Rolls-Royce embroiled in Petrobras bribery scandal following annus horribilis for both companies

 
Caitlin Morrison
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Maria das Gracas Foster left her role as Petrobras chief executive earlier this month

Rolls-Royce was dealt a fresh blow yesterday, as it faced allegations of bribery after being dragged into the ongoing series of scandals surrounding Brazilian oil giant Petrobras.

The British company, which manufactures turbines for Petrobras, was named in court documents by a key informant in a multi-billion dollar bribery case against the state-owned oil firm.
The informant, Pedro Barusco, is an ex-director of Sete Brazil, which supplied drilling rigs to Petrobras. He has accused Rolls-Royce of paying bribes via an agent for a $100m (£65m) contract, and told police that he received at least $200,000 from the company.
A Rolls-Royce spokesperson said the company had not received details of the allegations, and had not yet been approached by the authorities in Brazil.
“We have always been clear that we will not tolerate improper business conduct of any sort and will take all necessary action to ensure compliance, including co-operating with authorities in any country,” it added.
The inclusion of Rolls-Royce in the case intensifies the global scrutiny on Petrobras – Brazil’s largest company – after it was rocked by ongoing boardroom upheaval and corruption allegations.
Petrobras declined to comment on the Rolls-Royce accusations yesterday, just one part of an alleged kickback scandal involving hundreds of companies, several of which are international firms. Earlier this month, Maria das Gracas Foster resigned as Petrobras chief executive, and five other senior executives departed in the face of widespread speculation that the Brazilian President Dilma Rousseff was preparing to dismiss the firm’s leadership and step into the breach herself.
Banker Aldemir Bendine was appointed to replace Das Gracas Foster just over one week ago.
The scandal is also a huge problem for Rousseff’s government, with several politicians implicated in the corruption allegations. Numerous politicians from Rousseff’s Workers Party, along with several from its coalition partners, stand accused of collaborating with corrupt Petrobras executives.
The debacle has also cost the firm financially, with shares in the group dipping after recent unaudited accounts suggested the group had 88.6bn reais (£20.3bn) of over-valued assets
For Rolls, the Brazil allegations add further reputational woes in the wake of more corruption allegations last year.
The engineering giant is currently under investigation by the Serious Fraud Office, over possible malpractice in China and Indonesia. The timing of the revelations cannot be helpful for Rolls-Royce, which was forced to issue a profit warning on Friday. The firm said 2015 pre-tax profits could fall by as much as four per cent, blaming global oil prices for the decline.
The company made the comments while delivering its results for 2014, which saw Rolls-Royce’s revenue drop – the first in a decade.
Analysts at Edison said last week that the firm’s results reflected the “annus horribilis of 2014”, and added that the company’s guidance for 2015 “suggests that it remains stuck on the runway”. Becoming tied up in the massive scandal that has engulfed Petrobras will not help Rolls-Royce to get off the ground.

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