Brazil police probe U.S. Steel venture, Tenaris pipe unit

Reuters News
Posted: May 24, 2016 2:58 PM

By Jeb Blount and Caroline Stauffer

RIO DE JANEIRO/SAO PAULO (Reuters) - Brazilian police said on Tuesday they investigated local units of three international steelmakers in a second day of raids probing graft at the country's state-controlled oil producer, Petroleo Brasileiro SA.

Police and prosecutors allege that Apolo Tubulars, which is 50 percent owned by United States Steel, and Luxembourg-based Tenaris SA's Brazilian unit Confab were involved in graft at Petrobras, as the oil company is known. Tenaris is part of Italian-Argentine steel group Techint.

Police said they had no proof of corruption at French pipe-maker Vallourec SA but were continuing their investigation of the company's Brazilian unit, also known as V&M.

Rio de Janeiro-based Interoil Representações Ltda also arranged bribes for Petrobras, police said. Interoil Representações declined to speak with Reuters.

In Brazil, Interoil Representações owns 5 percent of the Brazilian unit of German oil tank company Oiltanking GmbH. Oiltanking's Brazilian lawyer did not return calls for comment.

U.S. Steel did not return calls or an email requesting comment. Apolo Tubulars said it was cooperating with authorities but had no other comment. Tenaris officials did not immediately respond to requests for comment, but Confab said it has no evidence its employees paid bribes and is collaborating with authorities.

Tuesday's actions were the latest in the two-year-old "Operation Car Wash", a probe that has scooped up dozens of Brazil's leading politicians and construction executives as well as top Petrobras officials.

Of 205 people accused in the broader case, 105 have been convicted for their roles in a massive price-fixing, bribery and political kick-back scheme that police and prosecutors describe as the largest in Brazilian history. Total prison and other sentences total more than 1,333 years.

The Tuesday operation sought to jail two people and take nine in for questioning, police said in a statement. They also had search warrants for 28 unidentified locations.

The sweep was aimed at probing alleged money laundering that used fictitious contracts arranged by Petrobras contractors and an executive in Petrobras' international unit to hide bribes and political kickbacks.

"Some parts of the state still need to go through a detoxification process," the statement said.

On Monday, police arrested a former treasurer of Brazil's Partido Progessista (PP), one of the parties in the country's ruling coalition. He was accused of receiving about 1 million reais ($280,465) in bribes and contract kickbacks.

The two-year-long investigation unveiled a scheme in which construction and engineering firms such as Odebrecht SA [ODBES.UL] and Andrade Gutierrez [AGIS.UL], colluded to overcharge Petrobras for work and used the excess funds to bribe officials.

Operation Car Wash also contributed to the diving popularity of suspended President Dilma Rousseff that led to her impeachment. Rousseff was suspended earlier this month after the Senate voted to put her on trial for breaking budgetary laws. She was chairwoman of Petrobras' board for seven years when much of the corruption took place.

(Reporting by Silvio Cascione; Editing by W Simon and Frances Kerry)