Brazil's Petrobras decides not to take graft writedown -paper
RIO DE JANEIRO Jan 27 (Reuters) - Brazil's state-run oil company Petrobras decided on Tuesday not to take a corruption-related charge against earnings on its delayed third-quarter results after the board failed to agree on the extent that graft has inflated the value of its assets, the Globo newspaper reported citing an unnamed company source.
Petroleo Brasileiro SA, as Petrobras is formally known, was supposed to report on Tuesday its unaudited third-quarter financial statements, already delayed by two months. In December it gave itself until the end of January to provide investors with the financial statements.
The contract-fixing, bribery and political kick-back scheme, which may be the biggest corruption scandal in Brazilian history, could force Petrobras to take a charge of as much as $20 billion against earnings in the quarter, a Veja magazine blog said on Monday citing sources close to the company.
But after a "very tense" seven-hour meeting, the board was unable to agree to what extent declines in the value of assets were the result of corruption, inefficiency, or other factors, such as rains, that caused delays in construction, Globo said, citing the source.
As a result, the board decided to publish quarterly results without write-offs.
The results, which were supposed to have been released in November, were first delayed after auditor PricewaterhouseCoopers declined to certify Petrobras' accounts in the face of allegations of contract-fixing, bribery and political kick-backs. Police say that graft may have skimmed 3 percent or more off the value of Petrobras projects.
Already the world's most indebted and least-profitable major oil company, Petrobras is now at risk of breaking its bond commitments to investors. This has all but shut it out of capital markets. In response, the company has said it plans to cut back on a $221 billion five-year investment plan.
According to police, prosecutors and the testimony of former Petrobras executives involved in the scheme, executives conspired with Brazil's largest construction and engineering companies to overcharge for refineries, ships and other goods and services.
Some of the excess revenue was then kicked back to executives, politicians and political parties as bribes and campaign contributions. The board had been expected to write much of those over-charges off as a loss. (Reporting by Jeb Blount and Stephen Eisenhammer; Editing by Lisa Shumaker)
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