Brazilian state-owned oil company Petrobras said last month that it has approved the newly-created position of executive director of governance, risk and compliance—and at a time when the company faces several investigations for its involvement in a widespread money-laundering and bribery scandal.
The new executive director of governance, risk and compliance individual will have responsibility for “ensuring process compliance and risk mitigation, including fraud and corruption—therefore guaranteeing compliance with laws, norms, standards and regulations, including Comissão de Valores Mobiliários (Securities and Exchange Commission) of Brazil (CVM) and U.S. Securities and Exchange Commission (SEC) rules,” the company stated. This individual will also participate in the decisions of the executive board.
Petrobras said the creation of this position does not increase the number of executive directors on Petrobras’ executive board. Rather, this post replaces the seat of the international executive director.
The board of directors will elect the new governance, risk and compliance executive director based on a list of three Brazilian professionals previously chosen by an executive recruitment search firm. This individual will serve a three-year term, which may be renewable, and will only be removed if determined by the board of directors, the company said.
Since March, Petrobras has been rocked by allegations made by Paulo Roberto Costa, former head of refining, that executives of the state-owned oil company engaged in a money-laundering and bribery scheme whereby billions of dollars were shaved off the value of contracts in the form of kickbacks paid back to Petrobras executives and politicians.
On Dec. 11, Brazilian prosecutors charged thirty-five individuals believed to be involved in the kickback scheme. Among those charged include twenty-three senior executives from construction and engineering companies OAS, Camargo Correa, UTC Engenharia, Mendes Junior, Engevix and Galvao Engenharia.
As part of a plea deal, Costa, one of the individuals who face charges, admitted to prosecutors he accepted bribes from construction firms and other contractors to win bids from Petrobras. Alberto Youssef, a convicted black market money dealer, was also charged.
Prosecutors said they are seeking the return of at least $400 million from the culpable individuals.
In the United Stated, the bribery allegations against Petrobras are also being investigated by the Department of Justice and the Securities and Exchange Commission for potential violations of the Foreign Corrupt Practices Act, the Financial Times reported last month.
Additionally, several shareholder class action proceedings already are underway concerning possible violations of federal securities laws, filed by six U.S. law firms. Those law firms are The Pomerantz Law Firm; Glance Binkow & Goldberg; Brower Piven; Kahn Swick & Foti; Wolf Popper; and The Rosen Law Firm.