News / Brazil

Gates Foundation sues Petrobras, PwC over scandal

Saturday, 26 September 2015 6:36 AM [ Last Update: Saturday, 26 September 2015 6:36 AM ]

The plaque of Petrobras headquarters in Rio de Janeiro, Brazil. (AP Photo)

Microsoft founder Bill Gates’ charity foundation has filed a legal complaint against Brazilian oil giant Petrobras over investment losses linked to alleged fraud at the company.

"The depth and breadth of the fraud within Petrobras is astounding. By Petrobras's own admission, the kickback scheme infected over $80 billion of its contracts, representing one-third of its total assets," according to the suit filed late Thursday in New York City.

The Bill & Melinda Gates Foundation, together with WGI Emerging Markets Fund, alleged in the suit that the Brazilian oil firm repeatedly misrepresented its financial statements in order to trick investors into giving money.

According to the suit, accounting giant PwC played an important role in misleading investors by attesting to Petrobras' financial statements.

"Equally breathtaking is that the fraud went on for years under PwC's watch, who repeatedly endorsed the integrity of Petrobras' internal controls and financial reports. This is a case of institutional corruption, criminal conspiracy and a massive fraud on the investing public," the suit read.

Massive kickback scheme

In Brazil, prosecutors say Petrobras executives colluded with construction companies to massively overbill the state-run firm. The extra money was then funneled to kickbacks and payoffs to company executives, high-ranking politicians and political parties, including the ruling Workers' Party.

On Monday, the former treasurer of Brazil's ruling Workers’ Party was sentenced to 15 years in jail for receiving bribes from Petrobras contractors and distributing the kickback funds among party members.

The Petrobras scandal emerged last year, implicating senior politicians of the ruling Workers' Party, to which President Dilma Rousseff belongs.

President Rousseff had earlier served as president of Petrobras and minister of energy when the fraud and corruption is alleged to have taken place in the corporation.