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SEC issues subpoena to Brazil's Petrobras

Published:Wednesday | November 26, 2014 | 12:00 AM

By Joe Leahy in Sao Paulo

The US Securities and Exchange Commission has issued a subpoena to Brazil's Petrobras for documents relating to an investigation into the state-controlled oil company.

Petrobras, which is at the centre of what is emerging as the country's largest corruption case, said in a note to investors it received the subpoena on Friday but did not elaborate on its contents.

"Petrobras reiterates its promise to attend to the American public authorities with the same effort that it is attending to the Brazilian public authorities," said the company, which is publicly listed in Brazil and the US with American Depositary Receipts.

Petrobras did not specify if the SEC request was related to the corruption case, in which one of its former executives and an accomplice are alleging they skimmed money off construction contracts to pay kickbacks to politicians.

But the FT reported earlier this month that the SEC and the Department of Justice are investigating Petrobras over whether the company or its employees were paid bribes.

The involvement of US authorities has widened the corruption case into a multinational investigation into Brazil's biggest company, in what could be a potentially embarrassing move for the ruling Workers' party, or PT, and its coalition allies.

Politicians from the PT and the coalition are alleged to have received 3 per cent of the value of the company's construction contracts from a cartel of companies in exchange for contracts.

The PT has denied involvement. President Dilma Rousseff, who led Petrobras until she took office in 2011, has also rejected allegations of wrongdoing and promised not to impede federal police and prosecutors in their investigation.

Some of the construction companies have denied involvement while all say they are working with authorities.

Petrobras said it would send the documents required by the SEC after working with a Brazilian law firm, Trench, Rossi & Watanabe Advogados, and a US firm, Gibson, Dunn & Crutcher. Petrobras earlier announced it had contracted the firms to conduct an internal investigation into the corruption allegations.

Petrobras has already announced it has been forced to delay the release of its audited third-quarter financial results after its auditor, PwC, refused to sign off on them.

The delay of the results makes it difficult for the company to raise further funds for capital expenditure until it has resolved the matter.

A delay until after April 30 next year could trigger its creditors to call in its US$57bn in bonds and US$66bn in bank loans, according to Morgan Stanley.

(c) The Financial Times Limited 2014