Brazil’s Petrobras revisits whistleblowers in wake of trading scandal

April 22, 2019

By Gram Slattery

RIO DE JANEIRO (Reuters) – Brazil’s Petroleo Brasileiro SA is re-examining its treatment of whistleblower complaints after the indictment of six of the state-run oil firm’s traders in December indicated that efforts to root out corruption had faltered, according to three people familiar with the matter.

In recent weeks, officials at Petrobras, as the firm is known, have summoned a number of current and former employees who had flagged instances of corruption at the company, particularly in relation to its trading operations, the sources said.

Company officials questioned the employees on how their complaints had been handled, said the people, who requested anonymity to discuss internal matters. Some of the employees said they were unsatisfied with the company’s response and believed the wrongdoing was not addressed, sources said.

In a statement, Petrobras said it was not investigating its controls but rather carrying out a thorough internal probe relating to the December oil trading indictments, with some 27 professionals looking into the matter.

The firm said it could not go into detail regarding the internal probe, citing the need to protect employees and the integrity of the investigation.

The enquiry underlines how Petrobras is still working to improve compliance and root out the graft at the center of Brazil’s five-year “Car Wash” investigation, considered by U.S. law enforcement to be the largest corporate corruption case ever.

The scandal has spread across Latin America, toppling governments, destroying business empires and leading Peru’s former president Alan Garcia to kill himself last week to avoid arrest in a related investigation.

Petrobras has said that a robust compliance department and beefed up internal investigations team have helped it to correct course since the Car Wash probes came to light in 2014 with revelations about political bribes paid by contracting firms.

However, in December, Brazilian prosecutors blew the lid off another kickback scheme, this time in the oil trading division of Petrobras, which also implicated commodities trading giants Glencore PLC, Vitol SA and Trafigura AG.

In March, Reuters reported that Petrobras officials had known of problems in its oil trading operations for years, although the company failed to quickly identify suspects and sideline them from operations.

Of the six people indicted in December, one pled guilty to conspiracy to commit money laundering and is cooperating with U.S. authorities in a parallel investigation of the scheme, Reuters reported in February.

Those indictments were focused on the company’s Houston trading desk. Some of the employees interviewed by Petrobras in recent weeks had previously complained of irregularities at the Singapore desk, the sources said, raising the possibility that the probe could expand geographically.

Petrobras did not comment on those allegations.

According to documents sent to Brazilian federal police investigators and seen by Reuters, a Singaporean employee complained to Petrobras officials in December 2012 of irregular trading of bunker fuel, which is used by ships.

A subsequent internal investigation found that Petrobras had paid unusual premiums for a significant quantity of bunker fuel in 2012, according to the documents, which were dated late 2012 and early 2013. Internal investigators recommended a series of measures to improve transparency at the Singaporean trading unit. It is unclear if those measures were carried out.

The federal police did not respond to a request for comment.

(Reporting by Gram Slattery; Editing by Brad Haynes and Rosalba O’Brien)

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