Brazil Builder Galvao Engenharia Linked to Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) Scandal Files for Bankruptcy

Brazilian engineering firm Galvao Engenharia is under investigations in an enquiry of unproven bribes at Petroleo Brasileiro SA, filed for bankruptcy. This was after being locked out of credit markets and banned from bidding on Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) work.

Where do analyst foresee upcoming resistance in PBR?

The private company is one of the first to break under the pressure of the negated projects and deferred payments as a consequence of the extensive police investigations into bribery at Petrobras, known as Operation Car Wash. Engenharia had its bankruptcy filing accepted by a judge in January.

Galvao Engenharia was one of the 23 companies blacklisted by Petrobras in December, with the oil company terminating payments and prohibiting the firms from bidding for impending contracts. These constructors lost a substantial proportion of their procedures after Petrobras stopped some of their contracts as a result of the scandal.

In a statement, Grupo Galvao, the parent company of Galvao Engenharia claimed that by the end of 2013, there was recurrent postponement of payments that Petrobras had yet to settle for numerous contracts. This was combined with restricted admittance to credit markets for the building sector, intensely influenced by Operation Car Wash.

In May 2014, Galvao attained a sale for the contract to expand and control a freeway passing through states of Goias and Tocantins. The constructor halted the progression of that project and dismissed more than 350 people because it did not have funding to continue carrying out project.

Grupo Galvao said it has cooperated with the police. It made a strict declaration that the company never indulged in the fraudulent scheme in which a lobby of engineering and construction firms overbilled Petrobras for work, with the surplus earnings being used in the making of corrupt deals. The company refutes being part of the cartel and maintains it has consistently held an ethical stand and is transparent in its dealings. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) alleged that its commitments with Galvao are up to date.

About the Author

Barry is a senior journalist at Us Markets Daily. He reports, shoots and edits many of his own stories by himself.

Leave A Response