Bloomberg News

Petrobras CEO Apartment Gift Delays Asset Freeze Ruling

August 20, 2014

A ruling on freezing the assets of Petroleo Brasileiro SA (PBR:US)’s chief executive officer in connection with a probe into the purchase of a refinery in Texas was delayed after a report she transferred apartments to family members.

Jose Jorge, a member of Brazil’s Federal Accounts Tribunal, asked for more time to look into the case yesterday after newspaper O Globo said that the executive transfered two apartments in Rio de Janeiro to direct family members in March.

Petrobras CEO Maria das Gracas Foster had been planning the transfer of the properties to her daughter and son since 2013 and had no intention of evading the government-spending watchdog’s probe, the state-run oil producer said in a statement after the decision.

Petrobras’s purchase of a refinery in Pasadena, Texas, has come under increasing scrutiny months before an October presidential election amid overpricing allegations. The Rio-based company paid $1.2 billion in two installments, in 2006 and in 2012, for the unit that Transcor Astra Group SA had bought for $42.5 million in 2005.

The tribunal last month ordered the assets of 11 former and current Petrobras executives be frozen to guarantee the country would recover $792 million in estimated losses from the business.

Nestor Cervero, a former international director at Petrobras, was also cited by O Globo as having donated properties to his heirs this year before the tribunal decided on freezing his assets.

Cervero’s lawyer, Edson Ribeiro, confirmed his client transferred three apartments to his heirs before the asset freeze order in a phone interview from Rio. He denied Cervero had any responsibility in the acquisition of the refinery and that it was a decision of the company’s board.

‘Unfortunately Emotional’

Brazil’s Attorney General Luiz Inacio Adams had asked the court to rule on Foster’s assets yesterday to bring a closing to a case he said has been unfortunately emotional and controversial. He asked for the watchdog to include the ruling in its agenda for next week.

“Foster has property she accrued over many years, and any activity of hers is absolutely transparent and legally justified,” Adams said after the ruling was removed from yesterday’s agenda.

Foster was appointed by President Dilma Rousseff, who is running for re-election. Alleged cost overruns at Petrobras projects are under investigation by police, lawmakers and prosecutors. One of its former directors was arrested this year as part of a money-laundering investigation. He hasn’t been acquitted or convicted yet.

On Aug. 8 Petrobras denied speculation Foster would be replaced.

Petrobras said in a July 24 statement it would pay the legal expenses for all current and former executives, according to its by-laws. Petrobras also said the case was getting started and no one had been charged with any wrongdoing.

To contact the reporter on this story: Sabrina Valle in Rio de Janeiro at svalle@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Carlos Caminada, Peter Millard


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Companies Mentioned

  • PBR
    (Petroleo Brasileiro SA)
    • $12.93 USD
    • 0.82
    • 6.34%
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