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Petrobras Settles with U.S. Authorities Over Alleged FCPA Violations

On September 27, 2018, the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) announced they had reached a settlement agreement with Brazil's state-owned energy company, Petroleo Brasiliero SA ("Petrobras") regarding allegations that now-former Petrobras executives participated in a corrupt payment scheme, providing payments to Brazilian officials and then concealing the payments in the company's books and records. Petrobras agreed to pay a total of $853 million in fines, as part of a non-prosecution agreement with the DOJ, 80 percent of which will be paid into a fund set up in Brazil related to parallel prosecutions of the conduct at issue in that country. SEC and DOJ will split the remaining funds equally. In the settlement agreement, Petrobras took responsibility for violating the books and records provisions of the Foreign Corrupt Practices Act (FCPA), but the agreement does not admit other improper conduct on the part of Petrobras.

Petrobras had previously agreed to pay $2.9 billion to aggrieved shareholders, as part of a settlement in a class action lawsuit in the Southern District of New York concerning the same alleged conduct, as reported in the January 2018 edition of Red Notice. The SEC's order notes that the SEC levied a payment of $933.4 million against Petrobras, but credited that amount to the money already paid as part of the lawsuit settlement.

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