Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), is being sued by many of its investors over embezzlement of funds and other financial malpractices. The corruption scandal is the biggest in Brazil’s history.
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In the past two weeks, it has emerged that several big institutional investors are independently suing Petrobras. Among the investors suing the company are Dimensional Fund Advisors, the US fund house and six New York City pension funds. The claimants seek losses suffered as a result of alleged embezzlement at the company since 2004.
AP1, the Swedish government pension scheme has also confirmed that it would take legal action against the oil company.
Allegations were made last year that the senior executives of the company conspired with ruling party members of the government to embezzle billions of dollars out of the company. As a result about forty executives and former directors of Petrobas have been arrested.
A 54 individual list with the Supreme Court carries the names of former minister and an ex-president.
Investor suits claim that the company wrongly stated the value of its assets and sold its stocks at artificially high value. The claimants also blame the multi-billion dollar bribery scheme for a 43% drop in the company’s share.
Lawsuits filed in the NewYork court system are the most recent in a string of class action lawsuits filed against the company since December. In March, all the claims were consolidated into one with Universities Superannuation Scheme as the lead plaintiff.
According to Claudinor Roberto Barbiero, the class action lawsuits are unprecedented in the country.
PwC the accounting firm has also come under fire as it has been the company’s auditor since 2012.
Investors claimed to have identified $800 million stolen from the company, however according to Andre Gordon, VP of Amec, the final amount could be as high as $10 billion.
The class action lawsuit estimates that the bribery scheme may be as large as $28 billion.
Many analysts believe that Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) is in a deep legal quagmire and will not get a quick dismissal.
