Saipem linked to Petrobras scandal

During 2014 in Brazil, a scandal came to light involving business executives from state-owned oil company Petrobras.

The executives at Petrobras were connected with allegations of bribery from construction firms, in return for awarding them contracts at an inflated price.

Dozens of politicians were caught up in the scandal including former Brazilian President Luiz Inacio Lula Da Silva, known as ‘Lula’. Lula was found guilty of the first of five charges against him: that he had been given a beachfront apartment by engineering firm OAS in return for his help in winning contracts with Petrobras.

Recently, engineering firm Saipem informed its shareholders that its French subsidiary Saipem S.A. and its Brazilian subsidiary Saipem do Brasil are facing administrative proceedings.

The Brazilian administrative authority (Controladoria-Geral da União through the Corregedoria-Geral da União) notified the company that proceedings are underway with respect to alleged irregularities in a contract awarded to Saipem by Brazilian oil company Petrobras in 2011.

The contract was for the installation of an underwater gas pipeline connecting the Lula and Cernambi fields in Santos Basin.

Petrobras was the leader of the consortium on the project which was valued at around BRL249 million (US$63.6 million) at the time.

Both subsidiaries of the engineering company have said that they will cooperate in the administrative proceedings and provide all the necessary clarifications required by the administrative authority.