Petrobras to pay US$2.95 billion to settle U.S. class action over corruption

 Brazil’s state-controlled oil company, Petroleo Brasileiro SA, has agreed to pay US$2.95 billion to settle a U.S. class action brought by investors seeking to get back money they claim to have lost as a result of a corruption scandal.

Petrobras, as the company is known, did not admit wrongdoing under the deal, which is one of the largest securities class action settlements in the United States. U.S. District Judge Jed Rakoff in Manhattan must approve the settlement.

Investors sued Petrobras after prosecutors in Brazil accused former executives at the company of accepting more than US$2 billion in bribes over a decade, mainly from construction and engineering companies.

Petrobras claimed it was itself a victim, but its market value plunged as the so-called Lava Jato or “car wash” scandal deepened.

Petrobras said that it hoped the settlement would resolve all investor claims in the United States over the scandal.

The deal does not include investors who bought non-U.S.-based Petrobras securities outside the United States, according to the company.

The deal came just days after Brazil’s securities regulator CVM formally accused eight former Petrobras executives of corruption.

According to a legal filing by the regulator on Friday, the accusations relate to possible irregularities in the contracting process for three drill ships.

Among the accused in CVM’s filing are former Petrobras chief executives Maria das Gracas Foster and Jose Sergio Gabrielli.

The largest securities fraud settlements in U.S. history include US$7.2 billion stemming from the collapse of Enron, US$6.2 billion over an accounting scandal at WorldCom and US$3.2 billion over an accounting scandal at Tyco International, according to Stanford Law School’s Securities Class Action Clearinghouse.