Petrobras Lays Off 2 in Contract Tender Fraud Scheme

RIO DE JANEIRO Jul 13, 2007 (Dow Jones Newswires)

Brazil's state-run oil firm Petroleo Brasileiro SA (PETR4.BR), or Petrobras, laid off two employees involved in a fraud scheme into contract tenders, the company said in a late Thursday release.

Petrobras also said it is checking the possible participation of three more employees in the scheme.

Brazil's Federal Police since Tuesday has arrested 14 people alleged to be involved in the scheme, among them three Petrobras employees. Arrest warrants have been issued for another four people, including a federal police officer.

The accused face prison sentences of up to 20 years for crimes such as corruption, money laundering, tax evasion and fraud in tender processes, the police said.

Public prosecutors have accused 26 people in total of various crimes, among them favoring certain service providers over others by rigged contract tenders.

Petrobras said it hasn't yet estimated its losses, but the Estado de S. Paulo newspaper Thursday reported Angraporto, a service provider firm, diverted $60 million by overcharging Petrobras and by billing services that weren't carried out.

Among the accused are two executives at the Maua Jurong shipyard, which is a joint venture of Singapore's SembCorp Marine Ltd. (S51.SG) and Brazil's Grupo Synergy. A spokesman for Maua Jurong Wednesday said the company wouldn't comment until its lawyers have examined the accusation.

Some of the money embezzled in the fraud scheme may have been used to finance political campaigns, the O Globo newspaper said Thursday.

Copyright (c) 2007 Dow Jones & Company, Inc.


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