Norway Oil Fund Puts Petrobras on Observation List
January 28 2016 - 9:31AM
Dow Jones News
By Kjetil Malkenes Hovland
OSLO--Norway's sovereign-wealth fund, the world's largest, said
Thursday it had placed Brazilian oil company Petrobras under
observation due to the risk of corruption, amid accusations of
bribery and kickbacks.
The decision to observe Petrobras was taken by the board of
Norway's central bank, which manages the fund, and was based on the
advice from the fund's Council of Ethics. Petrobras, also known as
Petróleo Brasileiro SA, is the largest listed company in Latin
America.
"The [central bank] executive board hasn't independently
considered all the details of the recommendation, but finds that
there is sufficient basis to conclude that the criteria for
observation have been satisfied, " the central bank said.
"Senior executives of the company and its most important
suppliers have apparently for a decade organized a system of paying
large bribes to top politicians, political parties and civil
servants," the fund's Council of Ethics said. "Several of the
company's senior executives also received large kickbacks."
The council said three former Petrobras employees have already
been convicted of such offenses. The case is still being
investigated by Brazil as well as U.S. authorities, it said. The
council said it had commissioned two studies by consultants to
assess the allegations of corruption, and that it had been in
dialogue with the Brazilian company.
Petrobras declined to comment.
The council said it had refrained from asking the fund to
exclude Petrobras because the company's anticorruption procedures
were recently established, and because the continuing
investigations and negative attention toward Petrobras would likely
reduce the risk of further corruption.
The Council of Ethics said it would make a new assessment of the
matter later this year, and if further cases of corruption crop up
and Petrobras can't show that its anticorruption program is
working, the condition for exclusion may be met.
The fund held 0.61% or $297 million worth of Petróleo Brasileiro
SA shares at the end of 2014. It also held $162.6 million worth of
shares in Luxembourg-incorporated Petrobras International Finance
Co SA and $38.4 million worth of shares in Netherlands-incorporated
Petrobras Global Finance BV. The fund's end-2015 holdings will be
published in March.
The fund has previously excluded more than 60 companies from its
investment range for ethical reasons, including companies producing
land mines, tobacco or nuclear weapons, and companies at risk of
violating human rights or causing severe environmental damage.
Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@wsj.com
(END) Dow Jones Newswires
January 28, 2016 09:16 ET (14:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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