Rolls-Royce accused in Petrobras scandal

A Petrobras station in downtown Rio de Janeiro, Brazil.
Vanderlei Almeida | AFP | Getty Images
A Petrobras station in downtown Rio de Janeiro, Brazil.

Rolls-Royce has been accused of involvement in a multibillion-dollar bribery and kickback scheme at Petrobras, Brazil's state-controlled oil producer, as more foreign companies are dragged into the country's largest corruption scandal.

The British engineering company, which makes gas turbines for Petrobras oil platforms, allegedly paid bribes via an agent in exchange for a $100 million contract as part of a scheme in operation during much of the past decade, according to testimony from a former Petrobras executive.

Pedro Barusco, the Petrobras veteran who has emerged as one of the investigation's key informants, told police he personally received at least $200,000 from Rolls-Royce — only part of the bribes he alleged were paid to a ring of politicians and other executives at the oil company. The admission was buried in more than 600 pages of documents released by Brazil's federal court system this month, detailing the testimonies of Mr Barusco who struck a plea bargain in November.

Responding to Mr Barusco's accusations, Rolls-Royce said: "We want to make it crystal clear that we will not tolerate improper business conduct of any sort and will take all necessary action to ensure compliance."

The accusations come as Rolls-Royce also faces a Serious Fraud Office investigation in the UK over allegations of bribery and corruption in China and Indonesia. They also come as the company is undergoing a painful restructuring, revealing its first fall in underlying sales in a decade and predicting a bigger than expected fall in profits in 2015.

Has Petrobras found a bottom?
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Rolls-Royce is the latest foreign company alleged to be involved in Brazil's Petrobras scandal, which threatens to engulf the government of President Dilma Rousseff only two months into her second term and push the country's most important company into technical default.

Brazil's authorities are already investigating allegations that Petrobras officials accepted bribes from SBM Offshore, a Netherlands-based supplier of offshore oil vessels. SBM has said it is co-operating with the investigation.

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Units of two Singaporean companies, Keppel Corporation and Sembcorp Marine, along with three Brazilian shipbuilders with large Japanese shareholders, have also been accused of participating in the bribes-for-contracts scheme. Keppel and Sembcorp have denied the allegations.

The Petrobras scandal emerged when the former head of the oil company's refining unit, Paulo Roberto Costa, also struck a plea bargain after being arrested for money laundering in March. According to the testimonies of Mr Costa, Mr Barusco and other informants, Petrobras contractors paid bribes for much of the past decade to executives and politicians from the ruling coalition led by Ms Rousseff's PT party, in exchange for billions of dollars in contracts. Analysts estimate the scheme has cost Petrobras more than $20 billion.

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The PT said the allegations are without proof and has promised to sue the "accusers".

In the latest testimony, Mr Barusco, who helped set up Petrobras's major rig supplier Sete Brasil after a 30-year career at the state-controlled company, said the kickback scheme was managed by several "operators" or agents who acted on behalf of groups of companies.

Mr Barusco alleged that his friend Luiz Eduardo Barbosa, a former executive of Swiss engineering group ABB, was responsible for organizing bribes from Rolls-Royce, SBM and Alusa, a Brazilian construction company. Alusa, which has changed its name to Alumini, vehemently denied the accusations. Mr Barbosa could not be reached for comment.