the world’s soccer association.

Defendants in the U.S. Southern District Court of New York’s Petrobras case also include the investment banks that underwrote and marketed Petrobras equity and debt between 2010 and 2015. J.P. Morgan Securities and Brazilian off-shore broker-dealers Itau BBA USA Securities in New York and Banco Bradesco in São Paulo are part of the trial.

The Petrobras swindle stretches from London to Hawaii. U.K. teachers pension fund Universities Superannuation Scheme Limited is the lead plaintiff in the trial, now set for Sept. 19, 2016 in New York.

“The fraudulent actions of Petrobras executives have caused significant losses to investors worldwide, many of whom are responsible for the pensions or long-term savings of large numbers of individuals,” said Jeremy Hill, Group General Counsel for the U.K. pension fund.

Other plaintiffs suing Petrobras include the State of North Carolina and the Hawaii Employees Retirement System, a pension fund for public workers that had retirement funds invested in Petrobras.

So far, no Brazilian politicians have been named as defendants. Dilma’s CEO of Petrobras at the time, Maria Gracas Foster and ex-CEO Jose Sérgio Gabrielli are part of the lawsuit.

As of May 6, all defendants have denied claims that they mislead investors.

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