Pimco files fraud lawsuit against Petrobras
OREANDA-NEWS. October 21, 2015. Institutional investment giant Pacific Investment Management (Pimco) has joined a growing list of companies seeking to recover losses resulting from alleged fraud at Brazil's state-controlled Petrobras, according to a lawsuit filed yesterday in a federal court in New York.
Pimco and related companies are suing Petrobras for undisclosed damages based on claims of pervasive fraud that diverted an estimated \\$28bn from Petrobras' coffers.
"The Petrobras scheme ultimately calls into question the integrity of the company as a whole," the lawsuit states.
Former chief executives Jose Sergio Gabrielli and Maria das Gracas Foster, former chief financial officer Almir Barbassa and other former Petrobras executives were also listed as defendants.
Pimco, which has \\$1.47 trillion in assets under management, declined to comment on the lawsuit. Petrobras also declined to comment.
The high-profile lawsuit from one of Petrobras? major institutional investors is another blow for the heavily indebted firm as it struggles to move past the colossal corruption scandal.
Petrobras is already facing more than a dozen minority investor lawsuits in the US that could result in more than \\$1bn in damages, according to some US legal experts.
Petrobras has already written off around \\$17bn in direct and indirect charges related to corruption at the firm, an amount expected to increase as investigations deepen.
The company is also facing investigations by the US Department of Justice and securities regulator SEC, which could result in hefty fines.
Petrobras maintains it was the victim of widespread corruption and intends to recover stolen funds.
The company's position was supported by an initial report from a congressional investigative committee established in Brazil's lower house to probe the multi-billion-dollar scheme.
Released yesterday, the controversial report led by congressmen Luiz Sergio, a member of Brazil's ruling Workers party (PT), cleared Petrobras and politicians, putting blame on corrupt suppliers and lower level employees.
The populist PT is allegedly one of the main beneficiaries of the scheme that diverted funds from inflated contracts to Petrobras executives and politicians.
Brazilian president Dilma Rousseff, Petrobras chairwoman in 2003-10, denies any knowledge of the scheme.