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PETROBRAS FALLS TO 10 YEAR LOWS ON CORRUPTION SCANDAL

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Brazil pertrobras on stock.com

PETROBRAS FALLS TO 10 YEAR LOWS ON CORRUPTION SCANDAL

Dec 12 2014, 10.50am GMT

STOCK.com

A multibillion-dollar corruption scandal in Brazil’s state-owned oil producer Petrobras, brings shares down 34% in one month.

In November the Brazilian federal police commenced raids on Petrobras offices, at which point shares fell 2.4%, adding to the year losses of 30%. Since then, the US Department of Justice opened a criminal investigation, the Securities and Exchange Commission started a civil investigation and issued a subpoena for documents related to the investigation, then yesterday six US law firms began a class-action to represent investors who lost funds on the US stock exchange by trading Petrobras whilst the corruption was taking place.

The scandal hinges on executives from Petrobras stealing more than R$10bn (US$3bn) and funneling it to President Dilma Rousseff's Workers' Party.

To date there have been 2 senior Petrobras executives arrested with additional formal charges against executives in 6 construction companies who are involved in huge infrastructure projects including the building of Olympic stadiums for 2016. It is alleged that they are part of the scandal. There are expectations that the Brazilian government will announce today a plan to guarantee a debt issuance from Petrobras but in the meantime the company’s accounts stay frozen with no access to capital markets.

MT4 chart: Petrobras falls from 11.02 to 7.23 over one month.

petrobras on stock.com

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