Providence suing Brazilian oil company amid corruption claims

PROVIDENCE, R.I. (WPRI) – Nothing says “Merry Christmas” like a lawsuit.

The city of Providence on Wednesday filed a class action suit against Petrobras, a multibillion-dollar Brazilian oil company that is currently engulfed in a far-reaching corruption scandal that has investors and ratings services on high alert.

The 70-page suit, filed in the U.S. District Court for the Southern District of New York, claims Providence “purchased Petrobras securities at artificially inflated prices” between 2010 and 2014 as a result of a kickback scheme that has already led to 39 indictments in Brazil, according to Reuters. The suit names the company’s chief executive, Maria das Gracas Foster, as one of the defendants.

Providence’s suit alleges that Petrobras sold $98 million in securities to investors between 2010 and 2014 and requests a judge grant anyone who joins the suit damages and interest. The suit does not say the amount Providence has invested or how much it is seeking.

Dawn Bergantino, a spokeswoman for Mayor Angel Taveras, told WPRI.com a lead plaintiff in the suit hasn’t been appointed.

A spokesperson for Petrobras did not immediately respond to a request for comment late Friday.

Founded in 1961, Petrobras has grown to become one of the world’s largest oil companies. Although it is owned by the Brazilian government, the company trades on the New York Stock Exchange, as well as in Madrid and Buenos Aires. In April, the New York Times reported that the company ranks as the “world’s most indebted company.”

Brazillian officials have accused Petrobras executives of skimming money from company profits to bribe politicians for government contracts. Paulo Roberto Costa, the company’s former downstream director, has been charged with money laundering.

The city’s lawsuit came a day after Moody’s Investors Service said it is considering downgrading Petrobras’ bond rating, citing the company’s decision to delay the release of its third-quarter financial report.

The lawsuit is the latest in a series of what the city calls its “affirmative litigation” efforts. In April, the city filed suit against Bank of America and the New York Stock Exchange over high-frequency trading. More recently, it agreed to drop a lawsuit filed against Santander bank after the bank agreed to provide $24 million in home loans to low-and moderate-income Providence residents.

Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Twitter: @danmcgowan

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s