SAO PAULO, Dec 12 (Reuters) - Brazil’s securities industry watchdog opened eight investigations into executives at state-controlled oil producer Petróleo Brasileiro SA related to a vast graft and money-laundering scheme inside the company, three sources with direct knowledge of the situation said.
The watchdog, commonly known as CVM, began the inquiries in October after a crime ring at the company’s refining, international and services divisions was made public and management began an internal investigation, said the first source, who requested anonymity citing legal restrictions.
According to a second source, the investigations aim to discern whether former and current management staff and board members at Petrobras, as the company is known, breached securities industry rules by hiding or failing to prevent any potential wrongdoing.
Rio de Janeiro-based CVM is also extending the inquiries to the independent auditing firms that Petrobras hired to validate the company’s financial statements, said the sources, who could not speak on the record because the process is taking place under secrecy. Potential punishments for executives include a warning, fines and a prohibition on working on a listed company for as long as 20 years, they noted.
CVM did not comment. Petrobras did not have an immediate comment.
The corruption scandal, in which billions of dollars were allegedly paid by the companies in bribes to win Petrobras contracts, threatens to paralyze infrastructure projects in Latin America’s largest economy.
Rising corruption within Petrobras also risks hampering President Dilma Rousseff’s second term in office, which starts in January.
News of the CVM probes come days after Petrobras was notified of a class-action lawsuit filed in New York over the alleged kickback and bribery scheme. The suit was filed on Monday by law firm Wolf Popper LLP in the Southern District of New York on behalf of investors who bought Petrobras ADRs between May 20, 2010 and Nov. 21, 2014. (Writing by Guillermo Parra-Bernal; Editing by Bernard Orr)