After investors, now is the time of a city to sue Petrobras in the United States. According to O Globo, On Christmas Eve, the capital of the state of Rhode Island, Providence, filed a class action against the Brazilian oil company, two of its international subsidiaries and several members of its board, including President Mary Graça Foster. The case was initiated in the New York District Court on the grounds that investors acquired oil papers with inflated prices because the company signed overpriced contracts with bribes.
In the process, there is a charge that Petrobras would have recorded the fees disclosed in the corruption case as costs related to the construction and installation of its infrastructure and recorded as part of the value of its assets. Unlike other class actions filed against Petrobras in the US, Providence also wants to be compensated for the damage to the fixed income securities backed by Petrobras debt.
The lawsuit also accuses Petrobras International Finance Company (PIFCo) and Petrobras Global Finance BV (PGF), Brazilian state of subsidiaries based respectively in Luxembourg and Rotterdam, the Netherlands, involved in the issuance of securities of the company.
The city of Providence manage claims “hundreds of millions of dollars in assets on behalf of thousands of beneficiaries associated with the city, including civil servants and retired, as well as their dependents.” The complainant alleges that the city bought Petrobras titles and was impaired in the period covered by the collective action.
“Before and during the period covered by this collective action, Petrobras has undertaken its plan to increase its production capacity. These plans involved the acquisition and construction of new units and oil production assets. For example, in 2006, the company bought 50% stake in a refinery in Pasadena, Texas, for $ 360 million, aiming to double the capacity of the refinery, 100 thousand barrels per day. In 2010, Petrobras changed the Petrochemical Complex construction plan of Rio de Janeiro (Comperj) – design originally released in 2004 for the construction of petrochemical refinery complex with capacity to process 150,000 barrels per day, with $ 6 cost , 1 billion – by expanding the total cost to an estimated $ 26.87 billion, “has listed the document. “Petrobras’ expansion plans also required substantial capital investment. To meet this need for capital, Petrobras has undergone several offers of papers, selling more than $ 98 billion in securities listed on the NYSE, including notes and American Depositary Shares (“ADSs”) representing common and preferred shares ”
With this lawsuit, Petrobras has at least 11 class action against the company in the US. The Justice of the country provides that subsequently these similar procedures will be unified in one action.
Investing in Brazil can be risky even on papers that should be secure. Every public Brazilian company has papers inflated because corruption and price inflation are the norm to do business in the country.