Recommendation to discontinue observation of Petroleo Brasileiro SA (Petrobras).
Petrobras is a Brazilian company which operates within the oil and gas sector. The Council on Ethics for the Government Pension Fund Global (GPFG) recommended on 13 November 2019 that Petrobras be removed from the list of companies it has under observation. Petrobras has been under observation since 2016. The Council on Ethics recommended that Petrobras be placed under observation in 2015 after revelations that senior executives at the company and its most important suppliers had for a decade operated a system in which the payment of bribes was a prerequisite for winning contracts with Petrobras. Investigations into some of these cases remains ongoing.
Despite the risk inherent in the fact that the Brazilian government, as the controlling shareholder, appoints a majority of Petrobras’s board members, the Council considers that the risk of corruption in the company has decreased. This assessment rests partly on the legal settlement entered into with the US Department of Justice which confirms that Petrobras has implemented wide-ranging improvement measures since the investigations commenced in 2014, and that it has undertaken to report on the further implementation of its compliance programme and internal control measures each year until 2021. The Council would also like to point out that Brazil’s federal prosecution service and supreme court have officially defined Petrobras as a victim in the Lava Jato investigation, and that the company is therefore assisting the prosecuting authorities in many ongoing criminal proceedings.
The Council on Ethics recommended placing Petroleo Brasileiro SA (Petrobras) under observation on December21, 2015, due to the risk of gross corruption. Senior executives of the company and its most important suppliers had apparently for a decade organised a system of paying large bribes to top politicians, political parties and civil servants. Several of the company’s senior executives also received large kickbacks.
Please find the Council’s recommendation here.
On January 28, 2016, Norges Bank placed the company under observation. The Council on Ethics will follow up on the risk of corruption with the company while it is under observation.
On March 17, 2017, the Council submitted a letter to Norges Bank on the observation of the company.
Please find the 2017 observation letter here.
On December 20, 2018, the Council submitted a letter to Norges Bank on the obsevation of the company.
Please find the 2018 observation letter here.