In the Matter of Petróleo Brasileiro S.A. – Petrobras
Admin. Proc. File No. 3-18843
On September 27, 2018, the Commission instituted and simultaneously settled cease-and-desist proceedings (the “Order”) against Petróleo Brasileiro S.A. – Petrobras (“Petrobras”). In the Order, the Commission found that, from at least 2003 to April 2012, Petrobras engaged in a large-scale expansion of its infrastructure for producing oil and gas, a matter of significant interest to investors. During the same period, certain former senior Petrobras executives (the “Corrupt Executives”) worked with Petrobras’s largest contractors and suppliers to inflate the cost of Petrobras’s infrastructure projects by billions of dollars. In return, the companies executing those projects paid billions of dollars in kickbacks that typically amounted to between 1% to 3% of the contract cost. The kickbacks were paid to the Corrupt Executives and conspiring politicians and political parties, including the Brazilian politicians to whom the Corrupt Executives owed their jobs at Petrobras. These same executives submitted misleading documents as part of Petrobras’ internal process of preparing its filings with the Commission. As a result of the conduct described in the Order, the Commission ordered Petrobras to pay disgorgement of $711,000,000 plus prejudgment interest of $222,473,797, for a total payment of $933,473,797. This amount was subject to reduction by any payment by Petrobras to the class action settlement fund in the matter of In re Petrobras Securities Litigation, No. 14-cv-9662 (S.D.N.Y.), up to and including the entire amount of the obligation. The Commission further ordered Petrobras to pay a civil money penalty of $853,200,000, subject to reductions of up to $682,560,000 and $85,320,000 for monies paid to the Brazilian authorities and the United States Department of Justice respectively, resulting in a post-reduction minimum penalty of $85,320,000. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, the Commission established the Fair Fund, so that the civil penalties could be distributed. The Commission ordered Petrobras to pay all reasonable administrative costs and expenses of the distribution, including payments of taxes and the premium fee for the administrator’s bond. See the Commission’s Order: Release No. 33-10561.
On March 25, 2019, Petrobras paid $85,320,000, satisfying the reduced penalty in full, into the Fair Fund, pursuant to the Order.
On January 6, 2020, the Commission issued an order appointing Epiq Systems, Inc., as the Fund Administrator to oversee the administration and distribution of the Fair Fund, and set the administrator’s bond amount. See the Commission’s Order: Release No. 34-87889.
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