Petrobras .Car Wash
We have collaborated effectively with the public authorities, who acknowledge the company is a victim. We have set our control mechanisms into motion and improved our standards.
We are facing these challenges with the same level of commitment with which we have achieved important milestones in our operating performance.
We have signed an agreement to settle Class Action in the USA and investigations by the US authorities: The goal is to settle all the current lawsuits that could be filed by investors in stocks and bonds of Petrobras acquired in the United States. This settlement eliminates the risk of an unfavorable sentence that could cause material adverse effects to the company and its financial situation. In addition, it puts an end to the uncertainties, burdens, and costs associated with the continuation of this class suit.
The settlement was approved, in its definitive form, by the US District Court (Federal Court of First Instance) in New York.
This decision may be subject to appeal to the Second Circuit Court of Appeals, however, from now on, the Class Action is closed at first instance. The settlement is not an admission of guilt or of irregular conduct by Petrobras, which has been recognized by the Brazilian authorities as a victim of the facts revealed by the “Lava-Jato” Operation.
We have also entered into agreements to terminate investigations by the Department of Justice (“DOJ”) and the Securities & Exchange Commission (“SEC”), in the United States, related to the company's internal controls, accounting records, and financial statements in the period ranging from 2003 to 2012. The agreements completely end the US authorities’ investigations.
Increased strictness in hiring: We have made the supplier management process stricter to increase security in the procurement of goods and services and to mitigate risks of corruption. Now, to join the register, companies must provide detailed information on their structure, finances, and on their mechanisms designed for compliance and combating fraud and corruption. Additionally, they are also evaluated through a process known as Integrity Due Diligence.
New Information Channel: We have put in place a new Information Channel, which is independent, confidential, and impartial, available to our external and internal audiences. A specialized independent company is in charge of receiving complaints. The Channel works 24 hours per day to receive, whether via the site or by phone, allegations of fraud, corruption, and money laundering, as well as of harassment, discrimination, or any other irregularity.
Internal Inquiry Commissions: We have established Internal Inquiry Committees to investigate evidence of nonconformities related to corporate rules, procedures or regulations, as well as to support administrative measures and consequent procedures. The results will be forwarded to the competent authorities for the relevant measures to be taken.
Disciplinary measures: We have investigated and punished internal misconduct. We apply disciplinary measures to employees at various hierarchical levels for misconduct and harassment, damage to property, fraud, theft, negligence, and misuse of company resources, resulting in employment contract termination, suspensions, and written warnings.
Precautionary Blocking of Companies: We have blocked companies belonging to the economic groups mentioned in the affidavits as cartel participants in a precautionary manner. These companies have been precautionarily prevented from participating in our bids and from contracting with Petrobras. The decision for an interim injunction does not imply stopping or terminating existing contracts, nor the suspension of payments due for services rendered.
Training: Members of the Board of Directors, Executive Board Officers, and employees have already gotten some training in compliance. At the holding company, the measure has reached 90 percent of the employees, while in the Petrobras System approximately 68,000 professionals have been trained.
The Brazilian Anti-Corruption Act, the American Anti-Corruption Act (FCPA - Foreign Corrupt Practices Act), the company's Code of Ethics and Conduct Guide are a few of the topics addressed in training.
Independent Internal Investigation Offices: In October 2014, we hired two independent law firms specialized in investigation, a Brazilian one (Trench, Rossi e Watanabe Advogados) and an American one (Gibson, Dunn & Crutcher LLP) to conduct independent internal investigations.
Special Independent Committee: In December 2014, we established a Special Independent Committee, which acts as the reporting line for the internal independent investigations conducted by the law firms. The Director of Governance, Risk and Compliance, João Adalberto Elek Júnior, is on the Committee, along with retired Federal Supreme Court Justice Dr. Ellen Gracie Northfleet and the Chief Compliance Officer of Siemens AG from 2007 to 2010, Dr. Andreas Pohlmann.
We have implemented a series of measures aimed at strengthening our governance and internal controls, ensuring transparency and effectiveness to the system designed to prevent risks and fight embezzlement. This new governance and management model is based on a better decision-making distribution and sharing, on the elimination of individual decisions for a set of actions, and on the creation of technical committees to ensure process compliance.
We have been certified by the Ministry of Planning as one of the Brazilian companies that most meet compliance requirements, market practices, and excellence in governance and transparency. We have secured a score of 10 in all matters evaluated by the Secretariat for the Coordination and Governance of State-Owned Enterprises (Sest) to comprise the unprecedented Governance Index (IG-Sest).
Another sign that we are on the right track was the fact that we secured certification under the Highlight in State Governance Program, granted by B3 (the São Paulo Stock Exchange), with the purpose of implementing corporate governance measures that go beyond those required by the Brazilian Corporate Act and by Act 13,303/16, the State-Owned Company Act. The certification works as a seal of quality in governance.
B3 authorized us to join the special segment of Corporate Governance Level 2 listing in line with the so-called “Novo Mercado” (New Market), which requires compliance with differentiated governance rules and the improvement of the quality of the information the company provides. These achievements reinforce the progress we have made in our corporate governance and ratify our commitment to continuous process improvement and alignment with best practices on the market.
Investigations are underway into the practice of alleged irregularities in detriment to Petrobras. The investigations are conducted by the Brazilian Federal Police and the Federal Public Prosecutor's Office, under the “Car Wash” Operation. The operation is quite extensive and involves investigations related to various criminal practices committed by individuals in different parts of the country and sectors of the economy.
The Federal Public Prosecutor's Office focused part of its investigations on irregularities involving suppliers and contractors responsible for the supply of goods and services to Petrobras and revealed a scheme of undue payments involving these companies.
The above-mentioned undue payment scheme involved a large number of suppliers and contractors, who used funds received in contracts for the supply of goods and services with Petrobras to make undue payments to political parties, political agents, former Petrobras employees, and others involved in the scheme, corrupting them so that they not only omitted taking measures against the criminal organization’s operations, but also to practice certain acts in their interest.