US refinery acquisition dogs Brazil president
OREANDA-NEWS. Brazilian president Dilma Rousseff is facing fresh allegations over her role in state-controlled Petrobras' controversial acquisition of a US oil refinery, a small piece of a gargantuan corruption scandal that is fueling persistent calls for her resignation.
Rousseff was narrowly re-elected for a second term in late 2014. Since then her administration has been dogged by controversy and a deteriorating economy. Widespread anti-government protests took place across Brazil yesterday.
The president is currently facing impeachment proceedings for alleged financial maneuvers unrelated to corruption at Petrobras and is not a direct target of the historic investigations. But recent allegations have put the spotlight back on her role as Petrobras chairwoman in 2003-10, when most of the corruption apparently occurred.
In 2006, Petrobras acquired a 50pc stake in the 100,000 b/d Pasadena refinery in Texas from Belgium's Transcor Astra through its subsidiary Petrobras America. The partnership dissolved in 2008 leading to a legal battle that resulted in a 2012 US federal court-order forcing Petrobras to acquire Transcor Astra's remaining 50pc interest.
Last week, a judge for Brazil's spending watchdog TCU requested Rousseff be held accountable for the acquisition, which the court says cost public coffers around $800mn. The TCU calculation is mainly based on Petrobras total $1bn purchase price compared with the $360mm Astra paid for the refinery a few years earlier.
The TCU request is the fruit of excerpts from a leaked plea agreement between federal prosecutors and senator Delc?dio do Amaral, the former senate leader for Rousseff's Workers Party (PT) who was arrested on obstruction of justice charges in November 2015.
Do Amaral claims Rousseff knew of the inflated price Petrobras paid for the refinery when she approved the purchase, a claim she has repeatedly denied. Rousseff has issued a lengthy statement reiterating her claims that the approval of the acquisition was made based on incomplete information.
The president has said the executive summary on which the board's decision was based was "technically and legally flawed" and that had it been informed of various clauses omitted in the summary, namely a put option and clause guaranteeing a fixed rate of return, the purchase "would certainly not have been approved."
Pasadena was originally planned to process the heavy oil extracted from the 157,000 b/d Marlim field in the offshore Campos basin.
The heavily indebted Petrobras has slowed investment in the refinery in recent years and has sought unsuccessfully to sell it as part of a large divestiture program.
Rousseff's attempts to stave off impeachment have been complicated by increasing legal pressure on her mentor and predecessor, popular former president Lu?z In?cio Lula da Silva.
On 9 March, less than a week after being detained by federal police for questioning, state prosecutors in Sao Paulo filed charges against Da Silva based on claims of money laundering and hiding assets. Last week, the same prosecutors requested Lula be jailed while investigations proceed.
The charges, which must still be accepted by a judge, are based on allegations of illegal dealings between the former president and Brazilian construction firm OAS, one of around two dozen Brazilian firms alleged to have siphoned funds from inflated Petrobras contracts.
The market has responded positively in anticipation of a possible change in the Brazilian government, pushing Petrobras stock higher and strengthening the Brazilian real.
Rousseff has rejected calls for her resignation, claiming there is no legal basis for her removal.
The political crisis has paralyzed the government and helped push the country into a deep recession. Brazil's economy contracted by 3.8pc in 2015 and is expected to shrink by around 3.5pc this year.
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