On Saturday, June 9, 2018, claim forms are due in the Petrobras securities litigation. Anyone who purchased certain Petrobras securities between 2010 and 2015 are eligible to participate. (Qualifying securities include ADRs and debt securities.) While the $3 billion settlement fund is certainly massive, the scandal behind it is even bigger. In fact, it has shaken the Brazilian political world to its core.
In 2014, the Federal Police Force of Brazil began investigating black market dealers, known in Brazil as doleiros, who used small businesses like gas stations and car washes for laundering profits. “Operação Lava Jato” was supposed to be a routine case, yet very quickly it became not merely the biggest corruption scandal in the history of Brazil, but perhaps the biggest corruption scandal in world history.
The first sign that the police had stumbled onto something bigger than the usual laundering job was when the doleiros said they were working for Petrobras executive Paulo Roberto Costa. Under questioning, Costa explained the quid pro quo: he and other Petrobras executives had been overpaying contracts in return for a cut of secret slush funds; contractors had formed a cartel to decide who among them would have the next turn in overcharging Petrobras. By some estimates, firms overcharged Petrobras—and therefore the Brazilian people as well as investors worldwide—by as much as $5 billion.
Petróleo Brasileiro S.A., aka Petrobras, is a multinational oil and gas company that is mostly owned by the Brazilian government. At its peak, it was the sixth biggest company in the world, based on market cap. As Operation Carwash unfolded, Petrobras lost over $250 billion. The company’s American Depository Receipts (ADRs) fell from $50 in late 2009 to just over $10 by December 2014.
Dozens of companies and hundreds of leading politicians, business leaders, and Petrobras executives were implicated, with nearly 200 people indicted. Over $3 billion in overpayments were recovered before the Brazilian Federal Police shut down the investigation lasr summer—which is a scandal in itself.
On December 31, 2017, Petrobras and investors in the US settled a securities class action for $2.95 billion. This is the biggest securities settlement in over a decade, the fifth biggest in history, and the largest US settlement ever against a foreign entity.
If you are eager to file a claim before the deadline in this case, or would like to discuss this settlement or any other settlement, please give us a call at 312-204-6970.