The Petrobras' Lessons
Petrobras , the Brazil’s state-controlled oil company, has agreed to pay $2.95 billion to settle a U.S. class action corruption lawsuit. This is one of the largest class action corruption settlements in U.S. history by a foreign entity. Petrobras denies any wrongdoing as part of the settlement, which a U.S. judge must still approve.
This is America as best: getting a foreign state company, misbehaving in its own land, to pay U.S. investors even when they would not compensate their own citizens. Clearly, you should not expect Saudi Arabia’s ARAMCO or Nigeria’s NNPC to list any time soon in Europe or U.S. Petrobras is co-listed in U.S.
The settlement put an end to “extremely high uncertainty” about the company’s potential liability, JPMorgan said in a client note, adding that it had expected a figure above $5 billion. Analysts at Brazilian bank BTG Pactual said the market had expected a settlement of $5 billion to $10 billion. […] Jeremy Lieberman, an attorney for the investors, called the deal an “excellent result” and said it was the largest ever involving a foreign securities issuer in the United States.
It feels good when you have a country that runs on laws and can do all to help its citizens. Petrobras could avoid the settlements in Brazil but since it is traded in U.S., it must face the music in U.S. courts. The penalty it is paying is the very reason America works and the core element that the opportunity exists for it to list therein.
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