Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has reportedly lost a massive $2 billion in bribery related costs. The company announced a total loss of about $7.2 billion on Wednesday.
Petrobras’ CEO and five other high-ranking officials have resigned over the scandal. The former executives of the company have been accused by Federal prosecutors of diverting company’s funds for their use or to pay off officials.
The investigation, dubbed “Operation Car Wash”, has till now seen 80 people being charged with money laundering and bribery. Many senior officials and politicians are currently being investigated. Brazilian President DilmaRousseff was the chairwoman of Petrobras during the years when the alleged corruption took place.
President DilmaRousseff denies any knowledge of any wrongdoing. Her popularity has sunk to record low due to the scandal and poor economic performance of Brazil. Dozens of other companies and firms have also been implicated in the scandal, and over 750 projects are under investigation.
According to Aryam Vazquez at Oxford Economics, the repercussion of the corruption scandal will affect Brazil’s key supply chains and industrial contracts. He further stated that Brazil’s economic activity prospects this year would be affected by the scandal.
Petrobras is also facing a class action lawsuit from shareholders who have accused the company of releasing false statements and misleading the investors about its assets. Investors are seemingly willing to give new management under AldemirBendine a chance and Petrobras’ shares have steadied in recent months.
The company released its much-delayed results on April 22 after accountants audited its books to find details of corruption and scams. The company is currently focused on survival, with sinking production, low oil prices, scarce cash and a hefty bill looming.
The voting shares of Petrobras rallied by 6% as audited results reduce the risk of default and further downgrades from credit rating agencies.