Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has been involved in a much publicized money laundering scandal and now the top prosecutor in Brazil says he will move forward on charges against government officials involved in the scheme. Rodrigo Janot has stated he plans to file the charges soon. The list of names included on the charges possibly includes President Dilma Rousseff along with members of the Brazilian congress. The country has been devastated by the scandal and the stock of PBR especially has been hurt.
The prosecutor is filing based on a plan hatched between the company and contractors of the state-run energy giant that embezzled millions of dollars from the company’s funds. Much of that money was filtered to Brazil’s politicians and it is speculated that over 40 members were involved. The accused politicians were predominantly members of the Worker’s Party, which is the current ruling party in the country. Brazil is the largest country in South America and the Latin American region. There are names from the opposition party on the list also which are related to overpriced contracts from the company.
The government is planning to file within a few days and once it does details will be released. The charges must be filed with the Brazilian Supreme Court as that court is the only one with jurisdiction over the politicians and cabinet members. The prosecutor is expected to petition the court to allow further investigations in an effort to bolster its case. President Rousseff has been at odds with congress since taking office and these accusations do nothing to help calm the country and investors. The country was also downgraded by Moody’s Investor Service, doing further damage to the credibility and solvency of the nation.
The stock seems to have found a level around $6.50-$6.75 but until some clear data as to the status of the charges occurs, it’s probably best to step back. The next resistance is at $7.75 and there is solid support at its current levels.